Bunq can use AI to check for money laundering, court rules
The Dutch central bank was wrong to ban online bank Bunq from screening its clients using AI techniques and data analyses, the Dutch company appeal court said on Tuesday.
The central bank had said Bunq was not properly complying with anti money laundering legislation which requires banks to run risk profiles of clients and monitor their transactions accordingly.
Bunq said this can best be done using AI, but the central bank disagreed, ordering the app-based bank to change its strategy.
The appeal court has now said that the central bank had not sufficiently proved Bunq’s methodology was not in line with the legislation and rejected the central bank’s claim Bunq did not have enough information about its business clients.
The court did find, however, that Bunq had not done enough to establish how its customers made their money or to investigate the source of income of ‘politically prominent people’.
Bunq founder Ali Niknam said the ruling was a victory for progress. ‘I’m incredibly happy to see that the Dutch court recognises the importance of the innovation we bring to a centuries-old industry,’ he said. ‘Its decision paves the way for industry-wide progress and opens the door to a safer financial sector.’
According to the Financieele Dagblad, the ruling is ground-breaking because judges rarely go against the decisions of a regulatory body. In addition, the paper said, there are very few banks willing to go to the highest legal authority in their dispute with a watchdog.
In 2018, ING was ordered to pay a €775 million out of court settlement for breaching money laundering regulsations, and three years later ABN Amro settled for €480 million. ING subsidiary Payvision is also now the subject of a criminal investigation, although the bank says the case dates from the period prior to its acquisition in 2018.
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