Financial Crime

Contrary to stereotype, financial crimes are not victimless. Traffickers in illegal arms, drugs, looted antiquities, endangered wildlife, and human beings are financial criminals, because they must launder their profits to use them. Today, they do this at low risk.

The United Nations estimates annual financial crime at $2 trillion and says we catch less than 1 percent – despite industry spending as much as $180 billion dollars globally every year to comply with anti-money laundering (AML) laws, plus billions in penalties when they fail. Meanwhile 40 million people are held captive today in modern human slavery – more than ever before in history – and ten million are children. Terrorist financing involves additional motives but operates through the same mechanisms of laundering illicit funds.

This is asymmetrical war, with criminals and terror networks using very high tech methods to hide money, while the financial industry and government still rely on mostly analog-era technology.

Meanwhile, the AML rules on Know Your Customer (KYC) inadvertently block innocent people from opening bank accounts, which exacerbates financial exclusion throughout the world.

All this is changing. AML is one of the most advanced global use cases for “regtech.” AIR works with regulators, law enforcement, banks and technology firms worldwide to create new tools to fight financial crime

Podcast: Force of Nature: Ribbit Capital’s Sigal Mandelker on How to Modernize Government Technology

Today’s show is different. Jo Ann’s guest, Sigal Mandelker, is the former U.S. Undersecretary of the Treasury for Terrorism and Financial Intelligence, and she talks to us with exceptional reflection and, frankly, frustration, about why and how we need our government to work better. That’s not a novel theme, of course – the world is noisy with critiques of government. Sigal’s message is distinct, though, and desperately needs to be heard, because it’s about technology.

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The case for placing AI at the heart of digitally robust financial regulation

In a paper published by the Brookings Institution, Alliance for Innovative Regulation co-founder Jo Ann Barefoot lays out multiple use cases for government agencies to use artificial intelligence to power their innovation strategies.

A New High-tech Era for AML Compliance in the US

AIR CEO Jo Ann Barefoot is featured in The Paypers Financial Crime and Fraud Report for 2022. Download the full report to find out latest insights into how to build trust, manage risk and fight financial crime.

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Podcast: Regtech Comes of Age: ING Bank’s Ian Hollowbread

In this episode, Ian describes the vision that is driving ING’s new innovation group, Neo. He outlines its five value spaces, including the one he runs – safe and compliant. He describes how they are developing regtech solutions that meet both the needs of the bank and also an external market. In our conversation, Ian explains why regtech is the future of compliance.

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TechSprint on Protecting Children

AIR hosted a TechSprint to find ways to curb the rising use of cryptocurrency to purchase online Child Sexual Abuse Material, or CSAM. The resulting tools were presented to the Director of FinCEN and are being incubated in the AIR Accelerator. During the sprint, one team found a likely case of actual CSAM crime in progress, which we referred to law enforcement.

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TechSprint on AML with UK Financial Conduct Authority

AIR collaborated with the FCA on the first-ever US regulatory TechSprint, enabling easier sharing of data on patterns and participants in financial crimes, while still protecting privacy and the integrity of investigations.