UK financial watchdog taps Palantir for data analysis

Controversial US data miner continues its advance into the UK public sector

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Source: Wikimedia Commons

US technology firm Palantir is to analyse highly sensitive data held by the UK’s financial regulator, in a move that has raised fresh concerns about privacy and the role of AI in government.

As reported by The Guardian, the Financial Conduct Authority (FCA) has awarded a contract to Palantir to examine internal intelligence as part of efforts to combat financial crime, including fraud, money laundering and insider trading.

The three-month trial will see Palantir paid more than £30,000 a week to analyse the regulator’s extensive data lake – a repository that includes case files, reports of suspected wrongdoing and consumer complaints.

The FCA said the project forms part of a broader push to make better use of digital tools across the 42,000 firms it supervises, ranging from major banks to cryptocurrency platforms.

Officials hope that advanced data analysis will allow the regulator to identify patterns of criminal activity more quickly and direct resources more effectively.

Palantir’s data mining platform Foundry is expected to process large volumes of information, including emails, call recordings and publicly available social media data.

An FCA spokesperson said the company would act strictly as a “data processor”, meaning it could only handle information under the regulator’s instructions.

The watchdog added that all data would remain in the UK and that encryption keys would be retained under its control.

Concerns over privacy and oversight

The arrangement has prompted unease among privacy advocates and some within the regulator itself.

Critics warn that giving a private company access to such detailed intelligence risks exposing sensitive personal and financial information.

The dataset may include bank details, communications and records relating to individuals not suspected of wrongdoing.

One source familiar with the project questioned how insights gained during the analysis would be used, asking whether sufficient safeguards were in place to prevent misuse.

Legal experts have also highlighted the potential risks of using real data in a pilot scheme, rather than anonymised or synthetic datasets.

Christopher Houssemayne du Boulay, a barrister specialising in financial crime, said investigations often involve large volumes of information about both suspects and innocent parties.

“If you ingest that data and use it to train an AI system, there are very significant privacy concerns,” he said, adding that strict confidentiality requirements would be essential.

Palantir already holds more than £500 million worth of UK public sector contracts, including work with the NHS, the Ministry of Defence and police forces.

In September, UK government signed a defence AI deal with Palantir. The same month, Coventry City Council signed a contract with the company to explore the use of AI in social work and children’s services.

Palantir’s expanding role has drawn political scrutiny, with some MPs previously questioning the company’s track record, its involvement in overseas security operations and ICE immigration raids in the US and its close connection to the Trump organisation and Peter Mandelson.

Greens leader Zack Polanski has urged the NHS to cancel its contract with Palantir via a break clause, while the Liberal Democrats have called for a parliamentary date over the suitability of the company for public contracts.

The firm has defended its work, saying its technology has supported policing efforts and improved healthcare delivery, while maintaining that it takes a “rigorous approach” to human rights.

Balancing innovation and risk

Professor Michael Levi, a specialist in financial crime, said the use of AI could significantly improve the detection of financial crime, but he raised questions about governance and accountability.

“What are the protocols agreed between the FCA and Palantir about the onward use of things that they have learned in that process?” he said.

The FCA said Palantir would not be permitted to use the data to train its own products and would be required to delete all information at the end of the contract.

“Effective use of technology is vital in the fight against financial crime and helps us identify risks to the consumers we serve and markets we oversee,” a spokesperson for the FCA said.

“We ran a competitive procurement process and have strict controls in place to ensure data is protected.”