Category:Banking
Generative AI- The Next Frontier in Fighting Financial Crime
Artificial intelligence (AI) is the latest tool in a financial institution’s arsenal to restrict the flow of money being channeled to fund illegal activities worldwide. As criminals get more innovative and sophisticated in using the latest technology to evade detection of their financial crimes, financial institutions must follow suit and utilize similar technology to root out these crimes or risk facing regulatory sanctions. Money laundering generally refers to financial transactions in which criminals, including terrorist organizations, attempt to disguise the proceeds of their illicit activities by making the funds appear to have come from a legitimate source. However, this is not a new phenomenon. Congress passed the Bank Secrecy Act (BSA) in 1970 to ensure financial institutions follow a set of guidelines known as KYC (Know Your Customer/Client) to detect and prevent money laundering through their systems.
CFPB Takes Aim at Credit Card Late Fees in Latest Rule to Eliminate ‘Junk Fees’
In January 2022, the Consumer Financial Protection Bureau (CFPB) set out to increase transparency in the pricing of financial services products by implementing rules to eliminate ‘junk fees’ that often obscure the true price of financial products. Through this initiative, the CFPB analyzed the impact of numerous types of fees across banking while simultaneously attracting the scrutiny of banking advocacy organizations such as the American Banking Association (ABA) and the US Chamber of Commerce. These advocacy organizations have challenged the constitutionality of the CFPB funding structure. The CFPB examines all categories of financial products in the search for ‘junk fees’, including recently uncovering paper bank statement fees for statements that were never printed or mailed, add-on products being charged to paid-off auto loan accounts, undisclosed fees imposed on international money transfers, and bank operating systems double-dipping on non-sufficient funds fees. While litigation has recently settled in the Supreme Court to determine that the CFPB is constitutionally funded under the Appropriations Clause, the most recent rule by the CFPB to limit ‘junk fees’ imposed on credit card accounts remains on hold following a decision to grant a Preliminary Injunction by the US District Court for the Northern District of Texas.