Director of Horizontal Supervision Directorate Discusses AML & Innovation at the European Anti-Financial Crime Summit

Key Takeaways

• Balancing Innovation and Risk: Technological advancements, such as AI and machine learning, offer significant opportunities to enhance anti-money laundering (AML) measures but must be implemented responsibly to avoid unintended consequences like privacy issues and financial exclusion.
• Holistic Regulatory Approach: The Central Bank of Ireland is adopting a more integrated supervisory framework to address financial crime risks across the entire sector, aligning with broader European regulatory initiatives like the Anti-Money Laundering Authority (AMLA).
• Innovation Sandbox: The Central Bank’s innovation sandbox provides a controlled environment for testing and developing technologies to combat financial crime, promoting responsible innovation while ensuring compliance with regulatory standards.
• Governance and Oversight: Despite technological advancements, strong governance, risk management frameworks, and human oversight remain critical in preventing financial crime and ensuring the effectiveness of AML/CFT measures

Deep Dive

At the 2025 European Anti-Financial Crime Summit, Patricia Dunne, Director of the Horizontal Supervision Directorate at the Central Bank of Ireland, delivered a thought-provoking speech on the intersection of technology, innovation, and the fight against financial crime. Her remarks, titled "AML and Innovation — Opportunities and Challenges", were aimed at exploring the balance between embracing new technologies and ensuring that risks are effectively managed to protect the financial system.

Dunne began by reflecting on the timeless motivations behind financial crime, which remain unchanged throughout history. However, she highlighted the stark contrast between these enduring motivations and the constantly evolving methods used to facilitate financial crime today.

"While the drivers of financial crime have stayed largely the same, the methods and technologies behind it have evolved dramatically," she explained. This framing set the tone for a deeper dive into the complexities of technological innovation in financial services, an area where benefits and risks walk hand in hand.

In acknowledging the rapid digitalization of financial services, Dunne pointed out that while technology has undoubtedly brought advantages, such as increased speed, convenience, and accessibility, it has also created new vulnerabilities.

"The pace at which digitalization is reshaping financial services is astounding, and with it comes an increased risk of abuse by bad actors," Dunne observed. With emerging technologies like generative AI becoming more prevalent, she stressed the need for regulators and firms to keep pace with these developments to ensure that risks are identified, mitigated, and addressed in a timely manner.

Dunne shared insights into the Central Bank of Ireland’s evolving approach to regulation, which now embraces a more integrated supervisory framework.

"We have evolved to a more holistic view of supervision, focusing on financial integrity as one of our key outcomes," she explained. This shift in perspective reflects a growing recognition that financial crime risks should be addressed comprehensively rather than in isolation. By adopting a whole-of-sector approach, the Central Bank aims to better align with the broader European Union’s regulatory thinking, notably through its support of the AMLA (Anti-Money Laundering Authority).

Her speech also highlighted the role of technology in both combating and facilitating financial crime. Dunne acknowledged the potential for innovation to enhance anti-money laundering (AML) efforts, but she was equally aware of the risks posed by these same technologies.

"New tools like machine learning and AI can make AML measures more efficient, but they also need to be used responsibly," she remarked. The balancing act, she stressed, lies in ensuring that technological solutions are both effective and proportionate to the risk. This includes considering potential unintended consequences such as privacy concerns and financial exclusion, as well as ensuring that innovative tools align with international standards on data protection and cybersecurity.

One particularly striking moment in Dunne’s speech came when she referenced Europol’s recent Serious and Organized Crime Threat Assessment. The report, which identified digital infrastructures as key enablers of criminal activity, reinforced the challenges posed by emerging technologies. Dunne pointed to the case of ChipMixer, an unlicensed cryptocurrency platform taken down by Europol in 2023, which had laundered over 152,000 Bitcoins, worth approximately €2.73 billion.

"The same qualities that make AI revolutionary for legitimate purposes, accessibility, adaptability, and sophistication, also make it a potent tool for criminals," she warned.

In response to these challenges, Dunne outlined the Central Bank’s efforts to facilitate innovation in the fight against financial crime through its first-ever innovation sandbox. The sandbox serves as a controlled environment for firms to test and develop new technologies aimed at tackling financial crime.

"Our sandbox is about creating a safe space for innovation, where technology can be tested in real-world scenarios while ensuring that regulatory standards are met," she explained. This initiative reflects the growing recognition that innovation and regulation must go hand in hand to protect the financial system.

Dunne also emphasized the importance of collaboration between financial institutions, regulators, and law enforcement in addressing financial crime.

"Financial crime is a complex issue that requires the collective effort of all stakeholders," she said. This collaborative approach extends to the sharing of data and intelligence, which she believes is crucial for detecting and disrupting financial crime. By fostering open communication across the ecosystem, firms and regulators can ensure that new technologies are used effectively to prevent illicit activities.

In her closing remarks, Dunne reminded the audience that while innovation is vital, it cannot replace strong governance and effective risk management frameworks within firms.

"Technology is a tool," she said, "but governance, oversight, and effective risk management are still the bedrock of financial crime prevention."

Her message underscored the need for a balanced approach, one that embraces innovation while safeguarding against its potential risks. As the financial sector continues to evolve and digital technologies reshape the landscape, Dunne’s speech served as a timely reminder that the fight against financial crime is not only about adopting new tools but also about ensuring that these tools are used responsibly and in line with robust regulatory frameworks. By staying ahead of emerging risks and fostering collaboration, regulators and financial institutions can work together to safeguard the integrity of the financial system for years to come.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.