Money Laundering Compliance—The Challenges of Technology

Abstract

Anti-money laundering (AML) and counter-terrorist financing (CTF) measure focus on the abuse by criminals of technology and new payment systems to hide the flows of illicit funds. The AML/CTF system itself, however, uses technology to monitor transactions, identify potential suspicious and unusual transactions and report them to the authorities. This chapter considers the AML/CTF framework, technology and ethical implications relating to customer monitoring and reporting. The AML/CTF framework, especially in relation to new payment methods such as mobile money, gives rise to privacy risks. Mobile money systems are capable of collecting and storing large amounts of data on clients. In countries that are subject to rule of law, this data is shared with the state within a legal framework. Many mobile money models are, however, operating in countries where the rule of law is weak. The ethical implications of providing access to the client data in both types of jurisdictions are often neglected by AML/CTF practitioners. This chapter discusses risk and risk management in the context of mobile money and highlights some of the complexities that face compliance officers who need to ensure compliance but also appropriate protection of legitimate interests of clients. With increasing international consensus that millions of socially vulnerable people should be included in the formal financial system, appropriate balancing of potentially competing interests is of increasing importance.