DEBATE: Could fintechs solve London’s dirty money problem?
Could fintechs be the answer to solving London’s dirty money problem?
Michael Harris, director of financial crime compliance and reputational risk at Lexis Nexis Risk Solutions, says YES.
By their very nature, fintech firms are disruptive and have a reputation for driving change in their field. Why shouldn’t the fight against money laundering be led by these technological innovators too?
Recent research supports this theory. A report from LexisNexis Risk Solutions and the Economist Intelligence Unit shows that fintechs are the most likely businesses to say that the UK has a long way to go in fighting dirty money. In fact, almost half (48 per cent) think that the existing UK regulatory framework is not effective in combating the issue.
How can they disrupt anti-money laundering? The vast majority (85 per cent) of fintechs are already using or making plans to adopt technology, such as advanced analytics and artificial intelligence, as part of their anti-money laundering arsenal – more so than the regulated industry average.
Unconstrained by legacy technology, fintechs have a golden opportunity to harness new technologies from the outset, giving them a potential advantage to be exploited in tackling this problem.
Arun Srivastava, a partner at international law firm Paul Hastings, says NO.
It would be too simplistic to say that fintechs are the most likely to shake the UK of its dirty money problem – it is too vast and complex to place the burden on one sector alone.
Estimates suggest that almost £100bn of illicit money flows through the UK economy each year, most of which will never come into contact with a fintech firm. It is misguided and unfair to seek to place the burden on this sector – the problem extends far beyond their reach.
Instead, collaboration is the key. Government, regulators, and businesses in any number of sectors must come together to stop dirty money flows.
The UK’s status as a renowned financial services hub is a core pillar of our economy and cannot be left open to abuse by financial criminals. Operating compliantly is key for everyone in the financial sector, including fintechs, but the problems with money laundering can only be solved by everyone pulling together.