ECB speaks on using tech to tackle financial crime

Elizabeth McCaul, Member of the Supervisory Board of the ECB, has delivered a speech on how technology (particularly AI) can be used in the fight against financial crime.

Ms McCaul discussed the relationship between digitalisation and AML/CFT and highlighted some challenges presented by the digital transformation of business models, eg:

• some businesses, in particular digital platforms or mixed activity groups providing both financial and non-financial services, might not be fully captured by the regulatory framework and may therefore fall outside the EU AML/CFT regime;
• certain new entrants, such as some fintechs, have an insufficient understanding of their AML/CFT obligations and so suffer from structural weaknesses in their CDD and KYC frameworks; and
• there may be AML/CFT challenges which are inherent to the business models of some new entrants.

Ms McCaul also explored how AI is being used in banking and stressed that digitalisation that harnesses innovation needs to be supported by a strong regulatory framework and sufficient oversight.