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Addressing emerging market money laundering and financial crime risks

Napier Chief Data Scientist, Dr. Janet Bastiman, appeared on a panel at the annual AMLP conference looking at today’s biggest AML and financial crime risks.

Napier AI
November 30, 2021

Napier Chief Data Scientist, Dr. Janet Bastiman, had the pleasure of joining a panel at the Annual European AML & Financial Crime conference: Addressing emerging ML & financial crime risks – the new vulnerabilities and how to strengthen your defences.  

The panel comprised:

Bringing together a diverse mix of experience, James and the panel discussed what they each see as the biggest emerging money laundering and financial crime vulnerabilities today.

If you missed it or would like a recap, here’s a brief summary of the biggest risks and threats as identified by the panel:

1. Fraud

Alex stressed how fraud is a security threat in the UK and globally, with billions in losses reported over the last few years. Crucially, many people see reporting fraud as pointless; estimates are low but not clear on how much crime is currently reported. With the pandemic further increasing the incidence of fraud, we are now at the edge of a serious problem that requires an international focus and global leadership to tackle it.

2. Digitalisation

Emilie emphasised how digitalisation is rapidly accelerating and creating lots of new tools for money laundering and terrorist financing, with terrorists being very active with online fraud. Money is moving instantly across borders and there’s a huge choice of payment methods for criminals to exploit. When it comes to regulations, criminals are clued up on their limitations and will unfortunately use crypto to facilitate terrorism, yet most anti-money laundering (AML) software and regulation is not set up for crypto.

3. Cyber and ransomware attacks

Livio highlighted that cyber and ransomware attacks are one of the biggest threats affecting businesses and organisations across all sectors right now. Financial institutions carry the additional burden of determining whether they are unknowingly supporting or facilitating ransomware payments.

4. Investment scams

While Alex acknowledged that the National Crime Agency (NCA) has made some steps forward, he questioned how much is being done in real-time to address investment scams. The general public often have little awareness or understanding of these scams, and more needs to be done to share intelligence. For example, sharing intelligence data in a national, encrypted group would make it easier to detect crime.

How to address money laundering and financial crime risks  

Criminal gangs are incredibly organised and always changing their techniques. The situation isn’t helped by loopholes, for example the ease with which fake companies can be set up in the UK with Companies House. This makes addressing the above money laundering and financial crime risks even more important.

We need sophisticated software

While crime will inevitably filter through; Janet emphasised the importance of early crime detection to stop it at its source. Legacy AML systems are currently limiting the capabilities of many companies. What we really need is automated, sophisticated transaction monitoring software, enhanced with artificial intelligence and combined with human decision making.

We need to work together

International collaboration, improved data and intelligence sharing, and the effective management of new payment methods are all crucial. Criminals can currently move money from one country to another in under a minute. Globalisation means that the world is no longer a series of separate countries, so we need to act and work together.  

As well as solutions, we need robust crypto regulation. Unfortunately, this unlikely to be harmonised around the world and may result in two-tier crypto regulations, with criminals being drawn to those countries with less strict regulations.

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