In 2025, artificial intelligence (AI) is revolutionizing banking, finance, and compliance. Banks and fintech companies rely on AI tools to identify high-risk clients before they cause significant damage. These systems can process thousands of transactions in seconds, detect suspicious behaviour, and raise alerts in real-time.
While AI plays a key role in preventing fraud, money laundering, and regulatory issues, it also raises important questions. Can AI always be trusted? What happens when it makes a mistake? And, given the stakes, should businesses fully rely on machines to make decisions that affect people’s lives and reputations?
Let’s explore how AI is used to detect high-risk clients, examine real-world cases where it has succeeded, and assess whether AI is truly a blessing or a potential red flag on its own.
What does it mean to be a High-Risk client?
A high-risk client is someone whose actions or background could expose a company to legal, financial, or reputational harm. The characteristics of a high-risk client may include:
- Suspicious financial transactions
- A history of fraud or criminal activity
- Links to politically exposed persons (PEPs)
- A company located in a sanctioned country
- Fake or unclear identity documents
In the past, banks employed compliance officers to manually assess every client. However, with millions of customers and transactions to process daily, this is no longer feasible. That’s where AI comes in.
How AI detects High-Risk clients
AI utilizes machine learning, natural language processing, and pattern recognition to analyse data from multiple sources, including internal records, news reports, sanctions lists, and public databases. These systems primarily perform the next three key functions:
- Monitor behaviour as AI analyses client transactions to ensure they align with their profile. Any deviations are flagged for review.
- Screen background as AI scans global news, watchlists, and legal filings to identify hidden risks associated with clients.
- Predict future risk as AI is based on behaviour patterns, AI predicts the likelihood that a client may engage in illegal or harmful activities.
AI in Action worldwide
1. Commonwealth Bank of Australia – fighting financial crime
In 2024, the Commonwealth Bank of Australia (CBA) launched an AI-powered alert system to combat financial crime. Previously, the bank used 12 separate apps to detect fraud, money laundering, and sanctions violations, an approach that was slow and full of gaps.
With the new AI-powered system, CBA achieved several improvements:
- Spotting high-risk clients by linking multiple suspicious activities
- Reducing false positives, saving valuable staff time
- Completing investigations faster with visual “risk maps” showing client connections
In one case, AI detected a pattern in several small international transfers that appeared benign. The system identified these transactions as being linked to a known fraud ring, based on timing, account history, and shared IP addresses. Without AI, this connection might have gone unnoticed.
2. Quantifind – public risk signals from open sources
Quantifind, a US-based company, helps banks and governments identify risky clients using publicly available data. Their AI tool, Graphyte, analyses:
- News articles
- Legal filings
- Sanctions lists
- Social media content
In 2023, a major US bank used Quantifind’s system to assess a corporate client from Eastern Europe. Although the client passed standard KYC (Know Your Customer) checks, AI flagged the CEO as a potential risk. The AI uncovered local-language news articles linking the CEO to a company fined for money laundering five years prior, information that was not available in English or public company records. As a result, the bank requested additional documentation, and the client withdrew the application.
3. Feedzai – catching card fraud in real time
Feedzai, a fintech firm based in Portugal, specialises in real-time fraud detection. Its AI systems are used by major banks in the US and Europe to track payment activity and block fraudulent transactions.
Between 2022 and 2024, Feedzai’s AI prevented a group of high-risk clients from draining prepaid debit cards through a combination of bots and human runners. The suspicious behaviour exhibited by the fraudsters included:
- Dozens of card reloads within a 30-minute period
- Location mismatches (cards used in three countries on the same day)
- Phone numbers linked to fake accounts
AI flagged the activity in real-time, preventing a multimillion-dollar loss for the banks.
How accurate is AI?
Although AI tools are powerful, they are not infallible. AI can occasionally trigger false alarms, flagging innocent individuals based on a name match or a single unusual transaction. These instances require human intervention to verify the context.
Another concern is the potential for bias. If the data used to train the AI is flawed or incomplete, the system could disproportionately flag clients from certain regions, industries, or backgrounds, leading to unfair treatment.
This is why it’s important for businesses to integrate human oversight alongside AI. While AI can process vast amounts of information quickly, only humans can interpret the context and make nuanced decisions.
Sophie Dardenne, a financial analyst, recently said at a fintech roundtable, “AI is like a flashlight in a dark room. It helps you see more, faster—but it doesn’t tell you what to do. That still requires human thinking.”
Some advantages of using AI for risk detection
No doubt that when implemented correctly, AI offers clear advantages for businesses:
- Faster detection – risky clients are flagged within seconds, reducing delays.
- Cost savings – fewer manual checks translate to lower staffing costs.
- Better protection – AI reduces the risk of fraud losses and regulatory fines.
- Smarter compliance – AI helps businesses stay compliant by identifying issues early.
For growing companies, AI offers a way to maintain security and compliance even with limited resources.
Caution for Businesses
For businesses managing large volumes of clients, adherence to Know Your Customer (KYC) regulations is often a requirement. AI tools can assist in ensuring compliance, but businesses must be aware of the following:
- Client data protection – safeguard personal and financial information.
- Clear guidelines – establish policies on how AI-generated decisions are used.
- Staff training – educate employees on the capabilities and limitations of AI systems.
Bottom Line
AI is transforming the way companies identify and manage high-risk clients. The results are often faster, more accurate, and more efficient than traditional methods. Real-world examples show that AI can detect risks that may otherwise go unnoticed.
However, AI is only a tool. Without proper oversight, accurate data, and human judgment, it can lead to costly mistakes. When used correctly, AI is a blessing. Used blindly, it can raise red flags.
Are you a financial professional, compliance officer, or business owner managing client risk? Now is the time to explore AI-powered risk detection tools. Start by reviewing your current systems and identifying gaps.
Check out our latest article for fresh insights into industry trends: “Why More Entrepreneurs Are Choosing Offshore Banking in 2025?”
Need help choosing the right solution? Contact our advisory team for a free consultation. We’ll guide you in selecting the best tools to reduce risk, without adding new ones.
Disclaimer
Widelia and its affiliates do not provide tax, investment, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, investment, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Please consult https://widelia.com/disclaimer/ for more information.
