Raymond Chan, Executive Director (Enforcement and AML), Hong Kong Monetary Authority
Good morning everyone. Let me offer you all a warm welcome to this experience sharing forum, which we hope will challenge all of you to ask how effectively your bank is deploying – if at all - artificial intelligence in fighting money laundering and terrorist financing activities.
Let me also quickly thank Simon [Chan, Chairman of Hong Kong Cyberport] and his team for co-hosting today’s event in these wonderful airy surroundings, and connecting us with Cyberport firms active in this area.
We have used our recent letter of the 9th of September to ask the industry some important questions: Are the technologies which you have been using in Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) still fit for purpose? Are you using or considering deploying artificial intelligence (AI) to make sure your AML/CFT defence remains sufficiently robust notwithstanding the many challenges ahead? And finally and most importantly, are we collectively delivering the expected value?
The Hong Kong Monetary Authority (HKMA) is fully committed to making sure the approach, technology, tools and data are right to deliver that value, and respond effectively to the rapidly evolving challenges of global financial crime.
The risks are not just about the money that may be lost; it’s about faith in our financial system, our security, and the pride we all have in Hong Kong as a leading, trusted financial centre. But if anyone needs to be reminded, fraud represents up to 46% of all crime reported in Hong Kong, with over 32,000 cases in the year to September, growing at a rate of 8% despite the enormous effort devoted to combating fraud in our society.
I have spoken recently about how I believe the HKMA can reset the response to these risks and why we should do so. But let me make one thing clear at the outset: it is only through working together, renewing our efforts on a daily basis, and a great deal of ingenuity and innovation, that we can really make such a reset successful.
The HKMA sets the entry requirements and standards for Banks and Stored Value Facility operators. But over the past few years our role has evolved from implementing international standards and checking their technical implementation to a more collaborative approach, to make sure these controls are implemented properly.
I am under no illusion about the scale of the challenge involved in making that reset happen quickly. Collaboration and the collective effort of the industry will be crucial to achieving that. We have learned in the past seven or eight years that partnerships, sharing lessons learned, know-how and experience, as well as data and tactical intelligence, are essential in that reset and addressing evolving threats. This is only possible through working ever more closely with the industry in workshops like today to develop practical answers to the problems we face.
So, what do we think that collective effort looks like?
To use an old analogy, we are only as strong as our weakest link. We have to look at the whole banking system, as part of an ecosystem approach, where all the various components – be they preventive, law enforcement, or policy-making – accept shared responsibility for improving overall outcomes.
What’s needed is an interconnected system, a network of banks with improved data streams at the centre linking their activity, powered by more advanced capabilities, such as analytics and artificial intelligence. We are acutely aware that getting the right data at the right quality is critical, so we are currently exploring with the Police and the banking industry the possibility of a wider use of Scameter data in banks’ customer due diligence and fraud and scam monitoring processes. We are working with the Police and other stakeholders to expand the scope of bank-to-bank information sharing. We believe these initiatives will further enhance the detection and prevention of fraud and scams.
Scammers are tech-savvy too and continue to use new tools, including those powered by AI. Therefore, we need to draw on our collective experience to innovate in the right way and make sure the reset works. The ability of artificial intelligence to apply analytics to massive data sets means it can be a game-changer for us if applied in the right way. And, as we have said many times before, this reset, this innovation, is not just about technology; it’s about making sure that the people at the centre of that network have the right skills and capabilities and most crucially that the approach is right for each bank, as well as for the system as a whole.
That is what today is about, working together, sharing our experience of these technologies, in particular the role of artificial intelligence, so that they are applied with explainability as a key priority from the outset. I’m asking each and every one of you today, whatever stage you are at in the process, to consider responsibly implementing technology-enabled innovations in the fight against financial crime, so as to make our collective response even stronger.
The team has put together an interesting program of presentations and panel discussions this morning, and I extend my thanks to all those who are presenting today and I look forward to speaking to you over the course of the morning.
