AI News, FATF: Opportunities and Challenges of New Technologies for AML ... artificial intelligence

Note to Hong Kong institutions re: FATF new technologiesreport

am writing to update Authorized Institutions (AIs) regarding a recent report by the Financial Action Task Force (FATF): “Opportunities and Challenges of New Technologies for AML/CFT” 1 , which identifies how new technologies 2 , especially emerging and available solutions such as machine learning and natural language processing, can help improve the speed, quality and efficiency of AML/CFT measures.

The HKMA will be taking a number of initiatives in the coming months as part of the broader “Fintech 2025” strategy3 to advance AIs’ positive and responsible use of new technologies for AML/CFT: (a) To share experience and success stories of AIs and Stored Value Facility (SVF) licensees – in September, the HKMA will host an AML webinar with speakers from law enforcement agencies and industry to focus on how the industry is combatting online fraud and money laundering networks using technology and data, underpinned by increasing public- private collaboration.

(b) To launch AML and Financial Crime Regtech Labs for experimenting and engaging with new technologies and emerging data analytics techniques – commencing in November 2021, the HKMA will launch a series of interactive lab sessions to allow experimentation in a facilitated environment using simulations of real-life AML/CFT Regtech use cases before significant investment decisions.

(c) To promote network analytics capability for tackling online fraud and associated mule account networks – in Q4/2021, we will commence a thematic review of progress over the past year by FMLIT4 member AIs across a number of fundamental building blocks for the development of network analytics.

Hyperautomated Adverse Media Investigations

Solutions that require analysts to read through articles one by one to manually determine and classify risk are non-scaleable, tedious and produce unreliable results.

FATF Opportunities and Challenges of New Technologies for AML/CFT

On July 1, the Financial Action Task Force (FATF) published its report on the opportunities and challenges of using new technologies to prevent money laundering (ML) and terrorism financing1.

The solution could be found in the application of AI, allowing for a quick and accurate analysis of large volumes of data and resulting in partial or full automation of the processes such as customer risk assessment or customer due diligence (CDD).

learning, as a subset of AI, is thought to offer the greatest advantage through its ability to learn from existing processes or data, reducing the need for manual intervention and improving the ability to filter out the complex cases requiring attention.

transaction monitoring, application of machine learning and NLP may allow to carry out investigations with greater speed, filter out cases requiring complex investigations and increase conversion rate of alerts into suspicious activity reports. Furthermore,

in the context of remote onboarding and authentication AI, including biometrics, machine learning and liveness detection techniques can be used to perform micro expression analysis, anti-spoofing checks, fake image detection and human face attributes analysis. DLT A

For example, through APIs, one can connect customer identification software with monitoring tools or risk and threats identification tools with customer risk profiles in order to generate alerts or alter risk classifications. E-Identification

The FATF has issued a dedicated guidance on the subject.2 Digital ID may improve customer access to financial services through mobile devices and smartphones while ensuring the security and accuracy of customer information through biometric information (supplementing personal identity information).

There is also an opportunity to increase the diversity of data sources by collecting additional data from customers, with their permission, which ultimately strengthens the knowledge and ability to manage the business relationship.

The growing use of technology has raised a number of ethical and legal concerns that have generated widespread calls and numerous workstreams to develop appropriate government and private sector standards and safeguards.

Kroll assists a wide range of financial services firms to identify, remediate and manage regulatory risk in their businesses, including developing risk assessments and sound due diligence and monitoring practices that are tailored to individual firms.

We often undertake reviews and recommend style assessments for firms identifying hidden gaps in financial crime systems and control frameworks and provide tailored and practical recommendations on how to address them.