Money laundering is a significant societal problem

In this episode of FinCrime Insights, Innovation Director John Erik Setsaas is joined by Synne Husby, Head of AML and KYC at Tietoevry Banking. They discuss what money laundering is, what is being done to detect it — and how we can improve in stopping this criminal activity.

The episode delves into the fundamental difference between how fraud and money laundering are detected and reported. When fraud occurs, either the bank or the customer suffers a financial loss, which is promptly noticed and reported. In contrast, money laundering does not involve stolen or missing funds, making it significantly more difficult to detect.

“Banks don't contact a customer and ask, ‘Are you engaging in money laundering?’” says Synne Husby.

More data needed

Only a fraction of total money laundering is detected. It is estimated that money laundering accounts for around five percent of the world's gross domestic product.

Banks are obligated to report suspicious activity related to money laundering to authorities, and the number of reports has significantly increased in recent years. However, reporting in the other direction is not as precise, which poses challenges and provides fewer learning points compared to fraud detection.

Setsaas and Husby discuss how artificial intelligence can be used to identify patterns and train models to detect more money laundering activities.

To train these models with actual data, more collaboration between banks is needed.

“Data sharing is crucial to track a person or entity across the entire ecosystem,” says Husby.

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