Combatting financial crime with AI at the crossroads of the revised EU AML/CFT regime and the AI Act

The integration of artificial intelligence (AI) into the area of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) marks an essential shift in how financial institutions and regulators approach the fight against financial crime. In the EU, in 2024, two major regulatory projects reached key milestones: the revision of the AML/CFT framework and the adoption of the AI Act. Although these legislative efforts progressed in parallel, there appears to have been limited coordination between the drafters, resulting in considerable inconsistencies and areas of ambiguity. Even such seemingly basic – yet crucial – issues as the consistent application of the definition of an AI system, the determination of risks possibly entailed by such a system, or the terminology concerning human oversight give rise to concerns. The present article has two primary objectives: first, to provide an in-depth analysis of the interplay between the AI-relevant provisions of the revised AML/CFT framework and the AI Act, highlighting instances of conceptual confusion and practical challenges that those implementing AI in the AML/CFT area may have to face; and second, to identify and examine the areas where the problematic interplay between the two regimes may negatively affect the scope and availability of the protective human rights standards enshrined in the AI Act.