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UK regulator urges banks to use technology to fight financial crime

Megan Butler, executive director of supervision for investment, wholesale and specialist firms at the U.K. Financial Conduct Authority, urged banks to use technology to combat financial crime, noting that lenders spend roughly £5 billion a year on fighting such crimes.

Butler said an annual financial crime data review launched by the regulator at the end of 2016, based on surveys of 2,100 major U.K. banks, life insurers and other firms, found that more than 1.1 million new customers were refused services and 370,000 existing customer relationships were cut off due to financial crime concerns.

Most firms cited phishing and identity theft as the most widespread fraud risks they now face, while many banks employ thousands of investigators to manually review high-risk transactions and accounts instead of using new data and technology to detect and disrupt criminal activity, Butler noted in a May 22 speech.

Butler said an analysis by the FCA suggests that monitoring transactions has the greatest potential to be effective in fighting financial crimes, as well as on-boarding, maintenance, client screening and reporting, adding that the next step is to apply intelligent technologies such as artificial intelligence, robotics, natural language processing and machine learning to help firms spot suspicious transactions in real time.