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Integration of blockchain into financial crime compliance From Promote risk information sharing technology

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On the second day of the Bund conference, Tu Jianwei, vice president of ant group, together with Zhang Fengyu, partner of Deloitte China forensic services and anti money laundering expert, officially launched a white paper on intelligent anti money laundering information sharing based on blockchain technology jointly released by Deloitte China and the organizers of the Bund conference at the Forum on intelligent risk control and anti money laundering, entitled “promoting risk information sharing technology – blockchain financing” The purpose of this paper is to explore how to integrate blockchain technology into the field of financial crime compliance, and to elaborate the main advantages of implementing this technology and the main challenges faced by financial institutions.

Zhang Fengyu, partner of Deloitte China forensic services and anti money laundering expert, said: “in the past decade, we have witnessed the rapid acceleration of the global regulatory system in terms of depth and complexity. Therefore, financial institutions should actively carry out their work to establish an effective compliance control framework for financial crimes to deal with inherent risks, and ultimately achieve the compliance, integrity and reputation culture of the whole institution. This paves the way for sustainable business development and stronger trust between financial institutions and their stakeholders, regulators and customers. Financial institutions are mobilizing resources to develop agile and scalable solutions to ensure standardized, safe and targeted strategies, aiming to enable every financial crime compliance process to be designed to meet regulatory expectations, and to streamline operations in a risk-based approach with the assistance of automation. “

According to the report, compared with some types of fast-growing financial crimes, due to the high dependence on human resources, the development speed of compliance projects of financial institutions is relatively slow, which poses a major challenge to their risk status. As a result, financial institutions have also begun to explore the use of new technologies to improve the accuracy and security of data, and release labor force so that they can focus on less repetitive and more strategic tasks. From the exploration of new technology, financial institutions are facing a series of potential challenges from operation transformation to process customization to meeting the special needs of institutions.

Information sharing is essential for the effective implementation of anti money laundering and anti terrorist financing programs. Regulatory and legal frameworks are often only targeted at specific jurisdictions, but criminals are not limited to committing crimes in a specific jurisdiction. Criminals often use this framework in anti money laundering and anti-terrorism financing procedures

Loopholes to escape conviction and enforcement. Data privacy and confidentiality laws sometimes limit the ability of law enforcement agencies to identify, capture criminals and solve cases.

Information sharing mechanisms that comply with privacy and confidentiality regulations in multiple places will enable law enforcement agencies around the world to work together to combat financial crime. The main standard setters of anti money laundering and international organizations, the Financial Action Task Force (FATF), have also pointed out that effective information sharing is also a key to combating financial crimes, because effective information sharing can improve the transparency of the financial system and protect the integrity of the financial system.

Zhang Fengyu, partner of Deloitte China forensic services and anti money laundering expert, said: “according to the FATF private sector information sharing guidelines, when the policies and mechanisms are mature, this scope can be further extended to suspicious intelligence, highly suspicious but unreported information and other marked information that can help identify customers’ money laundering and terrorist financing risks. By fully sharing intelligence information, blockchain alliance institutions can further improve the transparency of the institutions involved and create a more effective collaborative environment. To ensure the data security and data sharing between customers and organizations in accordance with the technical requirements of data privacy protection. “

The effective implementation of the alliance chain in the blockchain will bring the following advantages for inter agency money laundering risk information sharing:

We should break the isolated island of money laundering intelligence information, establish a joint prevention and control system on the basis of security and confidentiality, and comprehensively improve the effectiveness and timeliness of private sector’s anti money laundering and anti-terrorism financing work.

Financial intelligence agencies can obtain more complete and valuable intelligence and high-quality suspicious transaction reports from regulated entities, as well as more identities or data in transactions related to suspicious customers.

The implementation of blockchain technology in anti money laundering activities has the potential to expand the network. The participating organizations can be gradually expanded to public security, customs, taxation, industry, commerce and law enforcement agencies, and form a public-private alliance network with mutual trust and close contact, so as to further improve the efficiency of anti money laundering.

The formation of a joint prevention and control system will help to reduce the risk of money laundering within and across industries, and ultimately reduce the risk of money laundering at the national level.

Large financial institutions with strong anti money laundering ability can cooperate with smaller institutions to strengthen the overall anti money laundering measures and control, and improve their effectiveness to achieve better results.

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