Reported by Adena Friedman (The writer is chair and chief executive of Nasdaq)

Recent breakthroughs in artificial intelligence are rightly seen as a step-change in our technology economy. For the world of finance, much of the reaction has been focused on the risks from this rapid shift.

Concerns have rightly been raised about the capacity of regulators to oversee AI operations, market concentration risks from the small number of service providers, and digital herding where computers all act alike, reinforcing market swings.

While calls for caution and proactive regulation are appropriate, so are the calls for urgency and optimism as we empower industries to start harnessing the potential of the AI advances.

Financial crime is a major — and thriving — global industry. Estimates from LexisNexis show banks spend nearly $275bn on tackling financial crime annually. Yet UN studies suggest less than 1 per cent of the approximately $4tn of illicit funds that are in circulation across the financial system is currently being intercepted by law enforcement. 

One contributor to this disconnect is the restrictive impact of regulations that limit the banks’ use of data and advanced technology.

To put it most simply, financial crime is a data problem. Criminals don’t bank with only one bank. They exploit the entire financial ecosystem to avoid detection. The increasing interconnectivity of the financial system and the emergence of new payments systems are all helping criminals become more effective.

Therefore, on the crime-fighting side, the quality and depth of our data sets, combined with the use of the latest analytics technologies, are the most critical determinants of success in stopping crime.

Read full report: https://www.ft.com/content/ff760b96-730a-407a-91b0-1246d468b655