The Securities and Exchange Commission (SEC) has developed an e-enforcement project that uses artificial intelligence (AI) technology in verifying and investigating crimes and wrongdoing in the capital market.
The SEC also submitted an amendment of the Securities and Exchange Act to the Finance Ministry last week to enhance its authority as an investigator.
Anek Yooyuen, the SEC's assistant secretary-general of enforcement, said the e-enforcement project consists of three parts: AI enforcement, corporate surveillance, and an e-link.
AI enforcement detects unusual actions, such as odd stock price movements or anomalous trading behaviour, helping the regulator catch suspicious movements the moment they occur, he said.
Although the SEC has employed AI enforcement in the real market, it is in the second and third developmental phases, said Mr Anek. The technology can collect data to analyse trading behaviour and order distribution in trading, he said.
The second arm of corporate surveillance is an online investigative tool that detects irregularities in companies' financial status and operating results that may be fraudulent.
Mr Anek said the tool has been used since the second quarter this year, and in the future will include non-financial data, visualisation of a personal relationship between perpetrators, and a verification system for the surveillance.
AI and machine learning are expected to be integrated in the surveillance program to accelerate the detection and screening of unusual transactions, prevent the damage from spreading, shorten personnel working time, and reduce the number of fraud cases, he said.
The investigating program is expected to be functional in 2022.
The last component of the project, an e-link, encompasses systems used to visualise the connections and financial relationships between transactors to better detect wrongdoing and identify perpetrators. In the future, it will include other sets of relevant information to increase the efficiency of law enforcement and help prevent losses, said Mr Anek.
"E-enforcement can help filter out unusual movement in stock prices and trading volume, such as price push-ups, ordering and cancelling orders, and strange behaviour in order distribution. The tool will make the inspector's work easier, more precise, and prevent human error," he said.
The SEC plans to begin the second phase of the project in 2022, which will monitor the relationship of individuals and other entities. By 2023, the project aims to use AI and data analytics to predict misconduct and fraud in financial statement audits.
Ruenvadee Suwanmongkol, the SEC's secretary-general, said the redraft of the Securities and Exchange Act enhances the regulator's authority as an investigator and allows it to investigate cases unilaterally.
The amended version was sent to the Finance Ministry last week and the SEC plans to propose a Witness Protection Act to the ministry after the draft is approved.