RBI Governor advocates AI in combating money laundering

Mumbai

Reserve Bank of India (RBI) Governor Sanjay Malhotra emphasized the role of artificial intelligence (AI) and machine learning (ML) in fighting money laundering during his address at the Financial Action Task Force (FATF) Private Sector Collaborative Forum 2025 event. He highlighted the importance of evolving risk assessment frameworks using these technologies to keep pace with the increasing sophistication of financial crimes.

Malhotra noted that while technology has simplified business operations, it has also provided criminals with advanced methods to launder money and finance illicit activities. As such, he called for continuous improvement of risk models to detect suspicious transactions and preempt criminal activities.

He further urged central banks to stay updated on emerging trends and to develop rules that target illegal activities without stifling legitimate business operations. “Our measures must be precise, targeting only illicit activities without unintentionally affecting the honest,” Malhotra said.

The RBI Governor also stressed the need to improve data quality and leverage evolving technologies like blockchain, AI, and ML to enhance transaction screening and reduce errors. This would help in detecting suspicious activities more accurately, minimizing false positives and negatives.

Malhotra also addressed the G20 roadmap for inclusive cross-border payments, aiming to make them faster, cheaper, and more transparent by 2027. He warned against regulations that could unintentionally hinder financial inclusion and stressed the importance of balancing security with customer convenience.