There is money laundering: an exciting criminal offence attracting attention through prevention, investigation and prosecution activities, and depicted in numerous ways in blockbuster movies. Then there is AML/CFT compliance: the boring, monotonous daily routines and actions of so many involved in AML/CFT regulated entities. Today, many technology solutions or black boxes are pretending to be compliance, prevention, investigation and much more. However, with closer inspection and critical analysis, the reality is somewhat different and misleading. Here is why.

Great claims

The exaggerated claims by solution providers suggesting technology can prevent money laundering are, we think, overstated. Still, this has not stopped high-level advocates for the adoption of technology solutions in AML/CFT compliance formulating equally exciting assertions. The most prominent of these has to be the FATF. The FATF propose innovative technologies have the potential to make AML and counter terrorist financing measures faster, cheaper and more efficient’. This type of claim does not just stay with the FATF; claims go deeper into the now hugely commercialised world of AML/CFT compliance to excite potential adopters with costly, offthe-shelf solutions.

These products want to ‘revolutionise’ what is seen as a broken AML/CFT compliance regime, and the troubles associated with false positives – those annoying time-consuming beliefs that clients or customers are involved in money laundering or terrorism financing. Algorithms can apparently be trained, using data on financial transactions, to learn and therefore identify suspicious transactions ‘even in cases that might lack the usual red flags that a human designer would program into an automated system’. All of this is reinforced by industry experts who are understandably enthusiastic about how AI can seemingly create a more efficient and transparent AML/CFT compliance regime.