Financial Crime Trends: Emerging Risks in Malta
The financial landscape is constantly evolving, and with it, the risks associated with financial crimes are also changing. New technologies such as artificial intelligence (AI), deepfake technology, blockchain, and virtual assets have emerged, posing significant challenges for anti-money laundering (AML) subject persons.
The Rise of Blockchain and Virtual Assets
Blockchain technology, once hailed as a revolutionary innovation, has become a concern in the fight against financial crime. The anonymity and speed of transactions on blockchain networks make it an attractive tool for money launderers and terrorist financiers. Additionally, virtual assets such as privacy coins, which are designed to facilitate privacy, pose a significant risk due to their ability to obfuscate transaction details.
- Privacy Coins: These cryptocurrencies are particularly worrisome due to their ability to hide transaction details.
- Non-Fungible Tokens (NFTs): NFTs have gained popularity in recent years and pose a risk to financial crime prevention. Their subjective value and ease of manipulation make them susceptible to money laundering and terrorist financing.
The Threat of Deepfake Technology
Deepfake technology, which can create convincing content that manipulates people’s appearances and voices, poses an alarming risk to society. This technology has been used to spread disinformation, and its ability to deceive detection mechanisms makes it a significant threat to financial crime prevention.
- Fake News: The internet is flooded with misinformation intended to deceive users, making it increasingly difficult for AML subject persons to verify information.
- Language-Model AI Systems: Language-model AI systems like ChatGPT have only exacerbated this issue, making it challenging for AML subject persons to verify information.
Mitigating Emerging Risks
In light of these emerging risks, AML subject persons must take steps to identify and mitigate the corresponding threats. This includes:
- Familiarizing themselves with new technologies
- Designing controls to address the risks they pose
Deloitte’s Financial Crime Risk Management team is well-equipped to assist subject persons in setting up frameworks to prevent their services from being misused for financial crimes. With significant experience in the field, Deloitte can help AML subject persons stay ahead of emerging risks and ensure compliance with regulatory requirements.
Conclusion
As the landscape of financial crime continues to evolve, it is crucial that AML subject persons remain vigilant and proactive in addressing the new threats posed by emerging technologies. By doing so, they can effectively mitigate the risk of their services being misused for illegal activities.