AI could block $34bn in dirty money across Australia and New Zealand | Napier AI

Australia and New Zealand are tightening their regulatory frameworks to address evolving financial crime threats, including money muling and misuse of digital currencies. With evolving guidance and increasing penalties for noncompliance, financial crime compliance professionals face the dual challenge of keeping up with complex regulations and embracing technological innovation. 

Financial crime is a threat to economic growth. Where open banking has been adopted to provide customer choice and stimulate innovation through competition, effective financial crime compliance controls are paramount. Without them, GDP is at risk, as poorly screened customers or new decentralised digital currencies can enable unlawful movement of funds into the black market. Australia and New Zealand should look to protect the growth of their innovative financial marketplaces, with proportionate AI guidance and collaborative AML controls.

In this article, we examine the potential impact of AI on anti-money laundering efforts, estimating how much could be prevented from passing through Australia and New Zealand illegally, with data from the Napier AI / AML Index.

Australia and New Zealand are actively evolving their financial crime compliance regimes to address emerging risks in an increasingly digital landscape.  

In Australia, initiatives such as signing the Bletchley Declaration and proposals to extend AML obligations to a broader range of sectors underscore a proactive regulatory stance. While Australian banks are exploring the use of large language models and generative AI to counter financial crime, challenges remain amid stringent data laws and legacy systems. Additionally, new legislation has been passed to extend AUSTRAC’s AML regime to Tranche 2 entities, meaning lawyers, accountants, and real estate professionals may be required to conduct ongoing due diligence.

New Zealand is simultaneously strengthening its AML and counter-terrorism financing framework by expanding regulatory obligations and laying out a strategic, risk-based approach to AI. Together, these markets are harnessing innovation to enhance compliance without compromising security—demonstrating a balanced approach that blends cutting-edge technology with rigorous oversight to build a more resilient financial system.

Both nations are emphasizing public-private partnerships to streamline compliance and enhance detection mechanisms. In Australia, ongoing consultations on AML reforms and proposals for mandatory AI guardrails signal a clear commitment to future-proofing financial systems, while New Zealand’s extension of AML obligations to previously unregulated sectors highlights its drive toward comprehensive oversight. These collaborative efforts are setting the stage for a dynamic regulatory environment that not only mitigates emerging risks but also encourages sustainable innovation.

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Photo by Sulthan Auliya on Unsplash

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According to the Napier AI / AML Index, in 2023, $34 billion (USD) of dirty money passed through Australia and New Zealand. By implementing AI in regulatory compliance to drive down financial crime, Australia and New Zealand could save almost half of this — $34 billion (USD) — of dirty money passing through the region.

CTA: Download the Napier AI / AML Index.