Dublin Reporter’s Notebook

By Koos Couvée and Gabriel Vedrenne

The onward march of artificial intelligence, sweeping anti-money laundering reforms in Britain and the EU, sanctions against Russia and turmoil in the cryptocurrency industry emerged as frequent topics of discussion at the latest ACAMS annual conference in Europe.

Having returned to London after three days in Dublin, the editorial staff at ACAMS unpacks our suitcases, recharges our laptops and sifts through our notes to share what we learned at The Assembly Europe 2023 with our readers.

European regulators encouraged financial institutions in Tuesday’s opening panel to bolster their anti-money laundering programs with artificial intelligence, but warned that they must ensure that they fully grasp and can explain how their particular version of the technology arrives at decisions and carefully review those outcomes.

Philippe Bertho, head of the AML directorate at France’s Autorite de Controle Prudentiel et de Resolution, said his agency now uses AI in onsite inspections to screen millions of transactions and select individual payments for closer, manual review.

“We would like financial institutions to step up their efforts to develop innovative tools and that’s why we set up a working group,” Bertho said. “We’ve started the discussion on drafting guidelines to support the development of AI tools and to understand the implications in terms of [our] supervisory approach.”

Willem Schudel, head of financial crime supervision at De Nederlandsche Bank, the Dutch central bank, stressed that financial institutions must guard against “biases” within AI programs that could, for example, automatically exclude certain types of customers from financial services without a fair vetting process.

“It’s very important to make sure that there is a human check on the outcomes of these models, for example when it may lead to a de-risking decision,” Schudel said.

Lora von Ploetz, a director of AML supervision at Germany’s BaFin, said her agency is reviewing ties between financial technology-based institutions, or fintechs, online retailers and other digital platforms amid concerns that the complexity of their business models frequently sows confusion over where the responsibility for vetting customers lies.

“It’s extremely complex in those instances to understand what type of relationship it is, how [firms] interact and address the customer base,” von Ploetz said. “We need a better understanding, guidance and more transparency on counterparties involved in the provision of certain services.”

Russia’s ongoing assault on Ukraine and the unprecedented barrage of Western sanctions that have followed took center stage in Dublin amid intense efforts by the EU, Britain, Japan, the U.S. and other nations to implement and enforce financial and commercial embargos against Moscow to their fullest extent.

John Smith, former director of the U.S. Treasury’s Office of Foreign Assets Control, said Tuesday that financial institutions now comprise the frontline of the West’s campaign to ensure that prohibited exports with potential military applications do not end up in Russian hands and on the battlefield in Ukraine.

“We’re going to see a lot of technology-focused enforcement,” Smith, now a partner with Morrison Foerster in Washington, D.C., said.

Jonathan Schnatz, a senior analyst with IRS Criminal Investigation, said his unit has opened 23 sanctions-related investigations over the past year and begun sharing intelligence on blacklisted parties with other members of the Joint Chiefs of Global Tax Enforcement, or J5, a partnership of tax agencies from the U.S., U.K., Australia, Canada and the Netherlands.

“As we’re working through the J5 on tax and money laundering cases, we’re coming out with good information [on designated persons], because we’re not just looking for one thing,” Schnatz said. “A lot of it is in that space dealing with offshore structures.”

Emma Hardaker, senior compliance officer at Lloyd’s of London, the world’s largest insurance marketplace, said that while restrictions on insuring Russian crude shipments have had a powerful impact, the financial services industry could do little about the emergence of a “dark fleet” of oil tankers now helping the Kremlin evade energy-related sanctions.

“The withdrawal of legitimate insurance services … has created a problem and the right circumstances for this dark fleet to operate.”

Panelists in Dublin also discussed plans now in motion to overhaul the EU’s AML architecture, with national regulators now gathering supervisory information and enhancing cooperation with other members of the bloc ahead of the launch of a new, bloc-wide Anti-Money Laundering Authority, or AMLA, next year.

Michael McGrath, a senior official with Ireland’s Finance Department, said Tuesday that EU officials will soon agree on a methodology for selecting a city to host the AMLA, and predicted that a decision on the agency’s location could arrive by December.

Sinead Goss, head of AML, anti-bribery and sanctions for Europe and the Middle East at Citibank in London, questioned whether the EU’s development and application of a single, uniform set of AML rules for each of the bloc’s 27 nations would have the desired effect.

“I can confirm from personal experience that EU sanctions regulations produce absolutely no consistency across the union, at all,” Goss said. “But my hope is that having [the AMLA] over the top of that will drive consistency.”

Patrick Lordan, head of Ireland’s National Economic Crime Bureau and financial intelligence unit, said Wednesday that his investigators have had to contend with a rise in cyber-enabled fraud schemes, and separately warned banks to more thoroughly screen their employees, consultants and other third-party contractors for ties to organized crime.

Natasha Powell, chief compliance officer at BCB Group, a payment services provider for the cryptocurrency industry, said that the EU’s new regulation on markets in crypto-assets, or MiCA, will force companies to erect proper risk-management and consumer-protection safeguards and ensure they have adequate reserves on deposit.

The regulation could be a major boon for Europe amid what some view as an effort by the White House and U.S. regulators to curtail banking services to virtual asset service providers, or VASPs, Powell said.

“One of the side effects of Operation Choke Point 2.0 has been a flight to regulatory certainty,” Powell said. “If Europe can take advantage of that opportunity by a smooth implementation of MiCA, then we become a very attractive prospect for [becoming] a global crypto hub.”

But other compliance professionals and government regulators opined that VASPs have a long way to go to persuade regulators and banks in the EU that they have effective AML programs in place.

“We take a very, very stringent approach,” Mathew Seneviratne, a global anti-financial crime partner at Deutsche Bank in London, said. “One of the key learnings from the FTX collapse last year was: ‘Don’t just tell me, show me the evidence you can do what you say.'”

And that’s a wrap.

Contact Koos Couvée at and Gabriel Vedrenne at

Topics : Anti-money laundering , Counterterrorist Financing , Sanctions , Cryptocurrencies
Source: Ireland , U.S.: IRS
Document Date: May 25, 2023