Predictive RegTech: Real-Time AML Compliance in Instant Payment Networks using Graph Neural Networks (GNNs)

Abstract

This article presents a novel, first-of-its-kind predictive RegTech solution to address this challenge using machine learning methods. The rapid global adoption of Real‑Time Payment Systems (RTPS) has created a significant “velocity gap” in regulatory compliance. While expanding financial accessibility, these systems introduce new vulnerabilities into existing AML frameworks. Static, rule-based systems and batch processing architectures cannot effectively counter money laundering in sub-second transaction environments. This limitation enables sophisticated activities such as digital layering and smurfing that move illicit financial flows across networks faster than regulatory systems can react. The core of our solution involves the use of graph neural networks (GNNs). This approach enables real-time, pre-settlement risk assessment, preventing illicit transactions before execution. Unlike traditional AML systems that evaluate transactions in isolation, this framework analyzes the entire transaction network to detect coordinated illicit behavior in real time. GNNs capture complex structures such as loops, funnels, and bridges that indicate illicit activity. To support efficient implementation, the framework integrates Event-Driven Architecture (EDA). The proposed architecture introduces the concept of the Zero-Knowledge Proof (ZKP) protocol layer in order to make risk-sharing possible in a secure manner across multiple institutions. This allows the banks to cooperate with each other in order to combat financial crimes while maintaining their data sovereignty. With predictive graph analytics, event-driven integration, and private cooperation, the proposed architecture enables proactive compliance in real-time payment environments, including real-time payment systems such as FedNow, against high-speed financial crime.