Data-sharing ‘weak link’ in finance crime

Central Bank Deputy Governor Derville Rowland has said that technology that allows financial institutions to share information in a way that complies with GDPR rules will be “essential” to fight financial crime.

Rowland, who heads the Central Bank’s consumer and investor-protection division, was speaking at a conference on fintech and regulation in Dublin yesterday (4 February).

Citing recent Central Bank figures, she said that the value of fraud payments in Ireland had risen by more than a quarter to €126 million in 2023.

‘Important guardrails’

Rowland added that the EU’s anti-money-laundering (AML) package was important in tackling the cross-border nature of financial crime.

She said that the package’s idea of ‘information-sharing partnerships’ would enable credit and financial institutions to share information on high-risk customers, subject to “important guardrails” – including data-protection assessments.

“The lack of an ability to share such information has long been pointed to as a real weak link in the system, which could allow someone who had an account closed by one bank on ML/TF [money-laundering/terrorist-financing] grounds to seek to open an account in another,” the Central Bank official stated.

“It is hoped that these partnerships will be a real game-changer in the fight to keep bad actors from accessing the financial system in order to launder ill-gotten gains,” she added.

Pattern recognition

Rowland told the conference that the regulator was “hugely excited” about the ‘sandbox’ programme on financial crime that it launched last year.

She said that seven participants in the programme were employing new technologies and innovative methods to develop solutions that tackled financial crime.

Rowland told the event that key areas of focus included the use of AI, machine learning, and pattern recognition to detect and prevent fraud, and the use of technology to enable data-sharing without compromising sensitive information.

The regulator said that the Central Bank was organising workshops for participating firms on specific topics to allow them to test and develop their innovations.