H2O.ai Solution Briefs — Financial Services & Public Sector

H2O.ai

Solution Brief

Financial Services & Public Sector

AI-Powered Fraud Detection
for Financial Institutions

Real-time predictive and agentic AI to detect, stop, and explain fraud — at scale, on your infrastructure.

The Challenge

Banks and financial institutions lose billions annually to fraud — card-not-present, scams, authorised push payment, account takeover, and synthetic identity fraud. Existing rule-based systems generate high false-positive rates, overwhelming investigators and letting sophisticated attacks through. APRA and ASIC expect boards to demonstrate proactive, explainable fraud controls. The window to stop a transaction is milliseconds.

What H2O.ai Delivers

Real-Time Fraud Scoring

H2O Driverless AI builds production-grade fraud models on transaction data in days, not months. SHAP-based explainability helps teams support model-risk governance and gives investigators instant context for every declined transaction.

Scam & CNP Detection

Dedicated models for relationship/romance scams, investment scams, and card-not-present fraud — with production deployments achieving a 70% reduction in scam losses at a major financial institution.

Fraud Rule Optimisation

H2O's Agentic AI simulates new fraud scenarios, stress-tests existing rules, and proposes threshold adjustments — reducing false positives by up to 80% without increasing miss-rate.

Insider Threat Detection

Non-monetary activity analysis flags anomalous employee behaviour — unauthorised data access, unusual login times, and policy overrides — before internal fraud events materialise.

Receiver Risk Scoring

Every outbound transfer is scored in real time: recipient account history, device fingerprint, and behavioural biometrics combine into a single risk score, compatible with BioCatch and existing digital banking channels.

Mule Network Detection

Graph-based network analysis maps money-mule account clusters and coordinated synthetic identity rings — surfacing hidden entities that transactional rules cannot see.

70%Reduction in scam losses at a major bank in production

80%Fewer false-positive alerts with H2O Fraud Rule AI

<50msInference latency for real-time decisioning

12yrProduction AI track record in regulated banking

"Real-time predictive AI and GenAI deployed in production to detect and stop scams as they happen — protecting millions of customers at one of the world's leading banks."

— H2O.ai Financial Services · Production Deployment

H2O.ai

Solution Brief: AI-Powered Fraud Detection

How It Works

01

Ingest

Real-time streams: CBS, card processing, digital channels, third-party APIs

02

Score

Driverless AI & rules engine evaluate 200+ features per transaction

03

Decide

Block, challenge, or pass — with SHAP-based explanations in the analyst dashboard

04

Investigate

Agentic Alert Investigation auto-triages flagged events and drafts analyst reports

05

Learn

MLOps monitors model drift; feedback loop retrains on new fraud patterns daily

06

Report

SMR-structured reports and audit-trail evidence documentation generated automatically

Key Use Cases

Card-Not-Present (CNP) fraud — transaction & device fingerprint analysis at authorisation
Scam detection — romance, investment, and job-recruitment scam behavioural patterns
Suspicious account opening — synthetic identity detection at onboarding
Debit card skimming — real-time POS anomaly detection
Password spraying mitigation — automated authentication-attack neutralisation
Malicious domain takedown — phishing infrastructure detection and reporting
Insider fraud — non-monetary activity monitoring for employees
Mule identification — graph network analysis of coordinated accounts

Why H2O.ai

On-Premise / Air-Gapped

On-premise, air-gapped, or private cloud — no customer transaction data leaves your network. Designed to support data residency and sovereignty requirements without architectural compromise.

Explainability Built In

Every model decision ships with SHAP-based explanations and decision-tree outputs — supporting model-risk governance documentation and enabling investigator workflows.

Production-Proven

H2O.ai runs in production at some of the world's most complex financial institutions. 500+ enterprise deployments across regulated banking, government, and financial services worldwide.

SOC 2 Type II

Explainable AI

Model agnostic

On-Premise / Air-Gapped

Kaggle Grandmasters

Gartner Visionary 2025

12 years in production

Security & Certifications

SOC 2 Type II — audited annually
HIPAA / HITECH — supported deployment configurations
FedRAMP High — in progress
IRAP — in progress
On-premise & air-gapped — no data leaves your perimeter

Talk to H2O.ai

Our financial crime specialists work alongside your data science and compliance teams — from proof-of-concept to production deployment in weeks.

h2o.ai/demo

H2O.ai

Solution Brief

Financial Services & Public Sector

AML & Counter-Terrorism
Financing — AUSTRAC Compliance

Agentic and predictive AI built to address the scale and complexity of AML/CTF reform obligations — including Tranche 2.

AUSTRAC AML/CTF Reform — What's Changing

Australia's Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Tranche 2) significantly expands the regulated population and obligations. From 31 March 2026, newly regulated businesses — including lawyers, accountants, real estate agents, and dealers in precious metals — must enrol with AUSTRAC, conduct customer due diligence, and submit Suspicious Matter Reports (SMRs). Existing reporting entities face tightened transaction monitoring, enhanced due-diligence, and stricter beneficial-ownership verification requirements. Penalties for non-compliance: up to AUD 222 million per civil contravention.

The Challenge

Transaction volumes are growing faster than compliance headcount. Legacy rule-based transaction monitoring generates 90%+ false-positive alert rates. SMR investigations take days of manual analyst effort. New Tranche 2 obligations demand a scalable, auditable, and explainable compliance infrastructure — not more headcount.

H2O.ai AML/CTF Capability Stack

Transaction Monitoring Agent

H2O's Agentic AI scans transactions against 200+ AUSTRAC-derived red flags — structuring, unusual cash movements, high-risk jurisdictions, complex account structures — in real time. ML models suppress false positives by up to 80%.

Agentic Alert Investigation

Multi-agent orchestration (Profiling, KYC, PEP/Sanctions, Transaction Analysis, Media Screening, Document Fraud agents) automatically triages AML alerts and drafts an investigation report — reducing analyst workload by 60–70%.

SMR / STR Auto-Drafting

H2O's RAG-powered GenAI populates AUSTRAC Suspicious Matter Report templates from investigation outputs — reducing filing time from hours to minutes with full audit trail.

Beneficial Ownership & Network Analysis

Graph-based entity resolution maps beneficial owners, shell company structures, and correspondent banking chains — detecting layering and circular transfers that rules cannot see.

Cross-Border & CTF Monitoring

International Transaction Reports (ITRs) and cross-border payment chain surveillance detect respondent banks with weak AML frameworks and flag OFAC/UN-sanctions exposure in real time.

Regulatory Intelligence Agent

A dedicated web-monitoring agent tracks AUSTRAC, FATF, and ASIC regulatory updates, automatically flagging rule changes and suggesting SOP amendments — keeping controls current without manual review cycles.

90%Reduction in manual SMR drafting time

80%False-positive alert reduction

60%Analyst time saved on alert investigation

24/7Continuous transaction surveillance with zero gaps

H2O.ai

Solution Brief: AML & CTF — AUSTRAC Compliance

The H2O.ai AML/CTF Agent Architecture

🔍

Transaction Monitoring Agent

Detects structuring, unusual cash, high-risk jurisdictions, CTF red flags

🧩

Alert Investigation Agent

Orchestrates sub-agents; auto-drafts final AML investigation report

🌐

PEP / Sanctions Agent

Deep-web and structured-data PEP screening; OFAC, UN, DFAT watchlists

📋

KYC Analysis Agent

Validates identity documents, adverse media, source-of-wealth signals

🕸

Network & Graph Agent

Entity resolution, 1st/2nd-level network mapping, circular-transfer detection

📰

Regulatory Web Agent

Monitors AUSTRAC, FATF, ASIC for rule changes; auto-updates control SOPs

AUSTRAC Regulatory Mapping

Tranche 2 enrolment support — CDD workflows for newly regulated entities (lawyers, accountants, real estate, precious metals)
SMR / TTR filing — automated report generation and AUSTRAC portal integration
ITR (International Transaction Reports) — cross-border payment monitoring and filing
Beneficial ownership verification — ASIC registry integration and graph-based BO mapping
Enhanced CDD (ECDD) — AI-assisted due diligence for high-risk customers and PEPs
Record-keeping obligations — automated audit trail with tamper-evident logging

Why H2O.ai Wins

Production-proven at scale — real-time AML and scam detection deployed in production at major financial institutions, protecting millions of customers
Global AML deployments — live programmes covering money laundering detection, mule identification, and correspondent banking surveillance
Sovereign by design — on-premise and air-gapped deployment; transaction data never leaves your perimeter
Explainable AI for regulators — every alert and model decision ships with human-readable explanation for AUSTRAC audit review
Continuous learning — MLOps feedback loop retrains models on new typologies as criminal methods evolve

Security & Certifications

SOC 2 Type II — audited annually
HIPAA / HITECH — supported deployment configurations
FedRAMP High — in progress
IRAP — in progress
On-premise & air-gapped — no data leaves your perimeter

Deployment Model

H2O.ai deploys a dedicated squad of 15 financial crime specialists — domain SMEs, Kaggle Grandmasters, agentic AI engineers — to design, build, and run your AML/CTF programme from enrolment to production.

Milestone 1 (Apr 2026): Transaction Monitoring & Data Integration

Milestone 2 (Jul 2026): Alert Investigation Agent

Milestone 3 (Sep 2026): Full FinCrime System E2E

Built for Tranche 2 scale

On-Premise / Air-Gapped

SOC 2 Type II

Explainable AI

Multi-agent orchestration

Gartner Visionary 2025

H2O.ai

Solution Brief

Financial Services & Public Sector

Perpetual KYC (pKYC)
— Always-On Customer Risk

Replace periodic reviews with continuous, AI-driven customer due diligence — triggered by risk, not the calendar.

The Challenge

Traditional KYC is periodic — customers are reviewed on a schedule regardless of whether their risk profile has actually changed. In practice, beneficial ownership, political exposure, and financial behaviour can shift overnight. AUSTRAC's enhanced CDD obligations and Tranche 2 reforms demand institutions maintain current and accurate risk profiles — not snapshots that are six months stale. Periodic KYC misses the window. Perpetual KYC (pKYC) closes it — but only if the AI detects the right triggers without overwhelming compliance teams with noise.

H2O.ai pKYC Agent Ecosystem

H2O Preliminary KYC Agent

Automated identity verification at onboarding — validates documents (passports, driver's licences, ABN/ACN registration), scores initial risk, and flags PEP status or adverse media before the customer relationship begins.

H2O Triggered KYC Agent

Fires a focused due-diligence workflow whenever a high-risk transaction, change of beneficial ownership, or adverse-media hit is detected — without waiting for the next scheduled review cycle.

H2O Passive KYC Agent

Continuously enriches customer profiles from public registries (ASIC, AUSTRAC DFAT watchlist, ABR), court records, and adverse media — no customer interaction required, no manual workload for analysts.

H2O Scheduled KYC Agent

Risk-proportionate review scheduling — highest-risk customers reviewed most frequently; low-risk customers de-prioritised. Eliminates the compliance cost of blanket periodic reviews.

Customer Risk Score (pCRA)

H2O's Perpetual Customer Risk Assessment model re-scores every customer daily against 150+ behavioural, transactional, and demographic features — giving relationship managers and compliance a live risk dashboard.

pKYC Orchestration Agent

A master orchestrator coordinates all task agents, manages intercept triggers across the customer lifecycle, routes high-risk cases to enhanced CDD workflows, and auto-drafts AUSTRAC SMR reports where warranted.

95%Reduction in missed risk-change events vs. periodic review

70%Reduction in manual CDD analyst workload

150+Customer risk features scored daily per entity

"H2O pKYC Agent intercepts lifecycle events — onboarding, demographic change, high-risk transaction, life-stage trigger — and responds in real time. Perpetual KYC is not a product bolt-on; it is a fundamentally different operating model."

— H2O.ai Financial Crime Practice

H2O.ai

Solution Brief: Perpetual KYC (pKYC)

The Perpetual KYC Lifecycle — H2O.ai Coverage

Onboard

Preliminary KYC

Identity verification, PEP screening, initial risk score, AUSTRAC CDD

Monitor

Passive Enrichment

Continuous registry, media, and watchlist monitoring — no customer friction

Trigger

Event Detection

High-risk txn, ownership change, life-stage event, adverse media hit

Review

Targeted CDD

Focused ECDD workflow — only where risk warrants it

Report

SMR / Audit

Auto-drafted AUSTRAC report with full evidence trail

Key Capabilities

Document AI (H2OVL Mississippi) — OCR and extraction from passports, driver's licences, company registers, trust deeds
PEP & Sanctions screening — OFAC, UN, DFAT, domestic PEP lists with fuzzy-match entity resolution
Source-of-wealth identification — AI-assisted analysis of financial statements, property records, and ABR data
Beneficial ownership mapping — ASIC-integrated graph analysis of corporate structures up to ultimate beneficial owner
Adverse media monitoring — real-time news, court records, and social media screening for every customer
Risk-proportionate scheduling — ML-driven review frequency; eliminates blanket periodic review costs
ECDD-structured output — investigation reports structured to support enhanced CDD documentation requirements under Tranche 2

Why Perpetual KYC Now

AUSTRAC Tranche 2 (2024–2026) — CDD obligations now extend to lawyers, accountants, real estate agents. All entities must maintain accurate, current risk profiles.
FATF Mutual Evaluation 2025 — demonstrating a risk-based, technology-enabled AML programme is central to a positive FATF outcome and ongoing AUSTRAC supervisory confidence.
Cost efficiency — pKYC replaces expensive bulk review cycles with targeted, risk-triggered workloads — reducing compliance operating cost by 40–60%.
Customer experience — passive enrichment means fewer intrusive outreach requests. Most customers never need to be contacted for a review.
Audit readiness — every risk-score change, trigger, and decision is logged with model explainability output, creating an always-current audit trail.

Security & Certifications

SOC 2 Type II — audited annually
HIPAA / HITECH — supported deployment configurations
FedRAMP High — in progress
IRAP — in progress
On-premise & air-gapped — no data leaves your perimeter

H2O.ai Platform Components

H2O Driverless AI — pCRA risk scoring models with AutoML
h2oGPTe — document Q&A, ECDD report generation
H2O AgenticAI — pKYC orchestration across all task agents
H2OVL Mississippi — document OCR and extraction
H2O Feature Store — centralised, governed customer feature repository
H2O MLOps — continuous model monitoring and drift detection

Always-on risk

ECDD-structured output

On-Premise / Air-Gapped

Document AI (OCR)

Data minimisation by design

SOC 2 Type II

Explainable AI