A snapshot of the Nordics’s approach to AI in AML regulation in 2024

Index score: 2.84 / 10

Index score between 0-10, with a lower score reflecting a more efficient and innovative regulatory approach.‍

The Index aggregates four weighted components – AML attitude, AI/AML regulation, total cost of compliance, and AML effectiveness – into a single overall score (with lower values indicating stronger performance), providing a measure of how effectively each nation aligns its anti–money laundering (AML) efforts with outcomes, alongside an estimate of the potential gains achievable through AI-enhanced AML initiatives.

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Built on data science principles, the Index is not just another survey. It provides a comprehensive insight into the impact of AI on anti-money laundering and the cost of compliance. It ranks forty global markets based on their effectiveness in financial crime compliance.  

See the data here: Napier AI / AML Index.

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All the individual countries within the Nordic block (excluding Iceland and Norway) are part of the European Union (EU), and so are accountable to the new EU AI Act, which proposes AI principles of human-centricity and transparency. This includes Sweden, Denmark, and Finland. The combined GDP of these nations constitutes one of the biggest economies in the world, making it an attractive target for financial criminals. Although Iceland and Norway are not EU member states, they hold similar stances to their neighbours on financial crime compliance.

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Since 2018, Financial Institutions (FIs) in the region have been making a concerted effort to improve anti-money laundering controls. The goal is to achieve geographical and economic scale by establishing a position as a low-risk partner in the financial ecosystem. The Nordic nations are well on their way to achieving this. The Digital Operational Resilience Act (DORA), is an EU regulation aiming to strengthen IT security of financial entities and insurance companies, which comes into force in January 2025. Collective intelligence across the network will set the tone for a culture of transparency in the financial services sector across the Nordics.

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The Nordics’ collaborative cross-border payments initiative, P27, was to be formed through a collaboration between the six largest banks and was set to have AML as part of a centralised solution. Although P27 was withdrawn in 2023, that spirit of collaboration remains with an understanding of the national and institutional differences. Many financial institutions, each with its own risk profile, operate throughout different markets in the region. It is important to consider that each market has differing regulatory guidance, necessitating a multi-configuration approach to financial crime for a holistic view of financial crime risk.

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The Nordic markets have a low amount of GDP lost to money laundering, with a low cost of financial crime compliance. This can be attributed to its leadership in AI and technology. In June 2024, Microsoft announced it would be investing US$3.2 billion in cloud and AI infrastructure in Sweden over the next couple of years. Meanwhile, Denmark is currently in the process of building an NVIDIA AI supercomputer.

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Photo by Karl Hedin on Unsplash

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