Thwarting financial crime in a hyper-connected world!

Smruthi Bangera
Principal Product Manager – Marketing, Oracle Financial Services

The age of hyper-connected world is here! Not too long back, the financial services industry witnessed a huge transformation with Digitalization and Open Banking as a result of which financial institutions and service providers from across industries came together to create newer business models and ecosystems that worked towards innovation and providing the best customer experience. While on one side hyper-connectivity worked beautifully to improve the end user experience, on the other hand the bad guys have equally benefited from it. They have leveraged the loop holes within the digital payment transformation system and the payment networks to successfully mask their money laundering and terrorist financing activities.

Effectiveness and Efficiency – 2 sides of the same coin

Digitalization has caused an exponential increase in the number of financial transactions, as a result of which archaic rule-based systems no longer serve the purpose of catching the bad guys in real-time and ensuring compliance to the AML/CFT regulations. These systems need to be extremely precise in the flags they raise, so that they are “effective” and therefore can reduce the probability of false positives- the biggest pain point hampering the “efficiency” of anti-financial crime departments in banks. Efficiency can improve only when the investigators are able to focus on the real suspicious cases rather than false positives, which in turn can help improve the effectiveness of the anti-financial crime objectives of the institution.

Investing in intelligent systems that deploy advanced technologies like AI, RPA, NLP, Machine Learning and Graph Analytics enables institutions to be able to run through huge volumes of incoming transaction data in real-time and fish out “truly” suspicious transactions and augment financial crime investigators with the intelligence to analyze them. In the world of big data, these technologies can empower FIs to achieve much more from their networks. The FIs can leverage their network of internal and third-party systems in a hyper-connected world, to retrieve information about the customer, transaction, related accounts, and beneficiaries, feed the information into innovative analytical models, process and analyze them, and thereby ensure effectiveness and efficiency in their anti-financial crime compliance and investigation efforts. This opens up the possibility for these institutions to be innovative in the multitude of investigative scenarios and checks they might want to apply on data to nip the bud before it is too late, yet ensure superior customer service and keep lights on.

Joining the collaboration + innovation bandwagon

Regulators across the globe are also increasingly accepting the power of networks and advanced analytics to combat financial crime in the hyper connected world. The USA PATRIOT Act Section 314(b) by FinCEN permits financial institutions to share information with one another in order to identify and report to the federal government activities that may involve money laundering or terrorist activity. Not very long back the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN), the National Credit Union Administration, and the Office of the Comptroller of the Currency (collectively, the Agencies) issued a joint statement to encourage banks under the Bank Secrecy Act, to consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet their Bank Secrecy Act/anti-money laundering (BSA/AML) compliance obligations, in order to further strengthen the financial system against illicit financial activity. Similarly the Financial Conduct Authority along with global regulators has formed the Global Financial Innovation Network (GFIN) to leverage the power of collaboration to innovate and share best practices both in terms of newer products for customers as well as combat financial crime.

Few banks are already leading the path and testing waters to adopt these advanced analytical technologies as well as collaborate with their peers to combat money laundering and terrorist financing. Though quite a lot of them are yet to embark on these projects. Reasons could be one or many – lack of resources and expertise on advanced analytical technologies, internal conflicts or resistance to change, build vs buy decisions, etc.

Oracle’s Financial Crime and Compliance Management (FCCM) suite of products have been specifically designed for organizations looking to thwart illicit financial behavior with advanced capabilities to monitor, detect, investigate and report suspected financial crime, as well as fully manage regulatory compliance requirements. Using Oracle’s expertise, financial institutions can centrally assess, streamline and manage associated operational and customer risks with respect to the organization’s end-to-end AML, Fraud, Know Your Customer, Case Management and Trading and Broker compliance programs. These broad functional capabilities are delivered along with state-of-the-art data management and advanced analytics capabilities.

Visit Oracle at Booth H101 @SIBOS 2019 to meet our experts and discuss on how we can partner with you in your transformation journey to leverage the power of collaboration and advanced analytical technologies towards combating financial crime in a hyper-connected world!

For more information:
Website: www.oracle.com/goto/sibos
Email: financialservices_ww@oracle.com

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