American Banker Reports Treasury Seeking to Spur AI Innovation Amid Pressure to Fight Money Laundering

Last week, American Banker reported that the U.S. Treasury was looking to spur AI innovation amid pressure to fight money laundering. Citing a recently published strategy document, the Treasury will “focus more effort on technical solutions to the country’s growing and ever-changing money laundering challenges.” Notably, American Banker reported that while the strategy, last updated in 2020, “primarily focuses on regulatory and operational aspects of the U.S.’s fight against money laundering and financing of terrorism,” the department had recently added technological innovation as the fourth priority. And it should come as no surprise.

In addition to information sharing and public-private partnerships, technological innovation has long been cited by the industry as one of the most important tools we have to combat illicit finance. And with recent events and geopolitical strife, embracing innovation and emerging technologies has taken newfound urgency for the industry, which, according to McKinsey, was evident at a recent conference by the Association of Certified Anti-Money Laundering Specialists attended by industry leaders.

In an interview about the state of the industry following the event, McKinsey acknowledged that it has been a very challenging time for organizations with respect to compliance, highlighting that “compliance professionals must continue to evolve, and those that remain static will see increased pressure to innovate.” While there has been tremendous progress, there is still much more to be accomplished with McKinsey noting that “some organizations are still relatively basic in their processes like Know Your Customer [KYC] and alert reviews, with many false positives and significant time, resources, and costs spent on low-risk–reducing activities.” McKinsey goes on to highlight that “indeed, regulators also acknowledge that increased sophistication and innovation are what is going to move the needle on true financial-risk management.” And with the Treasury’s addition of technological innovation as its fourth strategic priority, it should send a strong signal to those in the field that the time to innovate is now. 

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