Artificial Intelligence and Policing of Financial Crime: A Legal Analysis of the State of the Field

This article maps the existing use of Artificial Intelligence (AI) in law enforcement, with a focus on crimes perpetrated on financial markets—including market manipulation and insider trading. Market manipulation can cost investors significant sums and reduce investor confidence, negatively impacting the efficiency of the markets that businesses rely on to raise capital and that pension funds, superannuation funds and sovereign wealth funds rely on to generate returns. With over AUD1 trillion of Australian taxpayer money currently invested in securities markets through superannuation funds, the stakes are high. As criminals have become more sophisticated in their efforts to manipulate financial markets, enforcement efforts have also become more innovative, utilising new technologies to detect and respond to criminal behaviour and protect investors, the public and the global financial system. The purpose of this chapter is to establish the state of the field in application of AI to policing of financial markets and take an interdisciplinary look at opportunities to enhance the use of AI in policing more broadly. The chapter begins with an explanation of the laws designed to combat crime on financial markets—in particular the offences of insider trading and market manipulation. This is followed by an analysis of the current state of the field and discussion of the application of AI to detect and deter financial crime, as well as the use of AI in other areas of policing. The chapter concludes with lessons and opportunities from the application of AI to policing financial crime, noting the risks and limitations of an AI approach and the challenges and opportunities for expanding the application of AI to policing more generally.