On 21 November 2018, the FCA published a speech delivered by Rob Gruppetta, Head of the Financial Crime Department, entitled ‘AI and financial crime: silver bullet or red herring?’. Some of the key points to note from the speech include:
- whilst the building blocks of artificial intelligence (AI) have begun to emerge, sound principles for putting them together haven’t been developed yet – thus regulators hold a degree of scepticism about AI;
- algorithms and AI models can be used by regulators to assist in being more consistent and effective in targeting financial crime risks, however crimes such as money laundering are hard for machines to predict and identify when data on funds are inherently illicit;
- the FCA’s recent report on financial crime analysis should allow firms and other regulators to benchmark their own views about financial crime risks against industry-wide views;
- the FCA is moving away from a rules-based, prescriptive approach to regulation to a more data-driven, predictive place where regulators are using data to help them objectively assess the inherent financial crime risk posed by firms; and
- with regards innovation the FCA remains somewhat sceptical: it wants to adopt innovation in a targeted, systematic and measured manner by keeping up with innovation trends without ‘overdoing’ it.