Shah welcomed the current era of rapid digital transformation and warned that we are at an inflexion point in the fight against cyber attacks and cyber-enabled financial crime. He suggested that the only solution is to harness innovation to ensure we can deliver security, resilience and trust.

He said the banking system is an intricate network of interconnected highways that enable payments. This system is fragmented, dependent on vast streams of data, and has some critical vulnerabilities. Threat actors exploit these vulnerabilities to enact financial crime and money laundering. The success of this organized crime is evident in the numbers and reached more than $3 trillion in 2023 which suggests that something within our defense is not working.

At the same time many institutions are still paying hugely in terms of regulatory burden that calls into question if this approach is fit for purpose. A different approach can start to counter sophisticated threat actors that are taking advantage of the advances in technology. The borderless digital world demands a similar application across borders and functions, using the most recent tech, following the money to follow a revolution of combined collaboration.

True positives

Projects by BIS using synthetic data at a silo, national and cross border level using machine and federated learning have demonstrated that a more holistic view has delivered a 300% improvement in true positive detection and an 80% reduction in false positives.

This represents a massive reduction in future costs. And demonstrates that the wider view is so much more effective.

The BIS has been surveying firms of different size and type and 82% believe that collaboration and information sharing is essential. This will facilitate trust and allow some to overcome the impediment of differing privacy laws. Data can be shared and distributed in a federated way where its residency does not change.

Data is king

But data is king and it is foolish to build a house on sand, Shah said. Quality, standardized data within the right architecture is the best foundation. In the same surveys, 70% of institutions say their own data is poor in quality and inadequately governed. 

The future is exciting, with the prospect of AI agents that can monitor production in real time to manage risk and route information appropriately. There is also huge benefit to be gained from the relative success in cyber security advances if we can apply the same principles and learnings to the rest of the threat landscape.

The fusion of strategy between cyber intelligence and financial crime teams will be of great value. In BIS surveys, 81% agree that using a separate approach to combat cybercrime and financial crime is inefficient and ineffective.

In conclusion, the convergence of innovation, collaboration and technology will significantly improve resilience, trust and security, he said.