The UK Financial Conduct Authority (FCA) published a report on 2 August entitled “’New Technologies and Anti-Money Laundering Compliance”. The report details findings of three months of research by the authors PA Consulting. The work included over 40 interviews with regulated firms, technology providers, and other bodies. The report sets out respondents’ views on topics such as:
- What are the key functions of new and emerging technologies related to anti-money laundering (AML) compliance, and how can they aid compliance activities?
- What challenges do firms face in introducing new technologies?
- What good practice examples and lessons are available for firms considering new compliance technologies?
- What steps could the FCA take to encourage more innovation in AML compliance?
Of the various technologies considered, the most highly regarded by respondents were those related to data analytics, machine learning and natural language processing (NLP) all of which were considered to have potential for transforming almost every part of the AML compliance lifecycle. Respondents from the technology sector were cautiously optimistic around the marketplace for their technologies and services. Many felt that they had technologies that were proven, robust and able to significantly improve the way in which regulated firms approach AML compliance. However, they face a range of obstacles to wider adoption, including some scepticism about their capabilities from larger financial services firms. Views on the FCA were generally positive. However, respondents highlighted a number of areas where they would prefer to see greater action taken by the regulator – including updating regulations/guidance to reflect the emergence of new technologies (including the broad adoption of digital channels), as well as potentially facilitating further industry-wide discussions on AML compliance and relevant new technologies. Many of these issues, particularly around new regulations or guidance, are not specific to the FCA but reflective of a global trend whereby lawmakers and regulators struggle to keep pace with new technologies.
The publication of the report coincides with UK firms updating their AML policies to comply with the new UK Money Laundering Regulations 2017 which came into force on 26 June 2017.