Banking with Interest The Anti-Money Laundering Regime Is Broken. Can It Be Fixed?
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Jan 14, 2026 Juan Zarate, former senior U.S. Treasury official and expert on sanctions and anti-money laundering, delves into the flaws of the current AML regime he helped create. He advocates for bold reforms, emphasizing the need to rethink traditional approaches and move towards behavioral analytics. Zarate discusses the challenges banks face in engaging without clear guidance and the transformative potential of AI in sharing insights. He highlights the unique moment for reform driven by technology, policy shifts, and industry fatigue, offering a hopeful vision for systemic change.
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From Case Building To Real‑Time Prevention
- After 9/11 AML shifted from post‑facto investigations to real‑time prevention, greatly expanding bank obligations.
- Juan recalls false‑positive excesses like a SAR filed for stolen bacon to illustrate the overload.
Design Mismatch Between Purpose And System
- The current AML system was built to help law enforcement build cases, not to prevent or predict illicit finance in real time.
- That mismatch makes the design unfit for today's preventive goals and produces massive inefficiency and false positives.
Pursue A Paradigm Shift With Technology
- Shift from marginal fixes to a paradigm shift that leverages modern techniques like federated learning and AI.
- Use technology to redesign information flows so the system becomes preventive, efficient, and collaborative.
