Generative artificial intelligence (AI)—with its vast potential for good but also rife with danger—has so far shown to be a gray ball. However, as Generative AI advances, society will be well served to regulate it at a far greater and more robust scale, lest it transform into the black ball that harms society.

Key ethical considerations stemming from AI, and generative AI in particular, include biased data and outcomes, transparency and accountability, data privacy and security, plagiarism, misinformation, and the future of work. Negative outcomes can arise even when development and deployment are executed with good intent. In the hands of bad actors, though, AI and generative AI can be misused, leaving a trail of dire consequences—facilitating financial crime, swaying public opinion and elections, or intentionally undermining human rights.

Several examples highlight the unintended adverse consequences of AI and its purposeful criminal uses:

• In September 2023, a group of authors initiated a lawsuit against OpenAI, the company that launched ChatGPT, alleging that the company had committed copyright infringement for training its models on authored works without permission.
• The accuracy of AI-driven facial recognition systems is often highly dependent on race, which could lead to the wrongful arrests and convictions of minorities.
• Generative AI-created deepfakes, which include imagery and audio, are so sophisticated that it can be near-impossible to differentiate them from authentic information. Deepfakes run amok could deeply impact what we believe and who we believe, with severe implications for national and international security.
• Phishing scams are accelerating with the help of generative AI, which has allowed fraudsters to craft more convincing messages and scale up their attacks.

As AI continues to refine itself, both good and bad applications will grow increasingly adept. Use cases not previously seen could arise, leading to even more ethical dilemmas.

In the world of fraud and money laundering risk management, ethical AI plays a pivotal role in enhancing the effectiveness and fairness of financial crime prevention measures. By leveraging advanced algorithms and machine learning, ethical or responsible AI-based systems can analyze immense datasets to identify anomalies indicative of fraudulent activities and money laundering while minimizing unfair or unintended consequences.

Ethical AI principles foster accountability and responsible use of technology by incorporating mechanisms for continuous monitoring and auditing. Their application ensures that algorithms prioritize accuracy and transparency while guarding against biases that could unduly affect certain groups. Striking a balance between technological advancement and ethical considerations is vital in developing AI solutions that not only combat fraud and money laundering but also align with societal values and evolving regulatory requirements.

Comprehensive regulations and international cooperation will be critical to navigating this increasingly complex landscape. Although regulatory regimes addressing AI are in their infancy, several jurisdictions and international organizations have made progress in their efforts to encourage innovation while safeguarding ethical standards.

• The EU’s AI Act, which passed in early December 2023, takes a human rights-centered approach to governing AI and restricts specific AI systems designated as high-risk. Recognized by many as the world’s first comprehensive regulatory framework to take on AI, the AI Act—though imperfect—will likely greatly influence other legislative efforts. These regulations, however, may be insufficient to deter rogue actors and networks who are unbound by compliance concerns. Addressing this will require heightened cooperation between international organizations, federal governments, and especially tech companies, whose embedded safety guardrails in their models are often easily bypassed.

• The UN has issued guidelines and standards surrounding ethical AI, such as the Recommendation on the Ethics of Artificial Intelligence by the United Nations Educational, Scientific and Cultural Organization.

• In July 2023, a group of the top players in tech, including Amazon, Google, Meta, and Microsoft, signed an AI safety pledge at the White House.

These are positive steps forward, but many of these actions are voluntary and non-binding, with no compliance requirements and no penalties. Symbolism will only go so far towards protecting rights when it comes to AI. Indeed, Google and Microsoft—two of the AI safety pledge signatories—have axed their ethical AI teams. In the balance between innovation and ethics, the former might come out on top without incentive to do otherwise.

Still, AI’s potential for good is overwhelming; if leveraged correctly, it could promote a safer, more just world. The road ahead will be difficult but not impossible: As long as regulatory efforts continue to progress and tech companies face pressure to develop ethical AI, it is unlikely that humanity has drawn the black ball from Bostrum’s urn of invention. We have, though, clearly drawn a gray ball—one that is just as complicated and risk-laden as it is beneficial.

Be on the lookout for Datos Insights’ report on The Double-Edged Sword of Generative AI: Fraud Perpetration and Detection coming later in January. To hear our experts expound on the benefits and dangers of generative AI as well as other critical trends impacting risk functions going into 2024, register for our January 9 webinar on the Top Trends in Risk in 2024.

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Phishing Scams 

Scammers pose as legitimate organizations and send texts or emails containing links aimed at stealing personal information, such as credit card or bank account details. These scams can be especially effective during the holiday season, when consumers are tracking mail orders, donating money to charity, and on the lookout for deals on gifts.  

The busy season also means that inboxes and cell phones are inundated with marketing materials, making it easier for a nefarious message to slip between the cracks. A particularly common holiday phishing theme is a message purporting to be from Amazon, FedEx, or UPS that notifies the recipient of a package delivery error.  

Telltale signs of a phishing scam include typos throughout the message, a suspicious domain name if it’s an email, and time pressure, e.g., “Verify your account details through the link below within two business days or risk account closure” or “Sale ends in ten hours—click here to purchase your discounted iPhone.” 

Social Media Ad Scams  

Ad scams on social media sites like Facebook or Instagram promote a fake product or service that the consumer pays for and does not receive. These scams will often involve a “too good to be true” deal, such as a steeply discounted product with free priority shipping.  

Instead of buying something via a social media ad, consumers should make their purchases through the company website. In cases where the website also appears disreputable, consumers should look for a similar product or service on a trustworthy platform like Amazon or a well-known store website such as Macy’s.  

Fake Charities 

Fraudsters take advantage of consumers’ generosity around the holidays to solicit donations for fake charities, often posing as legitimate organizations or completely fabricated entities. These scams target consumers through a variety of methods, including phishing messages, social media ads, and even phone calls.  

Consumers should verify the legitimacy of the charity by looking it up on its official website or checking to see if it is registered. Only ever give money through official charity websites, never through links. When in doubt as to a charity’s veracity, it is always better to give to a reputable, well-known one. 

Browser Extension Scams 

Browser extension scams: Legitimate browser extensions like Coupon Cabin scour the web for coupon codes and deals, and scammers are exploiting a surge in online shopping to peddle fake ones. Fake browser extensions install spyware on computers that then steals consumers’ personal information. Consumers should always do their homework and ensure the browser extension is legitimate before clicking on any links and looking to download one. 

Gift Card Scams  

Gift cards are often the solution for that hard-to-buy-for relative, but they are prized easy money for scammers. Scammers are transposing their own barcodes on top of gift cards’ valid ones, so when a consumer purchases the card, their money is sent to the account linked by the scammer.  

Before even heading to the checkout counter, consumers should inspect gift cards for evidence of tampering, such as stickers covering barcodes and ripped packaging. Websites and social media ads also advertise gift cards for discounts, which are often ploys to steal personal information, such as payment card numbers.  

Package Delivery Theft 

In today’s world of online fraud and scams, consumers may forget that old-fashioned theft is alive and well. So-called “porch piracy” cases are on the rise, in part due to an increase in online shopping since the pandemic: In 2022, a reported 79% of Americans had a delivery stolen.¹  

Deterrents include security cameras, requiring a signature for delivery, and the use of designated pickup locations.  

Conclusion 

Financial criminals’ adoption of emerging technologies such as generative AI is increasing. Phishing messages and copy for fake ads are becoming more refined and believable. Consumers will have to be extra vigilant this season: be suspicious even when faced with seemingly legitimate ads and messages, conduct research before clicking on links, and always err on the side of caution. It is always a good idea to monitor accounts for unusual activity and to immediately report such instances.  

To hear our experts talk about scams and other trends going into 2024, register for our webinar on the Top Trends in Risk in 2024, scheduled for 11:00 a.m. EST on January 9, 2024.

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On July 12^th, Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) reintroduced the Lummis-Gillibrand Responsible Financial Innovation Act, an ambitious bill that would establish a comprehensive regulatory framework for digital assets. Key components include the following:

• Requirement for crypto-asset exchanges to register with the Commodity Futures Trading Commission (CFTC)
• Strong consumer protections, including the establishment of a consumer protection and market integrity authority
• Anti-money laundering provisions
• Risk management standards for crypto-lending
• Requirement that stablecoins be issued solely by federally or state-regulated banks and credit unions
• Appropriation of US$500 million each to both the CFTC and the Securities and Exchange Commission (SEC)

The regulation of digital assets in the U.S. has traditionally been fragmented, with various federal agencies unable to agree on definitions and claiming overlapping responsibilities. The bill would finally establish standard definitions and clarify regulators’ domains. Most crypto-tokens would be classified as commodities, and crypto-trading would thus fall under the CFTC’s authority. The SEC would have a much more limited role, which is at odds with SEC Chair Gary Gensler’s traditionally aggressive approach to digital assets.

Legislation at the Forefront in the Senate

A couple weeks later, on July 28^th, Senators Elizabeth Warren (D-MA), Lindsey Graham (R-SC), Joe Manchin (D-WV), and Roger Marshall (R-KS) reintroduced the Digital Asset Anti-Money Laundering Act. The bill aims to crack down on cryptocurrency-related crime, close legislative gaps, and strengthen national security. Senator Warren has been extremely vocal on the national security risks stemming from digital assets, including their use by rogue states like North Korea to evade sanctions, fund weapons programs, spy, and carry out cyberattacks.

Key components include the following:

• Extension of Bank Secrecy Act (BSA) requirements to digital asset wallet providers, minors, validators, and other industry players
• Tougher enforcement of BSA compliance
• Requirement for the Financial Crimes Enforcement Network (FinCEN) to finalize a proposed 2020 rule that establishes identity verification, record-keeping, and reporting requirements for digital asset transactions that involve an unhosted wallet, as well as certain risky jurisdictions
• Requirement for FinCEN to establish rules barring financial institutions (FIs) from engaging with digital asset mixers (and other technologies that anonymize digital assets) and digital assets that have been anonymized

The reintroduction came a day after the Senate passed its annual National Defense Authorization Act (NDAA), which included an amendment requiring regulators to establish a “a risk-focused examination and review process” for FIs engaged in digital asset activities.

Regulatory Activity in the House

Meanwhile, the House of Representatives has been involved in parallel efforts. On July 20^th, the House Committees on Financial Services and Agriculture introduced the Financial Innovation and Technology for the 21^st Century Act, which seeks to enhance consumer protections while fostering innovation in digital assets. As with the Lummis-Gillibrand Responsible Financial Innovation Act, the bill expands the role of the CFTC in regulating digital assets. The bill has since been passed by both committees and has moved to the House floor.  

The Financial Technology Protection Act of 2023, introduced by Representative Zach Nunn (IA-03), also progressed to the House floor in July. The bill establishes a working group composed of various government departments, intelligence agencies, and industry leaders to address terrorism and the movement of illicit funds via digital asset platforms.

Although the bills are a step in the right direction, change will certainly not be immediate. They face opposition from a variety of stakeholders, and it is likely they will morph (if not get defeated or tabled) during the lengthy legislative process.

Preparing for a Shifting Crypto-Future

How should industry players adapt to this expanding scrutiny and prepare themselves for upcoming changes? The ever-evolving regulatory landscape promises to become more complex, with increasing requirements to fulfill, and firms that engage with digital assets must stay abreast of these developments or risk falling prey to criminal activity and non-compliance penalties. Firms should also look to replace legacy systems and processes for newer, sleeker ones—although they may come with expensive price tags, they will prove themselves key.

Going forward, regulatory certainty will be critical in avoiding another devastating cryptocurrency exchange collapse like those of FTX and Celsius, protecting investors from another Terra LUNA crash, and preventing the use of digital assets in money laundering and sanctions evasion. Still, there is more work to be done. Because of the transnational nature of digital assets, a global regulatory regime would be instrumental in combatting crypto-fueled financial crime and ensuring market protections. Further, regulators must also ensure that their efforts to rein in digital assets do not hinder innovation in the industry. Blockchain projects are becoming a cornerstone of global economic competition, and U.S. regulators and industry leaders are eager to make their mark. For more discussion on the future of digital assets regulation, contact me here.

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Amid the excitement and alarm, regulators around the globe are considering how best to respond. While some regulatory frameworks may already suffice to meet the emerging needs of this brave new world, others may have to be built from the ground up. Meanwhile, regulators must contend with the rapid-fire pace of change in AI technologies—which far outstrips that of slow and incremental regulatory change.

The European Union – Leading the Charge

The EU is leading the charge in global efforts to create a comprehensive regulatory framework for AI. Its Artificial Intelligence Act, first proposed in 2021 and expected to be adopted by the end of 2023, takes a risk-based, so-called “human-centric” approach to AI regulations. This Act classifies AI systems into four risk categories, from “minimal” to “unacceptable,” banning unacceptable systems—such as real-time biometric identification in public spaces and emotion recognition systems.

In response, OpenAI CEO Sam Altman noted that, although the company will attempt to comply, it has several criticisms over the wording of the bill. In its current version, the bill could classify ChatGPT as high-risk, which would impose additional transparency and safety requirements upon it—and potentially lead OpenAI to pull the system from the 27-country bloc.

The newest draft of the bill, adopted May 11^th, 2023, requires generative foundation models like ChatGPT to disclose that content is AI-generated and be designed to prevent the generation of illegal content. In the amendments proceedings, members of the European Parliament (MEPs) also called for the creation of a standardized, technology-neutral definition of AI to account for future developments in the industry and ensure the continued relevance of the Act.

Although the EU is close to finalizing the bill, it will likely not be fully enforced until a couple years after its adoption—allowing for regulated entities to ensure compliance before penalties and bans come into play. Still, even a couple years is a long time given the speed with which AI technologies advance, and this time period could allow for unchecked and potentially harmful developments. (In March, a group of over 1,000 technology leaders issued an open letter calling for a pause in the development of advanced AI systems, speaking to the depth of concern surrounding them.)

U.S – Historically Slow, Progress Is Picking Up Steam

In the U.S., attempts to regulate AI have historically been fragmented and slow, but progress has been brewing over the past eight months. In October 2022, the White House issued the Blueprint for an AI Bill of Rights, which aims to “guide the design, development, and deployment” of AI systems such that rights are safeguarded. The emergence of ChatGPT, a mere month after the release of the Blueprint, has put further pressure on U.S. regulators.

In January 2023, the National Institute of Standards and Technology (NIST) released the AI Risk Management Framework, and in April, Senator Chuck Schumer said in a statement that he had drafted a regulatory framework to both manage risks and encourage further innovation in AI. On May 16^th, 2023, the U.S. Senate Judiciary Subcommittee on Privacy, Technology, and the Law Subcommittee held a hearing entitled “Oversight of AI: Rules for Artificial Intelligence,” during which Sam Altman appeared to discuss ChatGPT’s capabilities and risks.

Although the U.S. lags behind the EU in its efforts, these are promising first steps—especially with a concrete bill in the works. As the legislative process gains traction, U.S. regulators should pay special attention to data privacy and security implications surrounding ChatGPT and similar models. There is currently no national regulatory regime on data privacy and security—only a handful of state ones, such as the California Consumer Privacy Act (CCPA). This month, the Federal Trade Commission (FTC) opened an investigation into OpenAI, in which it has asked the company to provide documentation on its data security and privacy practices.

Moving Forward

Going forward, regulators must seek to foster international cooperation surrounding generative AI—as models like ChatGPT are increasingly adopted and fine-tuned, they will have strong ripple effects across the global economy. Even OpenAI has proposed the creation of an international regulatory body akin to the International Atomic Energy Agency, which would have authority to inspect systems, impose restrictions, require audits, and test for compliance with safety standards. Wrote the company’s founders, “Given the possibility of existential risk, we can’t just be reactive.”

Going forward, financial institutions and solution providers must seek to stay informed, engage with regulators, and be methodical as they begin any adoption. To learn more about the risks associated with ChatGPT, read our report Large Language Model Threat: What CISOs Should Know About the World of ChatGPT.

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Escalating risks and cutting-edge technology alone do not dictate authentication strategies, however. As financial organizations look to phase out the password and scale up reliance on technologies such as facial recognition and other biometrics, they contend with their customers’ complex attitudes toward authentication.  

Aite-Novarica Group conducted a summer 2022 survey of 2,276 consumers across the U.S., the U.K., and Singapore on their attitudes toward authentication. The results were fascinating—if alarming, at times. Although consumers often do not understand the technology underpinning authentication, they have clear preferences on which authentication methods they use in accessing online banking and making an online purchase. Here are a few key ways organizations can balance consumer preferences with modern authentication capabilities.

1. Listen to Consumers—Within Reason

As financial organizations fine-tune their approaches to authentication, listening to consumers will be key. Still, consumer preferences must be balanced alongside security concerns, as consumers are often more attuned to customer experience than they are security.

Consumers are creatures of habit. They are drawn toward authentication methods they are comfortable and familiar with, as well as methods they find easy to use and over which they have control. This means that their preferences often do not align with the most effective measures in detecting fraud.

In the U.S. and the U.K., most consumers still overwhelmingly prefer the username and password combination, despite its waning efficacy and vulnerability to fraudsters. This preference is often accompanied by poor password hygiene, which spells trouble for consumers and their financial organizations alike—especially as financial crime and economic uncertainty grow.

Among risk management executives, the very concept of authentication is changing: Once conceptualized as a one-time event, authentication is now viewed as more of a continuous and dynamic process, one that captures a greater breadth of consumer interactions with their digital channels. Given this evolution, passwords have become archaic—they are not suited to the modern world of risk and technology.  

2. Ease Your Customers Into Newer Security Options

The introduction of innovative authentication methods will be crucial in combatting sophisticated financial crime, but doing so gradually will help prevent friction and other negative customer experiences. Consumers are more likely to embrace new authentication methods through continued exposure rather than an abrupt introduction.

According to the survey data, consumers worldwide are gradually adapting to more innovative authentication methods despite the long-held preference for the username and password. Since 2018, a preference for facial recognition has significantly risen, most likely due to the prevalence of facial recognition as an authenticator on smart devices.

In Singapore, consumers are most inclined to prefer the fingerprint biometric: Singapore has been very progressive in integrating biometrics into its national ID scheme, and multi-factor authentication (MFA) regulations are mature and stringent. Younger generations are also more inclined to favor biometrics like facial recognition, eye biometrics, and fingerprint biometrics, which is unsurprising given the tech-heavy environment in which they have grown up.

This link between exposure and preference is good news. For consumers who are hesitant to leave behind the username and password, continued exposure to a spectrum of innovative authentication methods will help them embrace biometrics. Providing choice will also be integral in easing the transition, as consumers prefer to have control in selecting the methods used to authenticate them.

3. Prioritize Continuous Authentication While Keeping Customers Happy

Amid these varied attitudes toward authentication, financial organizations are tasked with balancing anti-fraud measures alongside high expectations for customer experience. Consumers have very little tolerance for friction and expect their digital interactions to be seamless and quick.

A single negative customer experience could be enough for a customer to sever ties: Unauthorized transactions, false declines, and non-reimbursement in the case of victimization by a social engineering scam are all cause for a customer to leave their financial organization. Clearly, financial organizations cannot afford to get the all-important issue of authentication wrong. Continuous authentication will be essential in both ensuring security and elevating the customer experience.

As financial organizations navigate this changing environment and refine their authentication strategies, there are several steps they can take to ease the transition from the username and password, tamp down on both friction and fraud, and safeguard against customer attrition. Providing choice, listening to customers, and prioritizing continuous authentication will be especially key in ensuring smooth change.

For further insights on global consumers’ attitudes toward authentication and how financial organizations can best manage this landscape, read Aite-Novarica Group’s reports Global Consumers’ Authentication Preferences: Between Fraud and Friction in Digital Banking and Global Consumers’ Authentication Preferences: Frustration, Fraud, and Declines in a Changing E-Commerce Landscape.

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Many companies have sought to adapt to these shifting expectations, but a talent gap—or labor shortage—persists. As firms in the financial services and cybersecurity industries look to navigate the new world of work, retaining and attracting talent will be of utmost importance.

The COVID-19 pandemic, rapid digitalization, and changing demographics have fueled the Great Resignation and led to this dramatic workplace shake-up. Baby boomers are retiring earlier than expected, and midcareer and younger employees are switching jobs at an astoundingly high rate.

According to the U.S. Bureau of Labor Statistics, 6.3 million employees in the U.S. quit their jobs in November 2021, the highest number recorded since the survey began in December 2000. The entire year of 2021 saw a record-breaking 47 million employees in the U.S. leave their jobs. The trend is only set to continue. According to a survey by PwC, which gathered responses from 52,000 people across 44 countries, a fifth of the global workforce reported that they are very or extremely likely to switch jobs in 2022.

Amid this workplace reshuffle, companies are often left understaffed, fruitlessly searching for hires with the appropriate skill sets. Firms in the financial services and cybersecurity are grappling with how best to retain and attract talent while also growing profitability, responding to the ever-evolving pandemic, preparing for the impending economic recession, and wading through complicated regulatory landscapes.

The firms that are quickly adapting will reap the rewards, while those that do not risk losing talent to competitors. Listening to employees, recognizing and rewarding good performance, and providing employees with opportunities for growth and leadership will be key in retaining and cultivating talent. Potential hires will also gravitate toward flexible work arrangements, such as remote or hybrid.

Gen Z, which will soon make up a huge portion of the workforce, is an especially crucial component in the quest to attract new (and tech-savvy) talent. To engage the next generation, firms should look at establishing summer internship programs, seek partnerships with local colleges and vocational programs, emphasize a healthy work-life balance, and offer help (such as training and certifications) in career progression. Gen Zers who may be wary of traditional banking will be more inclined to join firms that demonstrate flexibility and genuine interest in their employees’ growth.

For a deeper exploration of the drivers of the Great Resignation, the impacts of the talent gap, and what firms can do to respond to this changing landscape, read Aite-Novarica Group’s Impact Report, The Great Resignation and Resulting Talent Gap.

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Bot attacks are one particularly pernicious type of threat, and they are on the rise. According to Kasada’s 2021 State of Bot Mitigation report, 83% of security professionals whose companies have started using an anti-bot platform reported that a bot attack had hit their company in the past year, and 80% reported that it was difficult for their security tools to detect and stop these malicious bots. As bots become more elusive and adaptable, no one is immune—countries, companies, and individuals cannot afford to ignore their lurking presence. Bot detection and management solutions must continuously innovate to stay ahead of the threat.

Fraud’s New Frontier

The metaverse, Web3, and virtual currency industries—fraught with as much risk as opportunity—are poised to become the next frontiers for bot attacks. The metaverse’s immense amount of data will be a treasure trove for hackers looking to steal personal data and carry out theft on a massive scale. Although the metaverse is in its infancy, its unique security challenges are already coming to light—according to Arkose Labs, metaverse companies saw a 40% increase in bot attacks in Q4 2021. Bloomberg Intelligence predicts that the metaverse could be a US$800 billion market by 2024, which will make it an especially attractive target for cybercriminals.

Hackers are similarly flocking to cryptocurrencies and NFTs in the hopes of making a profit. The network behind Solana, one of the globe’s biggest cryptocurrencies by market capitalization, has repeatedly been hit by bot attacks in the past year—even going offline several times. In the case of NFT launches, bots are snatching up works of digital art en masse, then reselling them on secondary markets at significantly higher prices. Many of these bots can be purchased for paltry sums, making hacking relatively accessible to even the most unsophisticated cybercriminal.

Global Cyber Threats

The decentralized nature of the virtual currency market presents another challenge in that it exists in a regulatory grey area. Different jurisdictions and agencies are grappling with how best to craft and impose workable cybersecurity standards and regulations in this complex, transnational realm. Government regulation aside, the technical architects behind metaverse, Web3, and virtual currency platforms must look to embed stringent and ever-evolving security controls to detect and stop bad bot activity and other cyberthreats.

Meanwhile, political conflict is increasingly playing out in the cyber world. Russian bots have taken to the internet to sow misinformation, sway political discourse, and wreak havoc. On February 15, 2022, a bot-based distributed denial-of-service (DDoS) attack attributed to a Russian federal agency caused the websites of the Ukrainian Defense Ministry and two of Ukraine’s largest banks to go dark. Governments have been slower than financial institutions in instituting digital transformation, which puts them further at risk of attack—as highlighted by massive fraud campaigns undertaken amidst the COVID-19 pandemic.

As the pace of digitalization continues to outstrip regulation; globalization, warfare, and digitalization collide; and hackers become increasingly clever, organizations of all sizes must look to invest in bot detection and management solutions. Solution providers in this industry must be constantly vigilant to keep pace with the evolution of bot activity. Behavioral biometrics, artificial intelligence, and machine learning will continue to take center stage in differentiating between human activity and bots, thwarting attacks, and reducing friction. For more information on 2022’s bot detection and management landscape, please read Aite-Novarica Group’s report Bot Detection and Management: Guarding the Gate Against Unwanted Bots.

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Founded in 2019, The Knoble is a nonprofit corporation seeking to protect vulnerable populations from modern slavery, human trafficking, fraud and scams, child exploitation, and elder abuse, which they collectively refer to as “human crime.” At its core, The Knoble is connecting experts in financial crime, fintech, and other professionals to combat exploitation and crimes against humanity more effectively.

The Knoble is the brainchild of founder Ian Mitchell, a long-time financial crime executive, who believes that meaningful, systemic change can only be effected through an integrated approach to spotting and impeding illicit money flows and human crime—one that unites industries across the public and private sectors. This cross-industry mission, a deliberate deviation from the historically siloed approach to tackling financial crime, has so far welcomed over 1,200 members, and over 200 organizations, into The Knoble Network.

Large global events can often spark an increase in illicit activity such as human trafficking, often due to the influx of out-of-town visitors. The Knoble recognized that aligning the private and public sectors and sharing targeted intelligence could substantially blunt these deplorable events.

The organization took a two-pronged collaborative approach toward its ambitious goal:

• First, the Knoble and partnering institutions developed red-flag detection scenarios. Participating financial institutions deployed these new scenarios into their existing anti-money laundering transaction monitoring platforms to spot suspicious transactions with common patterns linked to human trafficking. Upon investigation, financial institutions quickly filed suspicious activity reports (SARs) earmarked as human trafficking.
• In a targeted approach, law enforcement identified specific entities known to be involved in human trafficking in and around Los Angeles. The Knoble then facilitated intelligence sharing between law enforcement and financial institutions, after which those firms could scan their records for those specified parties and file corresponding SARs.

The initiative ran for a three-week period around and during the Super Bowl. Going forward, The Knoble hopes to scale up these types of efforts to other large events and cities as part of the more comprehensive strategy to awaken, equip, and deploy financial services to fight human crime.

Indeed, the work is far from over. Amidst the COVID-19 pandemic and the rapid digitalization that has accompanied it, financial and human crimes have soared in both volume and sophistication, with increasingly devastating effects. Vulnerable populations have been left even more susceptible. According to the United Nations, the pandemic has aggravated factors—like poverty, gender-based violence, and unemployment—that propel human trafficking, and victims have had less support and recourse to justice.

Women and girls continue to be disproportionately targeted. An increase in online time has increased vulnerability to trafficking, and traffickers have also begun to target children with more frequency. Meanwhile, the relative anonymity of cryptocurrency transactions is facilitating human trafficking, according to a report by the U.S. Government Accountability Office.

Financial services professionals are in a unique position to harness their expertise in protecting the vulnerable and bringing criminals to justice. The Knoble Network offers a remarkable opportunity to collaborate with and learn from experts across the cyber and fraud, law enforcement, tech, and regulatory industries, all bound by a common goal. The Knoble’s Member Center further facilitates collaboration, with discussion rooms and working groups geared toward sharing insights and information. Previously disparate approaches to fighting illicit money flows and human crime can now be strengthened into cohesive initiatives informed by multiple disciplines.

As the world seeks to defend the vulnerable populations around the world against human crime, financial crime fighters are encouraged to join The Knoble Network and contribute to the organization’s strategic mission: “awaken, equip, and deploy.” The organization continues to expand and launch new initiatives, with a focus on network collaboration, integrated data and technology, proven practices, and repeatable execution. For more information, visit https://www.theknoble.com/.

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