CareCredit - Women's Health April 2024

Canada Taps AI as Suspected Money Laundering Efforts Spike

Canada, AML, FINTRAC, AI

Canada is reportedly upping its use of artificial intelligence (AI) to combat money laundering.

Donna Achimov, deputy director of the country’s Financial Transactions and Reports Analysis Centre (FINTRAC) told Reuters Monday (Jan. 8) that AI helps the agency analyze data and spot suspicious transactions.

The efforts are happening as Canada is dealing with a spike in such transactions, of which there were 560,858 for the 2022-2023 financial year, almost five times the amount reported during the 2015-2016 financial year, Reuters said. 

The report also noted that roughly three-quarters of suspicious transactions recorded between April and September 2023 were reported by financial institutions (FIs). Against this backdrop, FINTRAC has “significantly” increased the frequency of meetings with banks, Reuters said.

FINTRAC’s efforts echo what is happening with FIs in the United States, PYMNTS wrote Monday, as 43% of American FIs logged an increase in fraud in 2023 compared to 2022. 

In addition, FIs with assets of $5 billion or more saw the average cost of fraud rise by 65% between 2022 and 2023, from $2.3 million to $3.8 million, according to joint research by PYMNTS Intelligence and Hawk AI.

In all, more than 40% of banks in the U.S. saw an increase in fraud during the same period, leading to a surge in major fraudulent transactions and financial losses.

“To combat the growing threat of fraud, FIs are taking proactive measures to enhance their fraud-fighting efforts,” PYMNTS wrote. “These include ramping up their investments in machine learning (ML) and AI technologies, recognized as cutting-edge tools in curbing fraudulent transactions. Currently, 66% of FIs with assets of $5 billion or more are utilizing ML and AI technologies to combat fraud, a significant increase from 34% in 2022.”

The research also found that the embrace of AI as a crime-fighting tool depended on the size of the bank. While just 44% of FIs in the $1 billion to $5 billion asset range rely on the technology to combat fraud, the share climbs to 97% among those with more $100 billion in assets.

And AI integrations — and AI models’ ability to continually learn from new data and contexts — can also help make sure that the balance between security and convenience doesn’t move too far in one direction, Hawk AI CEO Tobias Schweiger told PYMNTS in September.

“A tool like Hawk AI that’s capable of combining things like sanction screening and anti-money laundering transaction monitoring with fraud protection while enriching the signals of one another and vice-versa is the answer for how banks can win the arms race and how they can do it much more efficiently,” Schweiger said.