Fighting Financial Crime with Cutting-Edge Techniques

Jenna Danko
Product Marketing

As you know, the pressure placed on financial organizations to combat crime and money laundering is always on the rise—and there’s good reason, too. It’s estimated that US$1.6 trillion in criminal proceeds pass through the financial system every year, or roughly 2 to 5 percent of the world’s GDP.1

If that sounds like a lot, it’s worth bearing in mind that this isn’t just a number. This is money that funds organized crime—that’s terrorist groups, large-scale corruption, the drugs trade, human trafficking, and counterfeiting—and those of us in the finance industry are in a unique position to fight it all.

This is why anti-money laundering (AML), risk, compliance, and Bank Secrecy Act officials are constantly tasked with improving practices. But with more data flowing through the system than ever before, and with increasingly sophisticated threats, maintaining compliance and keeping crime at bay are tasks that grow in complexity.

Right now, a lot of banks are still using traditional methods to uncover suspicious behavior. But these methods are costly—and rife with opportunities for failure.

The time has come for a new approach. 

Fighting Fires Before They're Fires

There’s currently a real desire on the part of regulators to change the industry’s culture and approach to compliance, making it central for all operations. For example, a much bigger emphasis is currently being placed on due diligence and knowing your customers, with regulators really starting to scrutinize how banks have chosen their clients in the past.

There’s good reason for this, too. This initial stage of interaction between an institution and potential customer is the easiest time to prevent fraudulent activity. Quite often, by the time customers have been on-boarded, the damage has been done. But vetting customers before this point—before they even engage with the institution—is by far the most successful method of prevention. It’s all about knowing who your customer is.

How do you do this? Well, it’s clear that siloed, piecemeal solutions are no longer suitable. What the modern bank needs is a way of automating the on-boarding and risk-scoring processes to ensure compliance, while engaging in ongoing due diligence (ODD) and enhanced due diligence (EDD).

Placing Big Data Analytics at the Heart of Your Defense

Many organizations are already updating AML systems and Financial Crime and Compliance Management (FCCM) solutions to automate and standardize these on-boarding processes, gain a single version of the truth, increase transparency, and improve overall performance.

Several are also starting to acknowledge the importance of data-driven analytics, business intelligence tools, and the techniques commonly seen in other areas of big data analysis to prevent financial crime.

The fact is that although a lot of institutions feel limited to the data available in siloed databases, or to that which customers provide, many have the potential to access a much bigger pool of data in various formats residing in data lakes. With the right investments, this data can provide much better insight into who clients are and, ultimately, a better assessment of their risk to the institution.

Guesswork or manual review are not appropriate strategies for protecting your bank, so using big data in the investigative and due-diligence process to find early correlations between clients and crime is the best way to stay ahead of potential threats.

The main benefit is that where traditional SQL warehousing is slow and can only enable you to address structured data, big data analytics provide the ability to work with multiple data types like voice, chat, email, and machine logs, as well as transaction data. This means you can develop a more complete picture of compliance, track insider misconduct risks, and reduce instances of false positives. All-importantly, you can do all of this in real time, turning a responsive approach to protection into a proactive one and effortlessly putting compliance at the heart of your day-to-day operations.

Right now, the use of big data analytics in financial compliance programs is becoming more mainstream. But in order to take full advantage, you need the right solutions in place to ensure your approach is effective, cost-efficient, and future-proofed—so no matter what changes are made to legislation, you’re able to keep up.

A Solution Fit for the Modern Age

So the measures you take to protect your bank need to do a couple of things: take the cost out of the onboarding process, and minimize risk. But what technology can help you do this?

As we mentioned earlier, it all comes down to knowing your customer. There are plenty of tools available that can help you to get a more complete picture of your prospective clients from day one—making it far easier to monitor, detect, and investigate suspicious activity, and notify regulators of potential problem areas.

These same know-your-customer tools can also automate and reduce the cost of on-boarding—which makes finding new customers that much safer, and maintaining compliance that much cheaper.

Sound Good?

To learn more about the current state of financial crime and compliance, and the solutions available to help you face your challenges, visit our resource center.

Alternatively, if you want to experience the benefits of a modern approach right away, trial Oracle Financial Crime and Compliance Management today.

1 UNODC, "Illicit Money: How Much Is Out There?"

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