Saturday, March 4, 2023


As I have detailed many times, money launderers often seek out new and emerging technology, often long before it becomes mainstream. They also use programs specifically designed to identify money laundering and financial crime to modify and tailor their methods to minimize the chances of discovery and interdiction. Clever, yes, because they are driven by the consequences of failure.

You can expect that they have long been using artificial intelligence platforms to obtain information not otherwise available, and use it to create new pipelines through which to clean, and transfer, the proceeds of crime. Some of the topics that come to mind immediately are:

  1. Finding newly created offshore tax havens, brought into existence through legislation in faraway, obscure jurisdictions, and using them quickly, before they become common knowledge to both law enforcement and the compliance community. We call that "Use 'em, Abuse 'em and Lose 'em,."
  2. look for industries where there is little, if any, regulation, and a complete lack of law enforcement attention, and where opening a front company to clean money carries little risk of exposure.
  3. Finding legitimate companies in dire financial straits, which might therefore be amenable to taking on a "secret" partner who can move dirty money through it, amidst the clean cash flow. Cash-intensive businesses are, of course, the best candidates.
  4. Finding jurisdictions where loopholes in the law work in the favor of money laundering. If you saw the recent scandal in Canada, where an unregistered money service business in British Columbia will escape money laundering charges, because unregistered MSBs do not constitute a predicate act for the crime, is a prime example.

I could go on and on, but you get the idea.The AI-powered information superhighway works both ways; It also allows the bad guys access to the same previously unobtainable data that compliance can now reach, through artificial intelligence, using machine learning. This means that if you rely upon obsolete, legacy AML/CFT technology, your chances of finding the money launderers with accounts at your bank, are slim to none in 2023.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.