Financial Crime World

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Opportunities and Challenges of New Technologies for AML/CFT

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Overview

The Financial Action Task Force (FATF)/Organisation for Economic Co-operation and Development (OECD) report explores the opportunities and challenges of new technologies in implementing Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) measures. The FATF Secretariat conducted a digital transformation questionnaire with stakeholders from government authorities, public and private sector experts.

Key Challenges

The current AML/CFT measures face several key challenges:

  • Poor understanding of ML/TF threats: Inadequate risk assessments lead to inaccurate decision-making.
  • Legacy systems limitations: Current risk assessment tools rely on automated static analyses, human judgment, and manual input, generating matrices for risk interpretation and action.
  • Limited data analysis: Traditional risk assessment tools based on spreadsheets or static reporting platforms do not allow large-scale data analysis, limiting correlations and fine-grained picture of risks.

Opportunities

New technologies can provide added value in:

  • Real-time risk assessment: Machine learning and big data analytics can help identify, assess, and mitigate money laundering and terrorist financing risk.
  • Improved customer identification/verification: Advanced technologies can enhance the accuracy and efficiency of customer due diligence processes.

Case Studies and Examples

The report encourages respondents to submit case studies illustrating best practices or specific challenges. The questionnaire collected 188 responses, including examples of digital solutions from both public and private sector stakeholders.

RegTech and Suptech

The report mentions RegTech (regulatory technology) as a subset of FinTech that focuses on technologies facilitating the delivery of regulatory requirements more efficiently. Supervisory technology (suptech) refers to the use of innovative technology by supervisory agencies to support supervision.

Conclusion

Overall, the report highlights the need for regulators and financial institutions to adapt to new technologies and leverage their benefits in implementing AML/CFT measures effectively.