26 January 2022 Online

Artificial Intelligence and Financial Transparency as a National Security Priority Online Debate

Published 1 year, 2 months ago

The fight against illicit financial flows is a matter of vital public policy. However illicit finance may be defined, it encompasses a variety of financial transfers, made for different reasons, including the proceeds of crime (for example tax evasion, money laundering, fraud and corruption); funding of criminal activity (such as bribery, terrorist financing or conflict financing); proceeds and funding of hybrid warfare; transfers in defiance of international sanctions (e.g. Al Qaida and other terrorist organisations); and transfers that seek to evade anti-money laundering/counter-terrorist financing measures or other legal requirements (such as transparency or capital controls). Moreover, illicit finance exists in the intersection between (non-state) criminal activity and (state-sponsored) hybrid hostility.

This fight is currently being waged by means of ever more sophisticated technology. Artificial Intelligence (AI) has enabled those in possession of it to gain an upper hand in this struggle. AI is increasingly applied to assist the enforcement of financial transparency law, notably in anti-money laundering and countering the financing of terrorism (AML/CFT). This raises novel and important legal issues.

In a string of recent judicial developments, notably in a couple of recent opinions by the Advocate General of the Court of Justice of the European Union in joined cases C-793/19 and C-794/19In neuem Fenster öffnen, and C-339/20 VD and C-397/20 SRIn neuem Fenster öffnen, as well as the April 2021 ruling by the Conseil d’Etat in the Quadrature du Net caseIn neuem Fenster öffnen, a policy debate is emerging (see, e.g., A Securitarian Solange – VerfassungsblogIn neuem Fenster öffnen). This debate addresses unsettled legal and constitutional questions of how to find a workable balance between an individual’s fundamental right to data privacy, which is essential for today’s and tomorrow’s digital business, digital trade, and digital finance, on the one hand, and the society’s fundamental interest to safeguard its survival by preventing threats to public order and security breaches to persons and property, on the other hand.

On 26 January 2022, a distinguished panel of experts will engage with this debate and discuss AI-based models for AML/CFT compliance and the interaction between private/public use of personal data for purposes of safeguarding security and public order. We will address the EU-law implications and legal impasse resulting from recent court rulings and the way forward. In the last respect, we will discuss what would be required to achieve an effective hybrid-threat defence in the EU without undermining the essence of our fundamental rights and without creating increased legal uncertainty.