FCA trials cutting edge technology to assist in the fight against financial crime

The FCA has just launched a 12‑week proof‑of‑concept trial with Palantir to test whether a single, secure search capability across multiple datasets, can surface the intelligence that it needs to be more proactive, more accurate, and more effective in fighting financial crime by identifying patterns of harm far earlier than has previously ever been possible.  

Threat

Financial crime is one of the largest and most costly threats facing the financial services ecosystem, including direct threats to consumers, to firms, to the wider markets, and also to the wider economy. 

Preventing financial crime is a top-ranking regulatory priority for the FCA. As criminals become more sophisticated, and more nefariously enabled with modern technology, the FCA must itself make full use of the latest in modern technology to counter that threat in a sufficiently robust way. 

Risk

Against the backdrop of its regulatory obligation to protect consumers, firms, and the markets, from the constantly evolving threat of financial crime, the FCA faces the opposing challenge of ensuring that the data that it needs to subject to new technologies in order to keep pace, remains safe. 

Using the latest and most effective technologies to connect millions of data points across firms, markets, and consumer interactions inevitably needs access to the underlying data. Data is a long-standing and multi-faceted AI deployment friction point for every participant across the entire financial services ecosystem. As such, this is an interesting trial from which we can all watch and learn.

Data 

To safeguard the data being used in the trial, the FCA has built protections around it by ensuring that:

• Palantir acts as a data processor and not as a data controller;

• ensuring that the FCA retains full autonomy over encryption keys;

• hosting all the data concerned solely within the UK;

• prohibiting Palantir from using the data to train their products; and

• obliging Palantir to delete the data at the end of the trial.

These controls should act as a robust framework to ensure that the data is handled securely and appropriately during the trial while the FCA and its technical partners utilise the opportunity to:

• learn quickly;

• assess whether this new technology can move the dial in the fight against financial crime;

• move to deploy tools that help it to become a smarter and more effective regulator; and

• inform the way forward.

The route ahead

The FCA is in the exact same position as firms right now, doing the best that it can to keep pace with fast-evolving technologies and an equally fast-evolving threat landscape. This trial looks like a good example of how to test new technology in a controlled and responsible way and should provide some interesting and highly transferable learning. We will watch with interest.

Our thought leadership:

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Effective use of technology is vital in the fight against financial crime. It helps us identify risks earlier, join the dots across complex data, and make faster, better‑informed regulatory judgments. Anything less would be a dereliction of our duty to the consumers and firms we protect, and markets we oversee.

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