AFC Urges Treasury To Use AI Against Crypto Crime

The American Fintech Council urges the Treasury to fight illicit crypto activity by incentivizing AI adoption and ensuring unimpeded data flow for compliance.

The American Fintech Council (AFC) has presented a landmark framework to the U.S. Treasury Department, advocating for a technology-driven offensive against illicit activity in digital assets. The proposal centers on two pillars: creating regulatory incentives for the adoption of advanced AI compliance tools and ensuring unimpeded data movement across the financial ecosystem to power them. This initiative directly challenges the current, often fragmented, regulatory approach and signals a critical shift from penalizing bad actors to proactively empowering the entire sector with the tools for better financial surveillance. The move places significant pressure on regulators to modernize their own frameworks and for legacy financial institutions to justify their technological lag.

This forward-looking stance represents a stark contrast to the industry's traditionally defensive posture. While many lobby for lighter oversight, the AFC is delivering a sophisticated argument for smarter, more effective regulation powered by data analytics. The council’s proposal correctly identifies that the current chokehold on data sharing for privacy reasons is precisely what enables criminal activity to flourish in the shadows. Their framework matters because it demonstrates that the most potent weapon against financial crime is not more restrictive rules, but a collaborative, data-rich environment where regulatory technology can identify patterns invisible to siloed institutions.

For CEOs of fintech firms and traditional banks, this is a clear strategic directive. The future of risk management lies in heavy investment in AI-driven monitoring systems and forging strategic partnerships with specialized RegTech providers. The forward-looking insight is unambiguous: institutions that build the operational readiness to participate in secure, permissioned data networks will gain a significant competitive advantage in both compliance efficiency and market trust. Regulators will soon mandate this level of sophistication; those who wait for the mandate will be left behind, facing both higher costs and existential regulatory risk.