Latin America. Money laundering continues to be a challenge for the financial system in Latin America. According to estimates, approximately 400 billion dollars are laundered in the region each year, through activities such as tax evasion, drug trafficking, human trafficking, corruption, shell companies and the illicit use of bank secrecy.
In recent months, the U.S. Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN), pointed to several banking institutions for alleged involvement in money laundering operations linked to criminal organizations. These accusations have put at the center of the debate the capacity of the region's financial systems to prevent and detect this type of crime.
Josué Martínez, Global Advisor of BioCatch for LATAM, explained that "Latin America faces enormous challenges to curb financial crime, among the main obstacles identified are: 1) Institutional and regulatory weaknesses; 2) Corruption and infiltration of organized crime; 3) Technological complexity and volume of data; 4) Informal economies and use of cash, and 5) Limited cooperation."
According to BioCatch's global survey The Informal Economy: A Look at the Unseen, 78% of professionals working in fraud management perceive that criminal organizations have reached a higher level of sophistication in money laundering, while financial institutions remain lagging behind in detecting them. The same study indicates that 83% identify links between fraud and crimes such as human trafficking, terrorism and drug trafficking.
Behavioral biometrics to combat financial crime
Behavioral biometrics is proposed as a tool to detect networks of accounts that carry out money laundering operations through circular transactions. This technology analyzes patterns in users' interaction with digital devices and platforms, differentiating between legitimate behaviors and suspicious activities.
"The main benefit of behavioral biometrics is that it operates passively in the background during a web or mobile session, monitoring thousands of parameters, such as how a person holds the phone or scrolls and switches between fields. This allows us to minimize friction in the user experience," explained Martínez.
According to the BioCatch study, financial institutions that have implemented behavioral biometrics are, on average, less likely (46%) to lose sums of more than $10 million per year due to fraud, compared to 51% of those that do not have this technology.
Fines and regulations
The same report notes that 89% of respondents believe that effectively combating money laundering requires greater regulatory intervention. Three out of four respondents reported annual fines equal to or greater than $5 million, and 23% said that these fines exceeded $25 million.
Interbank cooperation
Martínez stressed that collaboration between financial institutions is key to addressing the problem. "The incorporation of behavioral biometrics (...) it will allow organizations to identify patterns of human behavior and differentiate between legitimate and criminal activities."
In this line, BioCatch has promoted interbank networks in countries such as Australia and Argentina, in order to share intelligence in real time and detect money laundering schemes based on networks of muletto accounts. According to Martínez, although these initiatives are still at an early stage, they offer the possibility of improving the financial sector's ability to identify and curb the illicit flow of funds.
