Banks Urged to Innovate Anti-Money Laundering Efforts
Every major U.S. banking regulatory body encouraged depository institutions on Monday to get creative with their anti-money laundering efforts, allowing banks to test automated fraud detectors without the threat of government enforcement if the new monitors fail to spot criminals’ cash flow.
Regulators urged banks to test the waters of “artificial intelligence” and promised to be forgiving if the automated programs reveal flaws with the banks' old systems or “prove unsuccessful.”
“You won’t necessarily get a free pass for not coming up with a new system to detect fraud, but you are not going to be penalized for putting forth the effort to use innovation and use technology,” said Mark M. Lee, a white collar defense and corporate compliance partner at Blank Rome LLP.
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“There always is a risk, when you implement a new program, that it is not going to do everything that the agencies or the regulators want it to do,” Lee told Law360. “Any time you get the OK from the government to implement a pilot program and not be held 100 percent responsible for the failure of it, that’s always a good thing.”
"Banks Urged to Innovate Anti-Money Laundering Efforts," by Alison Noon was published in Law360 on December 3, 2018.