RiskFinancial CrimeUsing Technology and Data to Keep Clean of Dirty Money

Using Technology and Data to Keep Clean of Dirty Money

The pressure placed on banks to meet consumer demand for near-instant decisioning almost seems to be at odds with the anti-money laundering (AML) and sanctions screening regimes in place around the world – and the same desire for speed, efficiency and quick decisions impacts corporations. The AML, sanctions and anti-fraud measures apply to corporate treasuries too, and additional stipulations like the supranational US Foreign Account Tax Compliance Act (FATCA), which seeks to limit avoidance, also play into this space.

The mandatory impact of trading with anyone appearing on any one of the several sanctions lists – be it with the UN, US and HM Treasury, or the Specially Designated Nationals (SDN) or Politically Exposed Persons (PEPs) lists – is severe with large fines likely to result. Just look at the examples of Standard Chartered and HSBC this year, which have respectively been fined US$340m and US$700m, rising to US$1.5bn, by US authorities for allowing banned Iranian transactions to pass and Mexican drug cartel money to be laundered. Corporations could just as easily be affected and must also take into account deceased people and terrorist funding rules as laid out in the US Patriot Act and other global regulations. Breaches and non-compliance can be expensive.

Protect Your Business

There are numerous active fraudsters and criminal networks at large and it is clear compliance obligations make identity verification and fraud detection a critical part of day-to-day business for everyone from banks, to insurers and broader financial services, to retailers and corporate treasurers.

Businesses need to be able to connect to a reliable system to ensure that the people they are transacting with are who they say they are, and that those people are also making honest disclosures about their circumstances. An appropriate system should be able to highlight and discern individuals who have provided truthful information and are good to transact with, as much as those who may have been dishonest.

A typical instance is when an application for a loan or credit card is made, it gets rejected, and then applications are fired off elsewhere for a credit product using subtly different disclosures and descriptions of circumstances. For example, self-employed people may say they are employed, while others may simply give different descriptions of their job or exaggerate income.

Credible up-to-date IT and data sets are essential in highlighting these problems, along with the ability to rapidly analyse huge numbers of data sources to indicate anomalies. Anything that doesn’t make sense about an individual or a transaction can be quickly flagged up.

In more complex situations it is vital to be able to highlight organised crime rings, or so-called fraud networks. Typically, there is often a web of seemingly unrelated relationships between people attempting to make transactions. With highly advanced pattern spotting behavioural systems now available, suspicious patterns of activity can be quickly flagged up and reviewed. Such solutions could save a corporation from attack.

The ability to track both small and large anomalies, as well as subtle discrepancies in major transaction groups, has to be underpinned by the latest detection systems, the right data, and the very best analysis.


Robust fraud detection systems are worth every penny of their investment. They protect income streams, underpin increasingly stringent compliance regulations and can help prevent insider fraud. Similarly, safeguarding customers against fraud not only protects companies’ cashflow against costly charge backs, it also enhances corporation’s reputation in the market place with individuals, suppliers and peers alike.

Experian recently completely re-platformed its in-house fraud detection system, called Hunter, to assist end users. As a result, it now has three times the capacity and can provide much more in-depth checking services. Other vendors have also upgraded their solutions to cope with new demands such as FATCA and increased sanction and PEP demands. Other more recent security industry developments include the ability to track people’s device usage. A footprint of people’s credit or registration applications using a particular laptop, desktop, mobile phone or tablet is taken. It can then quickly identify when they are applying on the device using different identities or circumstance information.

Consumers often struggle to remember all the numerous passwords they have for different websites and companies they transact with. This is a problem not only for them, but also for the companies they are buying from, which may struggle to present them with an easy and safe transaction experience. No one wants the spectre of false positives with good customers being turned away or transactions blocked.

A system for a single identity check will prevent this and enable customers to verify themselves once with the company before transacting in many different places, by using a single unique ID, without the worry of remembering multiple passwords. These platforms also enable extra levels of verification, in a simple manner, such as by sending codes to mobile phones when they are making larger transactions, to be sure of the user identity.

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