In April 2023 I wrote about the TRACE project, funded by the European Commission, that creates artificial intelligence tools for law enforcement agencies (‘LEAs’). The project is nearing its end.

AMLA and the AML toolkit
The tools will play an important role in the new anti-money laundering legislation of the EU (‘AML Package’). This was confirmed in the article The Anti-Money Laundering Authority (AMLA): A new EU authority to strengthen the AML toolkit, written by Julia Werberich of the NOVA School of Law:

By facilitating joint analysis of cross-border STRs and SARs, reviewing analysis procedures, and overseeing FIU.net, the AMLA aims to improve communication among FIUs and address the aforementioned challenges. In this context, the TRACE toolkit is designed to analyse extensive financial transaction data from large datasets. Thus, it can enable the end-user to identify suspicious patterns indicative of money laundering and other illicit money flows. Moreover, it facilitates the mapping of complex financial networks by linking seemingly unrelated transactions, entities, and individuals, thereby enabling an understanding of the bigger picture of IMFs. Furthermore, the TRACE tools are designed to continuously learn and enhance their data analysis capabilities as they assimilate new databases or receive information shared between LEAs and FIUs.In sum, the TRACE toolkit is crafted to support the implementation of measures highlighted as key objectives of AMLA, ensuring that LEAs’ technological equipment remains on par with the sophisticated tools employed by criminals to obfuscate the illicit origins of their funds. This proactive approach aims to curb money laundering, a practice detrimental to national budgets and, consequently, to citizens’ liberties. 

IMFs = illicit money flows

Article | ‘Legal implications of automated suspicious transaction monitoring: enhancing integrity of AI’
On the TRACE site an article for the Journal of Banking Regulations is announced, written by three TRACE-authors.
The article is based on “qualitative research design“, described as “interviewing senior managers from central and commercial banks and managers of IT companies developing AI/ML programs for banks“. The danger of such an approach is that it neither considers the position of the customer nor the fundamental rights of citizens.

Final TRACE conference in June
In June this year the final TRACE conference will take place in Vienna, Austria, read the announcement. Subjects of the presentations are amongst others:

• Ethics and Law in the age of AI(-Act)
• Unveiling hidden crime networks
• The transition from e-evidence to AI-generated evidence
• Application and Demo of TRACE solutions
• Regulatory Arbitrage and Geographic Risks in AML/CFT
• Artificial Intelligence in Financial Intelligence: In Search of a Rule of Law Framework

Are fundamental rights respected?

Whether the AML tools developed in this project are of high quality and do not contain the errors visible in publications by organisations such as the Egmont Group will have to be seen. Independent testing may not be possible because of all the secrecy that naturally surrounds crime fighting. The consequence, then, is that the errors will only be discovered through the inconvenience and harm caused to citizens.

It is to be hoped that the authorities not only report the successes achieved with the digital tools, but also log all unnecessary costs, nuisances and damages incurred by citizens. Only then can it be assessed whether the deployment of these digital tools fits into world that respects rule of law principles.