Anti-money laundering technology must operate in a collaborative ecosystem

by Jeremy

While advances in algorithms and artificial intelligence (AI) are making it easier than ever for banks to spot suspicious financial activity, the scale of money laundering in the global economy remains enormous. The United Nations Office on Drugs and Crime, for example, has estimated that somewhere between 2% and 5% of global GDP is laundered each year, meaning just under $2tn is moved illegally on an annual basis. The National Crime Agency (NCA) estimates that money laundering costs the country’s economy £24bn each year in the UK.

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According to research published in February 2021 by business-to-business (B2B) information services company Kyckr, 28 financial institutions across the globe were fined for anti-money laundering (AML) related violations in 2020, equating to roughly £2.6bn. In its report, Kyckr includes examples of AML fines issued to banks in the US, UK, Germany, Sweden, and China, among others, noting that they were levied in part for the bank’s failures to report suspicious activity to their respective regulators promptly.

This problem is not new. In September 2020, documents leaked to Buzzfeed News and shared with the International Consortium of Investigative Journalists (ICIJ) revealed that banks – including HSBC, Barclays, and Standard Chartered – took months, if not years, to file their suspicious activity reports (SARs) with the US Financial Crimes Enforcement Network, or FinCEN. The SAR documents identify more than $2tn in transactions between 1999 and 2017 that were flagged by financial institutions’ internal compliance officers as possible money laundering or other criminal activity, and an ICIJ analysis of the five biggest banks filing patterns show how long it took to report this activity.

For example, the median number of days it took Barclays to report a suspicious transaction to FinCEN was 1,205 days; for JP Morgan, 519 days; for Standard Chartered, 426 days; for Bank of New York Mellon, 210 days; and for Deutsche Bank, 126 days. To understand why banks fail to report suspicious activity and why it takes so long to take action against money launderers, Computer Weekly spoke to several AML practitioners and experts about the remaining barriers and whether there is room for technology to improve the surrounding processes.

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