India's FIU unveils AI-infused system to combat money laundering, terrorism financing

India's Financial Intelligence Unit (FIU) has launched an advanced 2.0 version of its information technology system, leveraging artificial intelligence (AI) and machine learning (ML) tools to enhance efforts in tackling money laundering and terrorist financing within the country's economic channels.

The newly upgraded system, known as Financial Intelligence Network (FINnet) 2.0, is designed to process and analyze suspicious transaction reports (STRs) from banks and financial institutions and disseminate vital information to investigative and intelligence organizations.

Upgrading FINnet

The FINnet 2.0 upgrade was deemed necessary due to the increasing volume of suspicious transaction reports flagged by financial institutions to the FIU.

According to a recent report for the 2022-23 fiscal year, the overhaul was required to address the rapidly changing regulatory environment and evolving technological landscape.

"FINnet 2.0 leverages emerging technologies for superior analytical competencies, data quality improvement, incisive compliance monitoring, and cutting-edge security tools for strengthening anti-money laundering and combating the financing of terrorism capabilities of FIU-India and its reporting universe," the report noted.

Advanced technology capabilities 

The system enables the generation of risk scores for individuals, businesses, reports, networks, and cases, allowing for the identification and prioritization of high-risk cases and entities using risk analytics.

FINnet 2.0 employs advanced analytics through AI and ML tools, offering features such as natural language processing (NLP) and text mining to analyze textual inputs like 'grounds of suspicion'.

FINnet 2.0's three sub-systems

1. FINGate: Gathers information from banks, financial institutions, and intermediaries.  
2. FINCore: Analyzes data using AI and ML tools to generate summaries and share STRs with law enforcement agencies based on risk profiles.  
3. FINex: Disseminates financial intelligence reports to investigative agencies like the Income Tax Department, ED, CBI, and DRI and intelligence organizations like the IB, military intelligence, and the NTRO.  

FINCore is the most critical vertical of the technology setup, incorporating external databases such as the Central Board of Direct Taxes (CBDT), Ministry of Corporate Affairs, National Payments Corporation of India (NPCI), and Central Depository Services Ltd. (CDSL).

The integration creates a comprehensive profile of the entities in question, enabling effective identification and resolution.

Incorporating measures to ensure data security

Given the sensitive nature of financial data processed by the FIU, the upgraded IT system incorporates several measures to ensure data confidentiality and security.

These include end-to-end encryption, automatic blocking of logins after multiple unsuccessful attempts, controlled access to portal content, logging of security incidents, and an identity management solution capable of managing security rights and privileges.