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Finance

Regional Bank: AML/KYC Compliance Transformation

How a $50B+ regional bank deployed sovereign AI for BSA/AML compliance—achieving 55% faster KYC reviews, 40% fewer false positives, and zero audit findings.

KYC Review Time Reduction

55%

False Positive Reduction

40%

OCC Audit Findings

0

The Challenge

The Challenge

By late 2023, the Bank's Financial Crimes Unit was reaching a breaking point. As the institution grew through strategic acquisitions, its legacy rules-based transaction monitoring system was generating an unmanageable volume of alerts with a false positive rate exceeding 90%.

Analysts were spending thousands of hours annually on "Level 1" triage—manually reviewing legitimate transactions flagged simply because they exceeded rigid dollar thresholds or matched broad geographic parameters.

The Cloud Block: The Bank's Chief Data Officer identified Generative AI as a potential solution, but the initiative hit a hard wall:

  • Data Egress & Sovereignty: The CISO refused to approve any solution that required sending PII or sensitive financial data to a third-party public cloud
  • Regulatory Defensibility (SR 11-7): The Model Risk Management team warned that commercial "black box" LLMs failed to meet Federal Reserve SR 11-7 standards for "conceptual soundness"—if the Bank could not explain exactly how the AI reached a decision, the model would not pass an OCC examination

The Solution

The PRYZM Solution

PRYZM deployed its Sovereign AI Architecture directly within the Bank's private infrastructure. The system was configured to ingest alerts from the legacy transaction monitoring system:

  • Step 1: The AI analyzes each alert, cross-referencing 12 months of customer transaction history, KYC files, and external adverse media
  • Step 2: It scores the alert for risk probability
  • Step 3: For low-risk alerts, it drafts a closure narrative explaining why the activity is normal
  • Step 4: For high-risk alerts, it generates a pre-investigation summary highlighting specific anomalies

Evidence Pack Generation: PRYZM's platform automatically generates comprehensive audit trails for every AI decision—detailing the data inputs, model weights, and logic paths used. This transformed the AI from a "black box" into a transparent, auditable tool that satisfies SR 11-7 requirements.

Executive Summary

A Top 20 US Regional Bank deployed PRYZM's Sovereign AI architecture for BSA/AML compliance, achieving a 55% reduction in KYC review times, a 40% decrease in false positives, and $2.1 million in annualized savings—all while receiving zero audit findings during their subsequent OCC regulatory examination.

Background

The Bank's legacy rules-based transaction monitoring system was generating alerts with a false positive rate exceeding 90%. Cloud-based AI solutions were incompatible with the Bank's data sovereignty requirements and SR 11-7 model risk management standards.

Implementation

PRYZM deployed a Sovereign AI instance within the Bank's private infrastructure:

  • Shadow Mode (60 days): PRYZM's outputs were compared against human analyst decisions to verify "conceptual soundness" as required by SR 11-7
  • Production Integration: Direct integration with legacy transaction monitoring and core banking systems
  • Evidence Pack Automation: Every AI decision generates immutable audit trails for regulatory examination

Results

Operational Efficiency: Average case handling time dropped from 45 minutes to 20 minutes. The Bank cleared a historical backlog of 4,000 cases in three weeks without overtime.

Financial Impact: $2.1M annualized savings through reduced contractor spend and operational efficiency.

Regulatory Victory: OCC examiners specifically reviewed the AI implementation and cited the Evidence Packs as a model for AI governance. Zero findings issued.

Key Takeaways

For regulated financial institutions, sovereign AI is the only path to compliance-forward AI deployment. PRYZM's Evidence Pack approach converts the regulatory burden into a competitive advantage.

"The regulators didn't just want to know that the system worked; they wanted to know how. With PRYZM, we handed examiners a 50-page Evidence Pack for every decision. They didn't just pass us; they asked if they could use our framework as an example."

Chief Compliance Officer

Chief Compliance Officer at Top 20 US Regional Bank

Full Testimonial

Before PRYZM, we faced an impossible choice: either deploy fast and risk regulatory fines, or wait for perfect governance frameworks that may never arrive. PRYZM's Evidence Pack approach let us move forward with confidence. Every decision is now auditable, every model change is tracked, and every jurisdiction's requirements are met automatically. We've cut our compliance team's workload by 73%—they now focus on strategy instead of log harvesting.

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