The Global Value of Financial Oversight

According to the United Nations, every year an estimated US$1 trillion is paid in bribes and US$2.6 trillion stolen through corruption. That remarkable sum represents 5% of annual global GDP, and a huge drain on global economies and our connected financial ecosystem.

The global cost of corruption is staggering, and the reality is that a trillion-dollar cost from a distance represents significant negative impacts on the ground, particularly in the most vulnerable communities. It’s estimated that the value of funds lost to corruption in emerging economies is more than ten-times higher than the amount received in official development assistance. 

Corruption thrives in the shadows, which means illuminating financial transactions with robust anti-corruption and anti-money laundering solutions is critical if we’re to effectively tackle corruption and unlock that lost value. Technology plays an important part in meeting that challenge.

Transparency shines a light on corruption

Fraud and corruption are sadly nothing new in global economies, but the AML solutions and tools to tackle fraud offer an increasingly powerful solution to address it. 

Trusted applications such as Neural Technologies’ own Anti-Money Laundering Solution can now leverage digital oversight, powered by powerful machine learning technologies, to shine a light on financial transactions, help eliminate corruption, and ensure comprehensive anti-money laundering compliance for businesses.

These digital-first solutions offer a remarkable access to transparency and clear financial oversight which has long been touted as a solution to tackling corruption. While a digital solution won’t categorically end the clichéd handover of a brown envelope of misappropriated funds, combining such solutions with robust and enforced regulatory requirements for transparent and evidenced financial transactions offers a major avenue to eliminate fraud and corrupt payments.

The truth is fraud is a threat in all nations, and not unique to emerging economies as some traditional narratives might suggest. In 2018, then Secretary-General of the United Nations Antonio Guterres highlighted that “Corruption robs schools, hospitals and others of vitally needed funds.” It also acts to undermine the role of fair competition, disincentivize foreign investment, and fundamentally weaken the business ecosystem. These combined impacts are why tackling fraud is so critical to our global economy.

Fraud and money laundering is an evolving art

Fraud and money laundering techniques are constantly evolving, as criminals seek new ways to launder money and hide their illicit profits. 

The trade of fine art and antiques is one area that has seen huge growth in recent years, as criminals seek to launder money through murky sale and purchase agreements that hide the value of their assets. The illicit art market is estimated to have reached a value of USD6 billion by the end of 2018, with about 50% of that value attributed to money laundering activities.

Art as a vehicle for money laundering raises an important point about tackling such corruption and fraud. While industries like finance and insurance must abide by strict AML regulations, there is a loophole in many markets whereby art trading is not covered by legislation mandating the transparent tracking or reporting of such purchases. That means criminals can leverage this route to launder large volumes of money without appropriate oversight.

There are currently efforts underway in markets such as the US to introduce legislation to tackle this loophole, with the Illicit Art and Antiquities Trafficking Prevention Act currently introduced for discussion in the US Congress. This shows the essential synergy between appropriate AML oversight and regulation that empowers companies to effectively track, record, and analyze financial transactions. 

The work of global anti-money laundering and combating the financing of terrorism continues to be a global priority, and one which institutions like the International Monetary Fund (IMF) are committed to tackling. Technology will play an increasingly important part of addressing this need.

In a 2017 speech, Christine Lagarde, then IMF Managing Director, highlighted the importance of such solutions. “We can use fintech to identify terrorist financial flows, including in the case of very small transactions. Machine learning and other artificial intelligence tools can help identify patterns of activity that would otherwise be very difficult to detect.”

Neural Technologies’ solutions are built on the power of those advanced technologies to tackle money laundering and eliminate fraud. Sophisticated neural network technologies are utilized to monitor and manage financial transactions, helping reduce financial risk and exposure to fraud. 

As well as day-to-day transactions, our AML solution also provides a powerful on-boarding analysis of new customers and partners, helping identify risk factors as part of enhanced due diligence processes. 

These solutions are vital if we are to tackle the multi-trillion dollar cost of global fraud and corruption. Effectively leveraging these advanced technologies will help us build a better business environment for our operations, and a more equitable and honest access to global financing for communities around the world. 

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