The FATF Identifies Technology Use in AML/CTF Efforts

The Financial Action Task Force (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system, recently published a report identifying emerging and available technology-based solutions. The FATF said in the report that new technologies can improve the speed, quality and efficiency of measures to combat money laundering and terrorist financing. They can also help financial institutions and supervisors, assess these risks in ways that are more accurate, timely and comprehensive.

However, although the responsible and proportional use of innovative AML/CFT technologies can help identify risks and focus compliance efforts, FATF strengthens the importance of manual review and human input.

The report also outlines the necessary conditions, policies and practices that need to be in place to improve efficiency and effectiveness, also examining the obstacles that could stand in the way of successful technology implementations, such as the operational and regulatory constraints like legacy AML/CFT compliance systems and traditional regulatory frameworks and oversight mechanisms.

At the end of the report, the FATF lists a set of suggested actions to support the use of technology in AML/CFT. For example, the government and the private sectors should work together to create an enabling environment for responsible innovation to enhance AML/CFT effectiveness; when implementing new technologies, privacy and data protection should always be put as the first priority. The FATF also encourages jurisdictions to work together and with private sector actors to consider a holistic approach to new technologies, taking into account its potential as well as its limitations.