Advances in anti-money laundering

It was veritably an enlightening experience to moderate a panel of experts during the well-received Philippine Anti-Money Laundering (AML) Executive Briefing organized by NICE Actimize and KrisFinSoft. It was composed of notable personalities namely Dante T. Fuentes, Group chief compliance officer of Security Bank Corporation; Dodie Lagman, senior consultant, on Counter Financing of Terrorism; Venkat Iyer, senior advisor of KrisFinSoft; and co-moderator Trevor Barritt, Principal AML Solutions of NICE Actimize.

While the panel spoke about incorporating best practices in designing and maintaining an AML monitoring program among financial institutions, such as staff training, involvement of senior management and independent people, and employing risk management approach, what’s especially salient was the exciting, yet terrifying, impact of new technologies such as digital currencies, artificial intelligence, and big data and analytics tools onto the AML practices.

My preparation for this event brought me to a much better understanding of the challenges, as well as opportunities of such technologies to AML. Take for instance the recent arrest of Alexander Vinnik, a Russian ‘internationally sought mastermind,’ who’s accused of laundering more than $4 billion in bitcoin, including funds obtained from the hacking of failed bitcoin exchange Mt Gox, by allegedly running a digital currency exchange used to trade bitcoin and facilitate crimes ranging from computer hacking to drug trafficking since 2011.

Since digital currencies such as bitcoin are still unregulated in most parts of the world, anyone can convert anything of value, including fiat currency, into Bitcoins simply by buying them. Consequently, it’s easy to purchase large amounts of the digital currency with regular fiat currency, then transmit the digital currency offshore and either convert it to another nation’s fiat currency and deposit it in a bank, or exchange it for more illegal products and services. This process allows the criminal activity to be less likely detected by the government concerned by avoiding the handling of actual currency or by simply converting the digital currency to fiat currency out of the country.

But advances in technology are likewise fighting high-tech AML. In a bid to become more efficient in battling AML, HSBC Holdings Plc recently collaborated with Silicon Valley-based artificial intelligence startup Ayasdi Inc. to automate investigations that have traditionally been conducted by thousands of humans.

In addition, Intel launched the Saffron – the first product on the market, Intel says, to use “associative memory” AI for the financial services sector. This promises to detect AML by unifying structured and unstructured data from various sources such as enterprise systems, email, and web. It can discover patterns from that data and transparently explain how the connections were identified, helping organizations catch financial criminals.

Despite these advances, however, money launderers historically have far outstripped the efforts of regulators, law-enforcement officials and AML professionals who try to stop them from dodging the law. That’s why technological advances should always be coupled with stringent foresight. Fraud examiners should always be one step ahead by forecasting what the future of money laundering involving virtual currencies might look like.

Regulatory bodies should also be ahead in adopting policies to stay abreast with advances in technology. It’s noteworthy that Bangko Sentral ng Pilipinas (BSP) crafted a set of rules early this year to cover virtual currency exchanges – the first such regulation in Asia – to address risks to financial consumers.
The fight should be non-stop.

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The Foundation of Outstanding Mapúans Inc. (FOMI), an organization composed of outstanding Mapúans and achievers in various fields of endeavor in the public and private sectors, is holding its first tech forum on November 17, 2017. Esteemed speakers will share their company’s view on the selected topic for this assembly, Traffic Crisis in Metro Manila. Our speakers will be Department of Transportation (DOTr) Undersecretary Thomas “Tim” Orbos, PHL Global Road Safety Partnership Secretary General Alberto Suansing, and a representative from Engie, a French multinational electric utility company. A panel discussion and workshop will then take place after their presentations.

For more details, please get in touch with Ms. Edna Jugado at (02) 988-9788 local 2102 or at

The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of Finex. The author may be emailed at The author is president of The Engage Philippines, a digital customer engagement solutions company and co-founder of Caucus Inc, a data privacy consulting firm. He teaches strategic management in the MBA Program of De La Salle University. He is also an adjunct faculty of the Asian Institute of Management.