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FCA encourages the use of technology to combat crime

29/05/2018

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Related topics: FCAMoney laundering

In her speech at the Anti-Money Laundering TechSprint event on 22 May, Megan Butler reiterated that the FCA has a public duty to explore all opportunities in combatting financial crime, including fraud and money laundering.

Results from a financial crime data return launched by the FCA in 2016 revealed the extent to which criminal activity has moved online, with phishing and identity theft noted as the most widespread risks faced by firms. “Excessive risk aversion is not going to help us win an arms race that is so heavily rooted in automation. We need to turn technology against criminals,” she said.

Over 2100 responses from the data return revealed that staff at all levels in UK financial services are playing an active role in combatting crime, with firms reporting more than 920,000 internal suspicious activity reports to their money laundering reporting officers within one year.

According to the FCA, British banks currently spend £5bn a year combatting financial crime. However, when it comes to developing these technologies, efficacy was stressed as the overwhelming priority. Butler warned that firms can’t expect to innovate simply for “virtue signalling”, as cheap, ineffective technologies are not acceptable alternatives to old expensive ones that work.

In her speech, Ms Butler encouraged firms to inform regulators of how they can use technology to combat financial crime head on. From previous analysis, the FCA identified transaction monitoring as having the most potential. Onboarding, maintenance, client screening and reporting were honourable mentions.

The next big step is to apply intelligent technologies such as artificial intelligence, robotics, natural language processing and machine learning, allowing firms to spot suspicious transactions in real time. However, this will be no easy task due to practical obstacles and issues with bias and transparency.

Despite this, Ms Butler urged firms not to be afraid to move first. However, they will not be let “off the hook” if developing new technology results in a breach of regulations. But Butler stressed that firms should not be afraid to use technology. She encouraged firms to work with regulators on systems they feel might be of genuine benefit.

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