Palantir, the US artificial intelligence company co-founded by billionaire Peter Thiel, has been awarded a contract to access highly sensitive data held by the Financial Conduct Authority (FCA) in a move that has sparked fresh privacy alarms. The three-month trial, worth over £30,000 per week, will see Palantir analyse the watchdog's internal intelligence to help tackle financial crime, including fraud, money laundering and insider trading.
The FCA's 'data lake' contains vast amounts of information, including case intelligence files, reports on problem firms, lender reports on fraud, consumer complaints, phone call recordings, emails and social media posts. The contract is part of the FCA's drive to use digital intelligence to better focus resources on rule-breaking among the 42,000 financial services firms it regulates, from major banks to crypto exchanges.
Campaign groups have voiced 'very significant privacy concerns', and sources inside the FCA have questioned Palantir's ethical reliability. The company's technology is used by the Israeli military and US immigration enforcement, leading to criticism from leftwing MPs who have called it 'highly questionable'. Palantir already holds over £500m in UK public contracts, including with the NHS, military and police.
The FCA stressed that Palantir will act only as a 'data processor', not a 'data controller', and that the regulator will retain exclusive control over encryption keys for the most sensitive files. Data will be hosted and stored solely in the UK, and Palantir must destroy it after the contract ends. Any intellectual property derived from the data will belong to the FCA.
Professor Michael Levi, an expert in money laundering at Cardiff University, acknowledged the potential value of AI in tackling financial crime but questioned the protocols for onward use of information. The FCA considered using dummy data but decided real data was necessary for a worthwhile test, despite guidelines encouraging synthetic data in pilots.
