Criminal Law Responses to Digital Banking Fraud in the Era of Artificial Intelligence

Abstract

The paper explores the current state of the digital banking fraud currently augmented by the application of artificial intelligence, and critically issues whether the existing criminal law measures are sufficient to capture these complex criminal transactions. It examines the role of AI-led methods to improve the commission as well as detection of financial crimes and a fine-tuning in reinterpretation legal norms is required to provide accountability and predictive deterrence efficacy. To be precise, the study points to the underlying distinctions between the management of criminal liability in terms of common law and civil law in matters of AI-based cyber-trading, as the number of such instances has been soaring worldwide. The paper also suggests that the rising interest of AI in the financial services sector coupled with innovative fraud detection tools has also created a new set of risks which are exploited by a new generation of criminals thus causing a spurt in complex, scalable, and hard to track digital banking fraud. The change induced by this paradigm shock requires a strong reevaluation of the liability of the corporate crime with regard to financial institutions that use AI whereby the previous stipulation of mens rea in financial institutions grows harder and harder to determine. The complications are even intensified by the fact that AI systems are not fully governed by the intentions of their programming or that certain cases can be negligent in how they are built or implemented, which sets up a problem that is similar to that of traditional responsibility of dangerous animals, except on a much grander scale. It requires an in-depth advancement of the attribution of culpability in the case in which AI systems are involved and possess certain type of designed cognition and will and hence significant in committing crime beyond the age-old notions of intent.