AI and managed services: A smarter way to tackle financial crime

Financial crime is complex, multi-faceted and constantly evolving. Persistent threats, such as money laundering, terrorist financing, sanctions breaches, bribery and corruption and fraud – continue to strain global defences. Adding to this challenge is the rise of virtual assets, artificial intelligence (AI) and machine learning, which create increasingly new and sophisticated criminal techniques.

The scale of the problem is staggering. The International Monetary Fund (IMF) estimates that 2% to 5% of the global GDP is laundered each year, underscoring the vast economic impact of financial crime.¹ Yet, despite major investments in detection and prevention, global enforcement remains alarmingly ineffective – the World Economic Forum’s Global Coalition to Fight Financial Crime reports that less than 1% of illicit financial flows are ever seized or frozen.² Together, these figures reveal a widening gap between the growing sophistication of financial crime and the limited effectiveness of current global defences.

As Middle East economies strengthen their global positions, addressing financial crime has become critical. For the region, such efforts not only mitigate risk but also help attract foreign investment and support sustainable growth.

Financial institutions need to move beyond costly, time-consuming legacy systems by adopting a layered AI approach or AI augmentation – through intelligent overlays to existing setups. This will enable firms to boost efficiency, strengthen compliance and deliver faster results without the disruption of full system replacement.

The institutions that will lead the next phase of FCC in the GCC will not necessarily be those with the biggest AI budgets, but those with the clearest strategic thinking. Success in this space depends on building compliance ecosystems that are modular, explainable and tightly aligned to both local regulation and operational workflows. 

That means training models on local transaction types, customer behaviour and linguistic data. It means creating feedback loops between investigators, technologists and control owners. But it shouldn’t work alone. It means adopting hybrid models, where AI augments but does not replace human judgement, particularly in high-risk or ambiguous cases.

For example, in anomaly detection, AI can scan large volumes of transactions in real time to identify patterns that may indicate unusual behaviour or potential fraud. This process enables the recognition of anomalies that might not be detected by manual review alone. Human involvement remains vital, as investigators assess AI-generated alerts using their judgement and contextual understanding to determine whether an identified anomaly is genuinely suspicious or simply an outlier. The combined approach, with AI providing rapid pattern identification and humans offering interpretation and validation, allows compliance teams to address potential issues efficiently while managing false positives.

Similarly, in risk assessment, AI highlights patterns linked to higher-risk customers, but human expertise remains essential. Experts interpret AI results using knowledge of context, industry and client history, turning data into actionable steps. This partnership shifts compliance teams from reactive measures to proactive risk management, making FCC a competitive strength.

When applied right, AI can turn compliance from a defensive obligation into a strategic advantage, improving risk detection, easing regulatory response and enabling scale without adding headcount. New techniques such as long short-term memory (LSTM) networks have achieved 94.2% fraud detection accuracy cutting false positives and reducing the burden on compliance teams.³ 

Beyond detection, AI can automate regulatory scanning and map obligations to risks and controls, giving institutions a holistic view of compliance. In a region where regulations are evolving rapidly, AI’s real value lies in keeping institutions responsive, resilient and ahead of change. 

Real-time analytics can flag anomalies that human eyes would miss, reduce false positives and free scarce expertise for higher-value investigation. This momentum is encouraging but, in a region, where regulatory nuance and cultural context matter, the question isn’t whether you use AI, but whether you use it wisely.

After all, you wouldn’t risk deploying the right tools to solve the wrong problems. For example, AI models trained on global data could fail to detect local nuances, such as region-specific money laundering typologies or misclassify common flows, such as GCC expatriate remittances. Without this contextual adaptation, institutions may miss key red flags or generate excessive false positives, undermining both compliance effectiveness and operational efficiency.

Navigating this new era of AI-enabled FCC demands strategic alignment across regulation, technology, governance and operational risk. For senior leaders, the complexity of deploying AI in a way that meets both regulatory expectations and business objectives cannot be overstated. Missteps can lead to inefficiencies, blind spots or missed red flags. 

In this entire exercise, the role of humans cannot be ignored. Even with the best technology and delivery models, people remain the decisive factor. The FCC professional of the future is not just a rule-keeper but a strategist who combines regulatory insight with data fluency and digital confidence. In the Middle East the demand for talent in areas such as virtual assets compliance, sanctions, fraud and AI governance is outstripping supply.

As regulatory demands rise, financial institutions are looking for smarter ways to scale. Managed FCC services and hybrid delivery models are stepping into this gap, offering advanced transaction monitoring, fraud detection, sanctions screening and case management without the heavy lift of building everything internally.

PwC research also shows that organisations leveraging managed services for FCC are not only reducing operational complexity but also gaining strategic advantages through access to best-in-class technology, talent and insights.⁴  

By tapping into specialist providers, institutions can access cutting-edge technology, regulatory expertise and scarce skills that are otherwise hard to build and maintain in-house. For pan-GCC institutions, centralised platforms that adapt to local rules are proving particularly attractive. The future will not be one-size-fits-all. It will be about constructing agile compliance ecosystems that adapt to risk, regulation and growth.

The path forward demands clear thinking and sharper questions:

• Are we investing in the right technologies to not only meet today’s requirements but to future-proof our compliance capabilities?
• Do we have the right talent strategies in place – both in terms of attracting local expertise and building cross-functional skill sets?
• Are our delivery models scalable and agile enough to respond to shifting regulatory and operational realities?
• Have we fully explored the potential of managed services to enhance efficiency and unlock strategic value?
• Most importantly, are we treating FCC as a defensive necessity – or as a proactive enabler of trust, innovation and growth?

Institutions that engage with these questions today will be the ones shaping the financial landscape of the Middle East tomorrow.