RBC Invests in AI and Technology to Combat Money Laundering, Says CEO

Royal Bank of Canada (RBC) is ramping up its investment in technology and artificial intelligence (AI) to tackle money laundering, according to its chief executive. Shares in RBC surged on Thursday after the bank reported better-than-expected earnings of CAD$4 billion, following its acquisition of HSBC Bank Canada.

During a call with analysts, RBC President and Chief Executive Officer Dave McKay emphasized the bank’s ongoing commitment to advancing new anti-money laundering (AML) strategies and products. “It takes all banks to protect the overall payment system,” McKay stated. “We do collaborate around that, we invest in technology [and] AI helps us protect the system. So we’re constantly on guard and investing in new systems.”

In December 2023, RBC faced a fine of nearly CAD$7.5 million from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for alleged deficiencies in its suspicious transaction reporting (STR) mechanisms. The agency noted failures in submitting STRs in situations “where suspected money laundering offenses were considered reasonable.”

In response, RBC highlighted in January that “AML and systems future proofing” are two key areas where AI is currently being utilized within RBC investor services. Additionally, earlier this month, RBC’s U.S. wealth management division announced a partnership with TIFIN to provide AI tools for RBC’s financial advisors.

McKay reiterated RBC’s vigilance and investment in new systems, stating, “[We are] using technology and training to make sure we play our role in the overall financial system and protect against this type of crime. We make it the highest priority in our organisation. We work with our regulators, our governments and all our agencies to protect the financial system. It’s a journey – the world changes and we adjust to that.”

Graham Hetworth, RBC’s chief risk officer, noted that the acquisition of HSBC Bank Canada introduced new AML considerations due to HSBC’s international client base. “HSBC has an international client base that presents unique risks,” Hetworth explained. “We spent a lot of time looking at their AML program, that was a key part of our due diligence.”

Hetworth emphasized the importance of ensuring that HSBC’s AML structure met RBC’s standards, adding, “We’re also bringing in a lot of seasoned professionals from the HSBC side. We’ll learn from their knowledge and experience, which is a real benefit for us as well.”

By fLEXI tEAM