We all know the eye-watering statistics about money laundering. Criminals launder €2-4tn every year. 70-80% of this “dirty” money goes through legitimate banking structures. Europol estimates that less than 2% of this criminal cash is successfully intercepted.
Governments are keenly aware of the problems, and regulators are moving to legislate against money laundering – but it’s all happening too slowly. Today, it’s the business community that can really drive better cooperation in anti-money laundering (AML) – to stop financial criminals, to coordinate sanctions against warmongers – and fast enough to have real-world impact for those directly afflicted by crime or war.
Which is why Salv, in collaboration with leaders from Estonia’s banking community, initiated the AML Bridge Estonia pilot.
What is AML Bridge?
AML Bridge is an information and data exchange platform that enables financial institutions to fight financial crime more effectively. The secure web-based platform helps banks to exchange and enrich data on bad actors, enabling one another to strengthen their respective AML efforts. It is encrypted and fully-compliant with the latest data protection regulations. As a result, AML Bridge can help financial institutions proactively co-operate across borders, across legal jurisdictions, and against transnational criminal networks.
More than just tooling, AML Bridge is also a crime-fighting community. It’s a network of passionate, dedicated investigators, compliance officers and compliance leaders, who come together to identify new crime typologies and share best-practice responses.
AML Bridge: Estonia pilot outcomes
Over a nine month period (Jul ‘21-Mar ‘22), ten Estonian banks representing 99% of the domestic market initiated over 1400+ collaborative investigations under the supervision of Estonia’s Financial Supervision and Resolution Authority (FSA), Data Protection Inspectorate (DPI), and Financial Intelligence Unit (FIU), facilitated by the AML Bridge platform, built by Salv.
The investigations – across three use cases: fraud, AML and sanctions – are estimated to have prevented €3m of customers’ money from reaching criminal-controlled accounts, stopping APP fraud and common scams (investment, romance, BEC/CEO impersonation etc), as well as reducing major time-delays in both sanctions and AML cases.
Collaborative investigations have been conducted at great speed. One-in-four urgent requests via the AML Bridge network are being responded to in less than five minutes, with 75% of urgent collaborative investigations receiving responses in under an hour – a major improvement on the 24-48hr delays common across the industry.
As Europol’s 2021 Serious and Organised Crime Threat Assessment report details, major criminal organisations operate across borders, across legal jurisdictions, and in sophisticated networks of highly-specialised professionals. As Salv has discovered: it takes a network to beat a network. Our work against money laundering and financial crime is far from finished – it’s only the tip of the iceberg.
AML Bridge brought significant improvements in addressing fraud and scam cases, anti-money laundering cases, and sanctions violations cases:
Fraud and scam cases
In fraud and scam cases a rapid response time can be the difference between successfully preventing funds from reaching criminals – as Swedbank’s Head of AML, Raul Vahtra, told Salv: “With instant payments and the rise of phishing attacks it really becomes a question of reacting within minutes – and I can say that thanks to this system, across the past three months we’ve been able to stop at least 70 such cases, successfully freezing the money and returning this to customers.”
Anti-money laundering cases
For anti-money laundering cases, AML Bridge has had a major impact in improving the quality of Suspicious Activity Reports (SARs) filed by banks to the Estonian FIU. In Estonia, banks file over 11,000 SARs reports per year, but due to incomplete information, the amount of investigations that the FIU can successfully resolve is significantly lower than this. By reducing tedious back-and-forth between the FIU and banks resolving information gaps, AML Bridge is contributing significantly to more effective intelligence investigations and prosecutions.
Sanctions violations cases
Regarding sanctions, AML Bridge has seen a massive spike in banks initiating collaborative investigations since Russia’s invasion of Ukraine. Two clear use cases are emerging here – firstly, B2B correspondence is dramatically reducing time lost clearing name-match false positives (which can often represent over 95% of sanctions alerts), which would otherwise require hassling customers for additional information. And secondly, with sanctions lists evolving on a near-daily basis, AML Bridge enables banks to better map potential politically exposed persons (PEPs) or relatives & close associates (RCAs) of sanctioned individuals – reducing financial institutions’ future exposure to potential fines or reputational damage.
For a full list of achievements, please see our August ‘22 white paper – but first and foremost, AML Bridge Estonia proves that fincrime intelligence sharing is possible, legal and completely operational, today.
AML Bridge: privacy and data protection
Since the enactment of the EU’s General Data Protection Regulation (GDPR) there is a clear, consistent legal basis for private-to-private fincrime intelligence sharing across the 27 member states and the UK. The precise scope as to what data, and in which instances it can be exchanged, will often be determined by nation-level AML/CTF legislation, but providing network members adhere to data-minimisation practices, and ensure that the data exchanged accords with principles of necessity and proportionality, then AML Bridge is legal across Europe (and potentially beyond).
“Historically private companies have been a little tentative with us, but this project helped change that. It gave the private sector confidence to work together closely with the Data Protection Inspectorate.” – Pille Lehis, Data Protection Inspectorate, Director General
Data minimisation is hard-wired into AML Bridge via specific use case templates that determine the parameters around which data is shared and why, limiting information exchange (i.e. data such as date of birth, account number, transaction ID etc) to only that which is necessary to identify the customer or transaction in question. This is critical to warding against financial exclusion for individuals, and dramatically reduces risks relating to potential breaches of personally identifiable information (PII).
AML Bridge: the future ahead
The AML Bridge Estonia pilot was originally conceived as a 6-9 month project to test the fundamental feasibility of fincrime intelligence sharing – using real customer data, and demonstrating real-world crime-fighting impact.
Buoyed by the overwhelming success of the first 6-9 months, all ten Estonian banks have agreed to extend their participation in the AML Bridge network, with participants from outside Estonia already applying to join an extended, pan-European AML Bridge network.
In recent months, the first non-bank members are being integrated into the network – including fintechs, payment service providers (PSPs), and money service businesses (MSBs), across the Baltic States and in the UK.
Via the network member workshops, Salv has also been validating new functionalities for AML Bridge, including multilateral messaging capabilities, improved messaging automation, and proactive suspicious account flagging across the network.
There is presently a backlog to integrate new AML Bridge members, but if you believe your organisation would benefit from participating in an expanded pan-European network please tell us now.