AI vs. Financial Scams: Why Banks Aren't Doing Enough in the Fight Against Sextortion and Fraud

Regulatory Ramblings

Ep #52 with Oonagh van den Berg (RAW Compliance)
Oonagh van den Berg, a seasoned international compliance professional, is the founder of RAW Compliance, a consultancy and training firm. With a legal background and two decades of experience in London, Hong Kong, and Singapore, Oonagh has become a respected figure in the compliance industry. Her upbringing in Northern Ireland during the violent era of "The Troubles" in the 1980s shaped her resilience and determination, leading her to a career as a lawyer, compliance officer, recruiter, consultant, and educator.
In this episode of Regulatory Ramblings, Oonagh discusses with Ajay Shamdasani the critical role of artificial intelligence (AI) in combating financial scams, deepfakes, and sextortion. These issues have become increasingly prevalent, especially in the dark corners of Web3. Oonagh's perspective is deeply personal, as her 13-year-old daughter and friends recently fell victim to blackmail after sharing innocent photos on Snapchat. This experience has driven her to raise awareness and produce educational videos through RAW Compliance, targeting pre-teens, teenagers, and young adults to prevent similar incidents.
A Europol poll highlights the growing use of AI by cybercriminals to commit complex and dangerous crimes. Malicious large language models (LLMs) are being utilized to craft scripts, phishing emails, and fraud advertisements, as well as to groom victims across language barriers. The rise of AI-altered and fully artificial child sexual abuse materials, which are increasingly realistic, has led to devastating consequences, including blackmail and suicides.
Oonagh also touches on her firm’s groundbreaking collaboration with Nick Leeson, the infamous former Barrings trader, to support victims of financial scams and assist in asset recovery. Together, they aim to provide the necessary help and guidance for victims to reclaim their financial futures.
She also criticizes banks for their insufficient efforts in helping scam victims, citing outdated technology and inadequate fraud detection systems. The scale of financial crime is alarming, with over 3.5 million people in the UK affected annually, leading to losses exceeding £1.2 billion. The problem is similarly severe across Europe and the US, with losses reaching billions of euros and dollars, respectively.
The conversation explores how financial institutions can navigate evolving regulations, monitor for child sexual abuse materials (CSAM), and investigate human trafficking within both traditional and decentralized financial systems. Oonagh emphasizes the challenges of global technology use in combating these crimes and provides estimates on the total value of suspected CSAM transactions using fiat versus cryptocurrency.
Oonagh concludes by highlighting the financial sector’s failure to take responsibility for anti-money laundering, human trafficking, and financial scams. She stresses the importance of understanding suspicious red flags and typologies that can aid in investigations, a crucial takeaway for both traditional financial crime compliance professionals and blockchain investigators.
HKU FinTech is the leading fintech research and education in Asia. Learn more at www.hkufintech.com.

章

1. AI vs. Financial Scams: Why Banks Aren't Doing Enough in the Fight Against Sextortion and Fraud (00:00:00)

2. The Urgency of Scam Awareness (00:05:13)

3. Banks Must Evolve to Safeguard Customers (00:12:09)

4. HSBC and Google AI: Legacy Code and the AI Revolution in Banking (00:27:09)

5. Band-Aid Fixes vs. Real Solutions: The Crisis in Banking Controls (00:31:14)

6. Banking Lapses: A Growing Threat to Customer Security (00:36:52)

7. Deniability and Accountability: Failures in Banking Enforcement (00:53:45)

8. CSAM Strategies: Detecting Human Trafficking and Exploitation (00:59:55)

9. The Case of the Beauty Salon: Bank Transaction Monitoring and Human Trafficking (01:02:19)

10. Systems Can't Replace Human Insight in Financial Crime (01:10:04)

11. Protecting Market Integrity and Customer Interests (01:21:00)