Digital Transformation of AML/CFT

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English

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Technology is transforming the way we work and live. In many fields, it offers considerable efficiencies and cost savings. The FATF is exploring the opportunities that technology can offer to improve anti-money laundering (AML) and counter-terrorist financing (CFT) efforts. New technologies for AML/CFT refer to:

innovative skills, methods, and processes that are used to achieve goals relating to the effective implementation of AML/CFT requirements or
innovative ways to use established technology-based processes to comply with AML/CFT obligation

FATF published work that focus on three distinct areas:

The opportunities and challenges of new technology to help the private sector and supervisors implement AML/CFT measures more efficiently.

The role of data pooling, collaborative analytics and data protection, taking stock of technologies that facilitate advanced AML/CFT analytics within regulated entities or collaborative analytics between financial institutions, while respecting national and international data privacy and protection legal frameworks.

The role of big data and advanced analytics in transforming the capabilities of operational agencies in detecting and investigating money laundering (ML) and terrorist financing (TF) and understanding ML/TF risks.

The opportunities and challenges of new technology to help the private sector and supervisors implement AML/CFT measures more efficiently.

Opportunities and Challenges of New Technologies for AML/CFT

1 Jul 2021

This FATF report aims to increase awareness of and identify opportunities to leverage emerging and existing technology-based solutions. It identifies the conditions, policies and practices that can help support the development and adoption of new technologies that contribute to the efficiency and effectiveness of AML/CFT.

Opportunities and challenges of digital transformation in AML/CFT

This project’s findings led to FATF member’s adoption of a set of suggested actions for government authorities to advance the responsible development and use of new technologies for AML/CFT.

The role of data pooling, collaborative analytics and data protection, taking stock of technologies that facilitate advanced AML/CFT analytics within regulated entities or collaborative analytics between financial institutions, while respecting national and international data privacy and protection legal frameworks.

Technological advances in recent years allow financial institutions to analyse large amounts of structured and unstructured data more efficiently and identify patterns and trends more effectively. Data pooling and collaborative analytics can help financial institutions better understand, assess and mitigate money laundering and terrorist financing risks. This will make it easier, more dynamic, effective and efficient to identify these activities. It can reduce the number of false positives, enabling the private sector to comply in a timelier and less burdensome manner. It can also help prevent criminals from exploiting the information gaps, as they engage with multiple domestic and international FIs, each having a limited and partial view of transactions. However, it may also infringe on the protection of individual and fundamental rights. Therefore, it is imperative that any exchange of information respects national and international legal frameworks for data protection and privacy.

Stocktake on Data Pooling, Collaborative Analytics and Data Protection

This report examines commercially available or emerging technologies that facilitate advanced AML/CFT analytics within regulated entities. It also looks at technologies that allow collaborative analytics between financial institutions, while respecting national and international data privacy and protection legal frameworks.

The role of big data and advanced analytics in transforming the capabilities of operational agencies in detecting and investigating money laundering (ML) and terrorist financing (TF) and understanding ML/TF risks.

This project will help operational agencies to harness technology to strengthen their operational capability and resilience. It focuses on the questions of how to identify appropriate tools and technologies, and optimise their use at different stages of the AML/CFT workflow. It examines how to remove barriers to any successful digital transformation. It also covers issues concerning secured, effective, and efficient data communication and information sharing within public sector, and between public and private sectors.

Digital Transformation of AML/CFT for Operational Agencies

In October 2021, the FATF and the Egmont Group of Financial Intelligence Units completed a project to explore how financial intelligence units can leverage technology to strengthen their operations.

AML/CFT Digital Strategy for Law Enforcement Authorities

The FATF completed work that explores how law enforcement agencies can use technology to successfully investigate money laundering and terrorist financing, mitigate the risks of these crimes, and share information in a secure manner.

innovative skills, methods, and processes that are used to achieve goals relating to the effective implementation of AML/CFT requirements or
innovative ways to use established technology-based processes to comply with AML/CFT obligation

These digital transformation projects build on earlier work such as the Guidance on Digital ID, Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers, Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing, FATF Guidance - Private Sector Information Sharing , and extensive engagement with the private sector through public-private workshops and the FATF Private Sector Consultative Forums (PSCF).

The projects rely on research and interviews with public and private sector stakeholders, including representatives from financial institutions, technology developers, and AML/CFT and data protection and privacy (DPP) authorities. The FATF also circulated an online Digital Transformation Questionnaire to AML/CFT national authorities and private sector stakeholders (including academia, FIs and technology developers), to identify the various new technologies available.

The FATF additionally hosted two High Level Roundtable for Data Pooling, Analysis and Data Protection, 10-11 March 2021 on 10-11 March 2021 for an open-minded and informed dialogue with key groups, including data protection authorities, financial institutions and technology developers.