This week, Fujitsu is supporting the Financial Conduct Authority in a week-long “Tech Sprint” to help address the challenges posed by financial and economic crime.
This is the second anti-money laundering (AML) tech sprint based on the success of the first last year.
This time it is bigger, bolder and more focused on developing tangible solutions to turn the dial to combat global money laundering and the criminal activity behind it.
Tackling the multi-billion pound money laundering challenge
From a recent report by the House of Commons Treasury Select Committee, the scale of money laundering passing through the UK and the City of London, as a global financial hub, is estimated to be anything from tens to probably hundreds of billions of pounds each year, and the UN estimates the global figure at $1.6trillion.
If that amount seems staggering, consider that in 2012 HSBC was fined $1.9bn by the US government for facilitating money laundering for South America’s drug cartels.
It’s not just the size of the numbers that matters, but the underlying devastating societal impact, from human trafficking to wildlife poaching and many other criminal activities. It’s this that the FCA is rightly reminding attendees of.
Anti-money laundering – a vital issue for financial institutions
So it’s not surprising then that AML is a key priority for the FCA in regulating the Financial Services industry, which it sets out in its Financial Crime Guide.
Failure to put in place effective systems and controls puts banks at risk of serious fines – other more recent fines include Canara Bank (£896,000) and Standard Chartered (£102m) – just two completed out of over 70 investigations the FCA currently has open into AML and financial crime.
The FCA as the regulator also has a role to help share best practice and knowledge. Supported by the banks, which have asked for additional powers to share information without compromising consumer privacy, this week’s sprint is placing a greater emphasis on the need for information sharing within the Financial sector, within regulators and between jurisdictions.
Individual organisations can only go so far in tackling what is a massive global challenge – probably the most infamous example of which was the movement of £200bn of suspect funds through the Estonian branch of Denmark’s biggest bank between 2007 and 2015.
Going beyond rules-based AML technology
Currently, most AML solutions implement some kind of rule-based system e.g. bank transactions over £10,000 are monitored through a rule engine that alerts administrators when the conditions are met.
The limitation of this approach is that fraudulent behavior can be very complex and change over time, making it difficult to define or update the rules; and not to mention the inconvenience enforcing them has on law abiding businesses or citizens, who have to take additional precautions or complete bureaucratic forms when moving money.
Basically, the technology is not going far enough.
That’s why Fujitsu is there to help co-create solutions as one of over 60 organisations with attendees from the USA, Europe, Africa and Asia, including other national financial regulators, banks, legal as well as law enforcement agencies, all with a common interest in countering financial crime.
From recent research conducted by Fujitsu – while 87 percent of business leaders feel positive about the changes their organisations have experienced over the last five years, 44 percent of them fear their organisation might miss out from tech innovation to solve business problems because they haven’t adequately planned for it.
Using Artificial Intelligence to identify the patterns in fraudulent account activity
To address these challenges, and as part of the Tech Sprint, Fujitsu is demonstrating to attendees two technologies developed by Fujitsu Laboratories of Europe that help to identify fraudulent behavior through the analysis of bank account transactions.
Firstly, by using artificial intelligence to learn the patterns within known fraudulent account data, which can be described as complex event processing (CEP).
Secondly, exporting that pattern to flag similarities by applying it to other accounts and transactions including at scale.
In both cases, the major benefit is that patterns discovered by one regulator or bank can be shared with other regulators or banks – and without compromising consumer privacy. The technology has been tested with synthetic data and currently we have initiated conversations with customers to test the technology in real scenarios.
This is just the start. Technology can make an impact but AML needs a global shift in approach that also touches on digital ethics and trust.
It requires collaboration with ecosystems working together. This is core to the way Fujitsu operates and why we are proud to be supporting the FCA on this cause to show that more can be done to reduce this global harm.
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