Money laundering detection mechanisms and legal obstacles

Despite the major obligations imposed by Anti-Money Laundering (AML) policies and regulations and the implementation of compliance regimes inside financial institutions (FI) (specifically Retail banking), this sector is still being affected by launderers. In this paper, we analyze the main characteristics of this type of crime, the legal implications deriving by the 4th AML Directive in the FIs duties and how technology can help in the fulfilling of those duties. Considering the main characteristics of some ML methods, we propose a multidimensional system that combines different technology, adapted from each stage of the ML detection process that could be able to prevent and detect ML inside the banking sector. The efficiency of those systems requires an effective understanding of the main characteristics of the crime and the activity of the sector. However, also entails an articulation between AML duties and certain legal criteria that determine which evidence is lawful in criminal proceedings. What we propose is that the same technology that could be used inside the institutions to prevent and detect the attempt or the occurrence of money laundering practices could be used in a criminal procedure as a legal evidence. Furthermore, the fight against ML represents a conflict of duties and interests. So, the adoption of a system must balance the compatibility between the protection of fundamental rights and the fight against organized crime. This paper is an outcome of multidisciplinary approach looking at the need to combine efforts and knowledge between legal studies, banking practices and technology to step forward in an effective fight against ML. The results of this work demonstrate that the use of AML software in FIs can work on prevention and detection ML inside the institutions, as means of evidence in a criminal prosecution and can also mitigate the conflicts between legal prosecution and fundamental rights like privacy and presumption of innocence.