Dutch challenger bank bunq has hailed a landmark verdict in the Dutch court over the use of artificial intelligence (AI) for anti-money laundering (AML) and counter-terrorist financing (CTF) processes.
Proud to have been part of bunq’s license application
The Dutch Central Bank (DNB) had originally prohibited bunq’s use of AI and machine learning to conduct monitoring – a move that led bunq to sue the central bank. DNB required bunq to screen its customers in advance using an analysis method that followed a fixed set of rules. However, bunq believed that this mandatory approach was old-fashioned, less effective, and not designed for a digital bank.
On October 18, 2022, the Dutch court (the Trade and Industry Appeals Tribunal) ruled in favor of bunq. The court ruled that DNB has not proved that the screening method used by bunq is contrary to the law, paving the way for the use of AI for AML controls.
It is the first time a Dutch bank sued a regulator over such a fundamental issue, as banks prefer to settle disputes with DNB behind closed doors. According to bunq, the unusual step of suing its banking supervisor was based on the potential long-term detriment to its users and the stability of the banking system as a whole had it yielded to DNB’s AML strategy.
The heavily manual processes around AML and CTF has long been a sticking point for digital challenger banks given that it adds significant costs in terms of reporting. This has in part led to the growth of the regtech sector where a number of vendors have sought to use AI to add more efficiency to the AML monitoring and reporting obligations.