The Dutch plans for financial surveillance of every citizen by banks, the ‘banking dragnet’ (‘bancair sleepnet‘), form part of an international trend in anti-money laundering (AML) policies.

Project Aurora by BIS

This is shown by project ‘Aurora’ of the Bank for International Settlements (BIS). The project will be explained during the BIS-conference of today (15:20 – 15:30) by Beju Shah, the head of the BIS Innovation Hub Nordic Centre.

The project is started because of failure of the current AML-systems:

Consequently, banks tend to overreport (defensive reporting), leading to a high number of false positives (when legitimate customers are flagged as potentially suspicious), which can be costly and time-consuming, while leading to an unnecessary exposure of sensitive customer information.
Furthermore, financial institutions decided not to work with certain clients if the volume of business doesn’t justify the increased compliance costs and perceived risks (a trend also known as “de-risking”).

The project is exactly doing what currently is proposed by the Dutch government in its proposal (markup by me):

Project Aurora will investigate the use of advanced technologies, such as privacy-enhancing technologies, machine learning methods, network analysis, and the use of additional data sources and machine-readable typologies (to represent money laundering patterns in a machine-readable format) in a proof of concept that aims to show how information could be shared in a private, secure and compliant way to detect suspicious transactions across financial institutions and borders.

NL as testing ground

It is amazing that the Dutch government wants to make the Netherlands a testing ground for financial surveillance by means of the legislative plan to tackle money laundering (wetsvoorstel plan van aanpak witwassen) and that a mature fundamental law discussion is lacking.

More information:

BIS’ project Aurora
The complete description of project Aurora on the site of BIS:

Project Aurora: using data to combat money laundering across firms and borders
The BIS Innovation Hub’s Nordic Centre is launching Project Aurora to explore how the latest data technologies can be used to combat money laundering across financial institutions and borders.
Fighting money laundering, terrorism financing, fraud and tax evasion helps to bolster trust in payments systems and financial stability, a matter of common interest to the public and private sectors. Today’s payments systems are complex ecosystems that involve several different categories of private and public actors (including commercial banks, payment services providers, fintech companies, central banks and regulators). As a result, complexity and fragmentation are increasing, as is the granularity, velocity and availability of data.
As one of the hardest activities to detect in the world of financial crime, money laundering represents a very complex data challenge. The estimated amount of money laundered globally is between 2 and 5% of global GDP. Criminals operate in networks and across borders. The professional money laundering networks adjust quickly and flexibly to shifting factors such as regulation. Meanwhile, most financial institutions rely on siloed data and isolated systems to monitor transactions and are often prohibited by regulation from sharing information with other financial institutions.
Yet the current approach to fighting money laundering puts most of the burden on financial institutions, which are liable if they let through transactions that turn out to be illegal. Consequently, banks tend to overreport (defensive reporting), leading to a high number of false positives (when legitimate customers are flagged as potentially suspicious), which can be costly and time-consuming, while leading to an unnecessary exposure of sensitive customer information.
Furthermore, financial institutions decided not to work with certain clients if the volume of business doesn’t justify the increased compliance costs and perceived risks (a trend also known as “de-risking”). This has led to several countries losing access to the global financial system, in practice acting as a financial exclusion force. The unintended consequence, if entire national systems become marginalised in this way, is that money laundering, tax evasion and terrorist financing may actually become more pervasive.
According to the Financial Action Task Force, almost all large money laundering schemes are cross-border in nature, spanning various business sectors. Spotting different money laundering patterns is complex, requiring different data points and data sources as well as the ability to connect them across different systems in order to better identify suspicious flows and patterns. As this requires a data-driven approach, current data technologies are capable of playing a pivotal role in better fighting money laundering.
Project Aurora will investigate the use of advanced technologies, such as privacy-enhancing technologies, machine learning methods, network analysis, and the use of additional data sources and machine-readable typologies (to represent money laundering patterns in a machine-readable format) in a proof of concept that aims to show how information could be shared in a private, secure and compliant way to detect suspicious transactions across financial institutions and borders.

About BIS, on the legal information page:

The Bank for International Settlements opened for business on 17 May 1930 in Basel, Switzerland, where it still has its headquarters today. Since its founding, the BIS has established two representative offices: in the Hong Kong Special Administrative Region (1998) and in Mexico City (2002).
The BIS was created at the Hague Conference that dealt with the issue of German war reparation payments arising from the 1919 Treaty of Versailles.

and their mission is:

to support central banks’ pursuit of monetary and financial stability through international cooperation, and to act as a bank for central banks.

To pursue our mission, we provide central banks with:
a forum for dialogue and broad international cooperation (…)
a platform for responsible innovation and knowledge-sharing (…)
in-depth analysis and insights on core policy issues (…)
sound and competitive financial services (…)

FATF on financial surveillance and data sharing: page on this  blog.