Recently American Banker lauded an effort to hold industry “tech sprints” to combat financial crime, particularly money-laundering. These have indeed been showing up with more regularity, and hopefully will have an impact on the prevention of financial crime. Some code developed for such competitions is likely unworkable, but will foster ideas.
One such sprint was held in the UK back in July, was focused around privacy-enhancing technologies — often blockchains built around revealing only specific details needed to facilitate transactions. While the effort seems to be around preventing identity theft, it doesn’t seem like this will prevent the bulk of money-laundering.
In the US, various laws (or lack thereof) make money laundering relatively simple. The lack of oversight of shell corporations, for example, or strict beneficial ownership or corporate transparency laws. Acts proposed in Congress since the early 2000’s have languished in committee.
Trade finance is another huge hole in money-laundering investigations, since most banks don’t have the big data teams in place to correlate the letters of credit with international shipping documents and insurance papers, and OFAC lists on things like vessel names cause so many false positives (imagine doing word searches on free-form party text fields for words like “TOUR 2” or “JASMINE” — either of which could show up in customer names for companies, and obviously the latter of which could cause a hit on individuals) that it’s hard to imagine banks keep looking at them.
On the smaller end of the scale, low-level drug dealers can always launder funds with gift cards. Signs restricting sales of gift cards to five or ten per customer have become common in drug stores in some areas, but even the presence of such signs means anyone wanting to launder money knows they simply need to visit multiple stores (or find one with more… let’s say, flexible… cashiers).
Can tech sprints solve these problems, or are they going to look into technically interesting issues of limited impact?
5campbell 