ASIC will soon utilise new technology such as artificial intelligence and biometric data in a bid to detect rogue banking behaviour and boost its surveillance powers.
ASIC will use the $120 million in funding boost it received from Parliament in November to unleash its digital capabilities including artificial intelligence issuing a warning to rogue bankers companies, fund managers and self-managed super funds that they were now experimenting with enhanced algorithms, which allowed them to map the relationships of persons and entities and create timelines of events.
The natural language algorithms (tools that allow computers to process and understand human languages) ASIC will use, will see them have the ability to scan large sets of data and conversations that would “allow big banks to police their own behaviour rather than delegating all the responsibility to ASIC, ” said Chairman Greg Medcraft.
Medcraft also adding that ASIC was also experimenting with cognitive sentiment – analytic tools to draw conclusions about individual behaviours and social media analytics to identify financial problem hotspots.
According to ASIC, artificial intelligence would allow them to classify market announcements to identify problem areas, Medcraft explaining that, “it could be used to identify unidentified accounts used by fund managers to disguise trading behaviour.”
The corporate regulator said for large-scale investigations, such as the bank bill swap rate investigation, artificial intelligence could be used to identify inappropriate conversations on the trading floor and read the actual moods of the people involved.
ASIC’s increased push for more power was confirmed by global law firm Herbert Smith Freehills (HSF) who commented that the corporate regulator, ” is eager to see its own power increased as it continues its focus on culture as an early warning sign for potential misconduct.”
HSF partner Andrew Eastwood suggested that ASIC would widen its reporting obligations as it, “seeks a significant increase in its enforcement abilities and the penalties it has available.”
Medcraft, delivered a speech in November at the ASIC Corporate Governance Discussion Group titled Driving better consumer outcomes in the era of big data and artificial intelligence which outlined the corporate regulator’s unveiling of their techniques for the collection and analysis of vast amounts of data, which Medcraft says, “twenty years ago would have been unimaginable.”
ASIC says it has strengthened its capabilities in investigative data analytics and machine learning by incorporating software-as-a-service (SAAS) software known as Enhanced Investigative Analytics (EIA) for use in investigation and enforcement matters.
EIA allows pattern matching across ASIC’s extensive evidence database using algorithms and allows them the ability to be able to “map target relationships and create chronologies, well beyond traditional word or enhanced word search capabilities.”
Luke Hastings, HSF’s Australian head of disputes reiterated the increased burden ASIC’s AI powers would have for companies who “will need to ensure they are meeting regulatory requirements, not just in the jurisdiction they are headquartered, but in all the countries they do business.”
While Medcraft issued the ominous warning for those still intent on acting outside the law, that, “there’s no way to hide.”