Australia’s financial crime watchdog says AI is making money launderers’ jobs easier.
In a report issued Tuesday (May 12), the Australian Transaction Reports and Analysis Center (AUSTRAC) said the country’s money laundering, terrorism and proliferation financing (PF) risks are becoming more complicated and interwoven due to technology, globalization and an increasing overlap between legal and illegal activity.
AUSTRAC also argues that digitization and “emerging technologies” — especially artificial intelligence (AI) and virtual assets — are enabling serious financial offenses. “Artificial intelligence (AI) is likely to become an accelerant for PF actors. It enables them to scale, fast-track and further hide PF activity,” per the report.
“Criminals are increasingly using AI as a part of their money laundering toolkit — fabricating identities, forging documents and rapidly disguising the proceeds of scams,” AUSTRAC CEO Brendan Thomas said in a news release.
“In some cases, technology is automating what used to be manual laundering techniques, raising the sophistication and scale of financial crime.”
AUSTRAC’s report also argues that the country’s “open and trade-integrated economy” means greater exposure to proliferation finance-related risks, as that activity could intersect with Australia’s legitimate import/export businesses and financial institutions.
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“This dynamic is reinforced by the growing use of stablecoins,” the report said, citing the coins’ “greater liquidity and price stability” compared to more volatile forms of cryptocurrency.
“These features make stablecoins well-suited to use within trade-like financial activity. This increases the likelihood that Australia’s financial system and trade-connected industries are exploited by PF actors,” AUSTRAC added.
The report follows findings earlier this year from the Financial Action Task Force (FATF) — an international body that establishes anti-money laundering standards for governments — showing that stablecoins have become the most commonly used crypto for illicit transactions.
PYMNTS examined the challenges facing anti-money laundering (AML) efforts in the age of AI in a March interview with Flagright Co-founder and Chief Technology Officer Madhu Nadig.
“FinTechs, banks and payment providers today are dealing with alert volumes that grow faster than their teams can handle,” he said. “Every screening hit, every transaction monitoring hit needs to be investigated, even though a significant portion turns out to be nothing. Resource requirements rise faster than teams can scale.”
This phenomenon is called “alert overload,” and has become one unrelenting financial crime compliance bottleneck. In response, compliance teams have turned to a new category of technology that uses AI.
“AI forensics is a family of specialized AI agents, each purpose-built to perform a specific investigator task across AML compliance and fraud prevention,” Nadig told PYMNTS. “You can think of them as digital investigators that follow your institution’s standard operating procedures exactly the same way your analysts follow them, but they can execute them autonomously at scale and in a few seconds.”
