Bias in the system: Why fairness must be the next frontier in AML compliance

Earlier this month, ING, one of Europe’s largest banks, publicly apologized for something that’s been quietly baked into financial crime systems for years: discrimination.

A Dutch human rights tribunal found that ING’s AML and anti-terrorism checks disproportionately flagged customers with Muslim- or non-Dutch-sounding names. The algorithms weren’t ill-intentioned, but they were flawed. Customers were scrutinized more heavily, had fewer opportunities to raise concerns, and were subjected to a system that didn’t reflect the complexity of real-life risk.

The bank called the outcome “unintentional but undesirable.” And that’s the issue. Bias in AML systems is rarely intentional. But it’s still deeply harmful.

Compliance shouldn’t come at the cost of fairness

The ING case is just the latest in a growing number of stories that highlight how rules-based systems, originally designed to reduce risk, can unintentionally create it, especially in culturally diverse markets.

Let’s look at the numbers:

• A 2023 study by the European Banking Authority flagged bias as a rising risk in financial institutions’ use of AI and automation.
• In recent global industry surveys, false positives remain one of the top challenges for compliance teams, costing time, resources, and eroding customer trust.
• Meanwhile, customers flagged by error face delayed transactions, frozen accounts, or worse, all without transparency or recourse.

That’s not just frustrating. It’s discriminatory. And when it affects people because of their name, nationality, or geography, it becomes a human rights issue.

Why this hits harder in MENA, Africa, and Asia Pacific

This isn’t a hypothetical concern in the regions Azentio serves. The Middle East, Africa, and South-East Asia is some of the most culturally and economically diverse areas in the world. Many financial institutions here operate across multiple regulatory regimes, languages, and customer behaviors.

These markets also carry higher volumes of cross-border payments, remittances, and cash-heavy transactions, all of which are more likely to be misinterpreted by traditional AML systems.

The result? Customers in these regions are more likely to be unfairly flagged, and institutions are more likely to face scrutiny, slowdowns, and reputational risk, not because of fraud, but because of faulty detection logic.

This isn’t about removing risk controls, it’s about improving them

Let’s be clear: strong AML controls are essential. the cost of financial crime globally is estimated at $3.5 trillion a year, and institutions are rightly under pressure to detect and report suspicious activity. without robust safeguards, banks expose themselves to fines, reputational damage and systemic vulnerabilities.

1. The hidden cost of false positives

   If your AML system is flagging the wrong things or the wrong people, it is not helping. it is hurting. overzealous alerts stall legitimate transactions, frustrate customers and drain compliance teams of time and resources. false positives erode trust and can even create legal risks when entire communities feel unfairly targeted.

2. What institutions need now

   What financial institutions need now are tools that understand context, reduce noise, treat customers fairly and meet or exceed regulatory expectations. these requirements reflect a broader industry trend toward more inclusive and effective controls.

3. Industry best practices for inclusive controls

   Banks are already adopting several best practices to avoid repeating past mistakes and to build a more inclusive financial system:

   • Cultural awareness training helps staff learn about diverse customs, holidays and community practices to prevent unnecessary alarms over routine transactions.
   • Smarter transaction monitoring powered by advanced analytics and artificial intelligence incorporates customer context such as typical payment patterns and local cash-heavy behaviors to distinguish actual risk from ordinary activity.
   • Customer feedback mechanisms invite ongoing insights from customers, advocacy groups and community organizations, allowing institutions to refine procedures and respond quickly to emerging concerns.
   • Balancing compliance and inclusion involve collaborating with regulators and non-governmental organizations to ensure that AML controls do not disproportionately impact any group, keeping the financial system open and accessible.

AMLOCK: Built for fairness. Designed for intelligence.

At Azentio, we’ve reimagined what an AML platform can and should do. The newly launched next-gen AMLOCK isn’t just faster or smarter, it’s fairer. Here’s how:

AI-driven risk scoring

We’ve trained our models on real-world AML typologies, not shortcuts like nationality or account label. Risk is assessed on behavior, not bias.

Personalized behavioral analytics

AMLOCK builds customer-specific baselines, so it knows what’s “normal” for this customer, not just customers in general. That’s crucial for regions where informal economies and multilingual transactions are the norm.

Explainable AI

No black-box algorithms here. Every flagged alert is accompanied by a clear, auditable rationale, giving your compliance team the tools they need to investigate quickly and fairly.

Continuous learning

AMLOCK gets smarter over time, using investigation outcomes and user feedback to identify blind spots and course-correct, long before they turn into risk exposure.

Fairness is more than an ethical goal, it’s a business strategy

Let’s talk business impact. AML platforms that generate high volumes of false positives can drain up to 50% of compliance team resources, not to mention the reputational hit of dealing with customer complaints or, worse, regulatory findings.

A system like AMLOCK reduces false positives, improves investigation speed, and allows teams to focus on real threats, not red herrings.

But even more importantly: it helps institutions build trust. In high-growth, highly competitive markets, trust is currency.

When your AML platform becomes a tool for both protection and fairness, you’re no longer just managing risk, you’re strengthening your brand, your client relationships, and your ability to grow with confidence.

What comes next: A new standard for AML

Financial institutions are under pressure from all sides, new regulations, rising expectations, and increasingly sophisticated criminal networks. But in trying to keep up, we can’t afford to cut corners on fairness.

Bias, even if unintentional, damages more than just the customer experience, it damages institutions’ ability to lead, scale, and be trusted.

ING’s case should serve as a wake-up call. Not because of the headline, but because of what it reflects, a system-wide need to rebuild AML processes that serve both compliance teams and the communities they protect.

At Azentio, we’re ready for that challenge. And with AMLOCK, we’re helping our clients get ahead of it.