FCA Turning to ‘Machine Learning’ Techniques to Identify Misconduct
09 May 2019

The UK’s Financial Conduct Authority (FCA) is increasingly turning to machine-learning technology to identify companies and individuals that launder money and pose other risks to the financial sector, an official said Wednesday.

As part of that effort, the FCA is backing the development of technical solutions, particularly in relation to anti-money laundering (AML), said Christopher Woolard, the authority’s executive director of strategy and competition, in a speech in London.

The supervisory agency will host an event with global regulatory and law enforcement officials later this year as part of the “next stage of the process,” said Woolard, who also noted that the FCA is looking to “science, technology, engineering and maths graduates to increase our capability in areas like cybersecurity, data science and technology.”

Last year, the FCA and the Bank of England launched a 6-month, digital-reporting pilot program in collaboration with Barclays, Credit Suisse, Lloyds, Nationwide, NatWest and Santander in an attempt to standardize the regulatory data reported by financial institution. The program sought to evaluate the efficiency of machine executable-code versions of regulatory instructions that would allow for the automated production of regulatory reports.

“We want to explore not only how technology can drive new products, services and firms in consumers’ interests, but also what it can do to reduce the compliance burden of existing ones and make them more effective,” Woolard said Wednesday.

The FCA is separately seeking to strengthen its partnerships to tackle financial crime and will soon extend its senior managers and certification regime to more businesses, he noted.

Last month, the authority fined Standard Chartered Bank £102.2 million for AML failures by its branches in the United Arab Emirates that relied on UK correspondent banking services from November 2010 to July 2013. The settlement, which came as part of a global settlement with US authorities, was the second-largest AML monetary penalty levied by the FCA to date.

Read more:

FCA to Weigh Use of Prosecutorial Powers in AML Cases: Enforcement Director

A new broom: making sense of the Senior Managers and Certification Regime

Sharp rise in cases opened by UK regulator FCA


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