Financial Crime World

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MALTA: Financial Crime Prevention Strategies in a Changing Landscape

Emerging financial crime risks, such as AI and deep fake technology, are changing the landscape of risk management across the board, raising the key question: how can these risks be identified and addressed?

The Evolving Threat Landscape

As innovative technologies continue to shape the financial sector, anti-money laundering (AML) subject persons must be aware of and familiar with emerging financial crime risks and trends to avoid becoming unknowingly involved in any criminal activity involving illicit funds. Blockchain technology, non-fungible tokens (NFTs), fake news, and deepfake technology are just a few examples of the new risks that require attention.

The Risks of Blockchain Technology

Blockchain technology has the potential to revolutionize the financial landscape, but its anonymity features also make it susceptible to misuse by wrongdoers. Virtual assets like privacy coins can further increase anonymity, making them more likely to be used for money laundering, terrorist financing, and other financial crimes.

NFTs: A New Risk Landscape

NFTs, which have gained popularity in recent years, may change the digital ownership landscape but also pose risks, including:

  • Manipulation of their value
  • Conducive to money laundering and terrorist financing
  • Perpetration of known crimes, such as insider trading

Fake News and Online Disinformation

Fake news and online disinformation are becoming more prevalent, with language-model AI systems like ChatGPT exacerbating these concerns. The identification of reliable online news sources has become a challenging task, especially in the context of due diligence on clients by AML subject persons.

Deepfake Technology: A Growing Concern

Deepfake technology enables the production of convincing fake content, which can be used to spread disinformation and facilitate various crimes, including:

  • Fraud
  • Extortion
  • Disrupting financial markets

The lack of awareness about deepfake technology’s risks and difficulties in detecting its misuse highlight the importance of understanding and mitigating these risks.

Mitigating Emerging Risks

To mitigate the risks posed by emerging financial crime risks, AML subject persons should:

  • Identify and understand the corresponding risks
  • Design controls to address them
  • Ensure their AML/CTF framework keeps up with emerging risks
  • Train employees to identify and mitigate these risks using a risk-based approach

Deloitte’s Expertise in Financial Crime Risk Management and Compliance

Deloitte has significant experience in financial crime risk management and compliance and can assist subject persons in setting up frameworks to mitigate the risk of their services being misused for money laundering, terrorist financing, or financial crime. By reaching out to our team, you can learn more about emerging risks and how they can be managed.

Author: Gianluca Busuttil, Senior Manager, Deloitte Malta Tax Team.