New Delhi, Dec. 9 -- The Indian banks are rapidly integrating machine learning models into Financial Crime Compliance (FCC) operations amid rising fraud and regulatory scrutiny, making the traditional rule-based systems inadequate, KPMG said in a report.

The report highlighted that the legacy manual and threshold-based methods are "progressively losing effectiveness" against sophisticated financial crime.

This is prompting financial institutions to shift to AI-driven frameworks for Anti-Money Laundering (AML), fraud detection and customer risk assessment, it said.

Notably, the KPMG report also highlighted that the shift towards AI is being accelerated by regulatory expectations, including RBI's FREE-AI framework and SEBI's guidelines, ...