Fraud prevention & security


Especially with the rise of digitalisation, banks have increasing opportunities to stop money launderers and other cyber criminals in their tracks.


$800bn – $2trn


The estimated amount that is


laundered each year across the world, representing 2-5% of global GDP.


United Nations Office on Drugs and Crime


0.1% Taylor & Francis Online 38


and the minister of finance are very happy with the initiative, the Privacy Authority is not happy because they believe that personal privacy is at stake,” Loonen explains. “I’m not so sure that’s the case. I understand that people are anxious with regards to privacy, but I believe we always have to find a balance between what we want to achieve – a safe financial system that doesn’t enable criminals and terrorists – and the price for that goal. In my view, with the assurances being given by the banks and the authorities being very vigilant, it’s a fair investment.” As technology, including AI, becomes a more important part of KYC processes, there are also mindset shifts to be made. Traditionally, KYC workforces were made up of armies of people carrying out repetitive manual work, such as data entry. Increasingly, AI has the potential to take on many of those tasks, allowing specialists to focus on the exceptions. According to Loonen, banks must be flexible and willing to adapt to these new ways of working.


The amount of money laundering funds that are recovered by AML activities.


At present, the biggest banks have up to 8,000 people working on KYC every day, but Loonen believes that, over time, this number could be cut in half. “A lot of work has to be done first to obtain, analyse and store information in proper systems,” he stresses. “But once this has been achieved and the right AI solutions have been introduced, I would not be surprised if banks could reduce their KYC workforces by 50 percent or more.” With all this activity in the background, Loonen is watching with interest at how the situation develops over the next few years. One thing he is


certain of is that progress won’t be flawless. “We will definitely have a lot of accidents happening in the near future when it comes to AI,” he predicts. “Banks want to reduce their costs as soon as possible and maybe they will sometimes do that too quickly and use systems that are not 100% okay, built on AI that is a little bit shaky.” He is also certain that our knowledge of the underground banking network – and the movements of the moles within it – will increase. “When you have all of those institutions combining data, you are making that chance to catch a mole as big as possible,” he says. “But it is very challenging. I’m not so sure we will win this war. But I’m sure that we will make very big steps and make great efforts to reduce the chances for these moles to pop up and use the financial system. However, of course it is much better to catch the moles themselves.”


There is one final point on which Loonen is adamant: banks that do not accelerate their digital transformation and embrace digital KYC processes will be left behind. “The digital journey for clients today is so crucial,” he stresses. “If you have 20 clients waiting to open an account with you and can only handle ten, the other ten will go to your competitor and you won’t be able to grow commercially. At the same time, legislation will only become more severe. If banks don’t have their data and their processes in order, they run the risk of losing their license.” They are still pinpricks, in short, but there is more and more light filtering into the murky network inhabited by financial criminals – ultimately resulting in fewer places for those pesky moles to hide. ●


Future Banking / www.nsbanking.com


TA design/Shutterstock.com


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