Thursday 21 November 2019 6:59 am

Through technology, crime is closer than you think

Money laundering often gets a laugh: the laundrette at the end of the road that’s never open to launder clothes, a running joke about a dodgy colleague, or the time a friend inadvertently cleaned cash for a bloke they met in a pub when you were students. 

But the reality is that the pervasiveness of laundering serves only to normalise something that enables activities with which none of us would want to be associated, such as large-scale deforestation, illegally trading exotic animals, and even people trafficking.

The situation in the UK is the same the world over — an economic crime report launched by the Treasury earlier this year found that hundreds of billions could be being laundered through this country every year, but the government is unable to put a figure on the scale of the problem. 

It is the same story for terrorist financing — it’s easy to make noise about the rules and regulations in place to counter it, but nobody is able to quantify the issue.


Why is this a challenge on an immeasurable scale? And how is it still an unsolved problem in 2019? 

To answer this, we have to look at the structure that governs how humans move value: the financial system. People assume that banks get fined billions for financial crime, in spite of their investments in processes, huge teams, and technology to combat it.

But the reality is that they simply operate amid a complete mess. Legacy systems — cobbled together and barely fit for purpose — are relied on because wholesale replacement is even riskier. 

A large global bank in London might process two billion payments a year and generate 100m false positives, each of which costs $150 to remediate. But a false negative means billions in fines — which is how the unfit, costly, but better-the-devil-you-know systems stay in place. 

What’s more, criminals have sophisticated and intensively-planned ways to circumvent these systems. Whenever an incremental improvement is made and a weak point is closed off — by cracking down on offshore shell companies, for example — a new attack vector will be developed. 

This is an arms race. The rewards for money laundering are huge, and criminals, unlike banks, are not obliged to play within the law.

And finally, there is no cohesion in solving this problem. Businesses, organisations, and governments need to wake up to the threat of financial crime and take it seriously. 


Technology has moved this dark world on from the laundrette to digital aliases, wire stripping payments (where material information is deliberately changed or removed from payment instructions), and the abuse of embryonic cryptocurrencies.

This is one of the few areas of existence where centralising information and visibility is more than necessary — in a world that is digitally defined, not doing so means that the bad guys will win. 

This is not simply about all of us coming into contact with dirty money that’s been cleaned via laundering, or good money being used for bad things like financing terrorism. It is about saving the global economy from increasingly reactionary, draconian legislation which — while negating some crime — will also slow down commerce, productivity, and growth.

If this problem has been caused by advances in technology, it is worth stating that technology also gives us the solution, and provides the opportunity to completely rethink how we approach financial crime. 

My company — and we are just one example — uses machine learning to build profiles covering every sort of risk for every single person in the world. It is a master system for criminal activity globally. 

Using machine learning to do this means that, rather than manually researching individuals and activities, real-time profiles for customers can be automatically built by surfacing data points and pattern recognition.

But for companies like ours to succeed in tackling financial crime in the twenty-first century, we need buy-in across our own industry, from the financial sector and from government. The latter needs to recognise — as popular opinion does — that preventing terrorism has to trump privacy. And we all need to get better at sharing information that will improve and save lives.

Tackling this problem would also have financial benefits, as some of the lack of growth in the UK economy stems from the bureaucracy of compliance. If banks could onboard faster, without the threat of financial crime looming so large, their margins would be greater. 

After Brexit, the UK has the opportunity to have an autonomous sanctions regime, separate from the EU, and thus become a leading light in best practice, entrenching its position as a global financial hub.

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