Edited by Giuseppe Miceli

Where there is shadow there must be light. This quote from the celebrated Japanese writer Haruki Murakami could be borrowed to describe the dynamics of the fight against money laundering and terrorist financing. The dark shadow of illegality seems destined to fade in the glare of the bright rays cast by the synergistic action of the Anti-Money Laundering Authorities. By now, it's clear—like the sunlight of this scorching summer of 2021—that the Anti-Money Laundering battle must be played out on the field of technological innovation. This is what has already emerged from the latest CONSOB Annual Report and the FIU Report for Italy, relating to the year 2020.

The President of Consob himself, Paolo Savona, which during the presentation of its annual report had raised the alarm about new "Internet-related" risks, has returned to speak – in a recent press article – of the need to learn to operate in that same immaterial sphere (or infosphere) in which the new army of recyclers operates, to ensure greater protection of savings, also with respect to new risks, especially those associated with conversion platforms between virtual and traditional instruments.

The fight against money laundering and terrorist financing requires the use of new protocols for action and information exchange based on the most modern digital technology, as stated by the Director of the FIU, Dr. Claudio Clemente, in the 144-page document no. 13 of 2021, which we discussed in our previous article.

Furthermore, the increasingly technological aspects of criminal activities of money laundering and terrorist financing have been promptly traced in the 2020 Operating Budget that the Guardia di Finanza presented on the occasion of the ceremony for the 247th anniversary of the founding of the Corps.

The analysis of the scenario is now completed by the Financial Action Task Force – Financial Action Task Force (FATF), the highest international body for coordinating policies for the prevention and fight against money laundering (AML) and terrorist financing (CTF), which in July published the report entitled: Opportunities and challenges of new technologies for AML/CFT (in Italian: Opportunities and challenges of new technologies for AML/CFT).

According to FATF experts, the use of modern technologies can enhance the effectiveness of the FATF Recommendations and international Standards, also due to the faster implementation of measures to combat money laundering and terrorist financing.

From reading the analysis document of the Opportunities and challenges of new technologies for AML/CFT The need to promote greater awareness of the scope and effects of the most innovative digital solutions applicable to specific operational contexts emerges.

The findings of the FATF's investigation into the impact of persistent money laundering and terrorist financing risk factors are significant. The FATF's risk mitigation strategy includes a review and analysis of the regulatory technology (RegTech) and of supervisory technology (SupTech) with the aim of optimizing the effectiveness of the FATF Standards.

According to the FATF, this project must be based on the development of expertise and the application of innovative methods, as well as the systematic and consolidated use of highly technological processes. By virtue of this technologically advanced strategy, regulatory and supervisory authorities, as well as supervised entities, will be able—according to the FATF—to overcome AML/CFT challenges, both those already identified and established and those emerging.

The systematic use of technology will facilitate the collection, processing and analysis of data and help “Obligated subjects” to identify and manage money laundering and terrorist financing (ML/TF) risks more quickly and effectively. According to the FATF, this same technology not only offers the advantage of faster payments and transactions, but also enhances the accuracy of identification, monitoring, recording, and information-sharing systems between competent authorities and supervised entities.

In other words, the FATF believes that increased use of digital AML/CFT solutions based on Artificial Intelligence (AI) in its various forms (machine learning, natural language processing) can enhance risk factor detection and identification strategies, as well as generate response actions in terms of real-time monitoring and reporting of suspicious activity.

It is the FATF's belief – and one which is widely shared by the author – that the increase in digital solutions for AML/CFT based on Artificial Intelligence, in addition to providing the Anti-Money Laundering Authorities with a more effective flow of information, would also lead to a greater “Obligated subjects”, a significant reduction in costs related to operations aimed at ensuring the correct fulfillment of anti-money laundering obligations, also significantly reducing the risk associated with the sanctions provided for by Legislative Decree 231/2007.

*Editor and author of the Anti-Money Laundering Atlas