AI and payments: the EU bans social scoring, automatic monitoring of payment flows becomes possible, a precedent of frozen accounts in Canada

What is reported

Since 2 February 2025, the European AI regulation (AI Act, Article 5) bans AI systems that evaluate or classify people based on their social behavior or personal characteristics, when the resulting score leads to unfavorable treatment unrelated to the context or disproportionate: the legislator acknowledges that “social scoring” by AI is technically possible and dangerous. In 2023, the BIS’s Project Aurora showed, on simulated data, that machine learning applied to the payments of several banks and several countries detects money-laundering networks far better than isolated analysis. In Canada, in February 2022, at least 257 bank accounts were frozen without a court decision under the Emergencies Act; the Federal Court (January 2024) and then the Federal Court of Appeal (16 January 2026) held the use of this law unreasonable and the freezes contrary to the Charter (unreasonable search and seizure); the government asked to take the case to the Supreme Court (March 2026).