On the money: Webcast discusses technological innovations to help you comply with AML mandates
How well do you know your customers?
If you want to stay on the right side of stringent anti-money laundering (AML) regulations worldwide, the answer had better be "pretty well."
But despite your best efforts and significant investments in AML training and technology — the cost of complying with AML mandates has increased 61 percent over the last three years, according to some estimates — bad and fragmented data has probably left you unable to resolve entities and chart relationships. This means you can't fully comply with AML laws, and you remain vulnerable to crippling fines.
These problems, and new technologies used to overcome them, were the subject of a recent webcast called Leveraging Transactional Data to Dynamically Enhance KYC and KYCC Profiles. The webcast, presented by the Association of Certified Anti-Money Laundering Specialists and sponsored by Pitney Bowes, has been viewed by more than 4,000 financial crimes professionals in 100 countries.
All the names for John
Data problems start with customer profiles. These profiles too often contain incorrect or incomplete information, leaving bank investigators unable to coalesce identities for a holistic customer view.
Consider this: an Italian customer does business with a United States bank under the name "John Green." In his home nation, he is known as "Giovanni Verde." Without the ability to detect name variations, the bank may not realise that this single person is using two different names. So bank investigators can't obtain a complete picture of his relationship with the institution.
The need to resolve name variations takes on greater urgency when you realise that, worldwide, there are more than 60 variations of the name "John," and about two dozen spellings of the name "Mohammad."
"You would think that, with all their effort, with all their spending, that banks would be able to tell that a man named Frank who's a customer in their retail bank is the same person as the Francis who is one of their private wealth clients," said Douglas Stevenson, Managing Director of Financial Crimes and Compliance for Pitney Bowes and webcast co-host. "But many banks still can't do that."
Static profiles in a dynamic era
Another problem plaguing banks seeking holistic customer views: static customer profiles.
Banks traditionally update customer profiles only occasionally, but new information about the customer and the customer's network dribbles in with every transaction. Transaction data includes counterparty names, amounts transferred, means of transfer, information appearing on memo lines, and other bits of data that can give banks a better view of customers and their networks. But until recently banks had no effective way to mine transaction data and no efficient means of attaching that data to customer profiles.
As discussed in the webcast, Pitney Bowes Entity Resolution for Financial Crimes and Compliance software can help you more effectively and cost-efficiently comply with AML mandates. This software helps banks and other financial institutions resolve entities and chart relationships though a four-step process:
- Find data
- Clean, enhance and integrate data
- Link data
- Visualise relationships
Stevenson, of Pitney Bowes, said that the solution can help you find customer information in disparate, siloed systems and departments. These include systems for retail banking, credit cards, mortgages, businesses and investment. The software then automates the process of compiling a comprehensive profile of each customer, and on the external parties with whom bank customers do business.
The solution then links information from these sources to a specific entity. This linkage eliminates the need for investigators to follow or manually reassemble long digital or paper trails to uncover information about a specific bank customer and the entities in the customer's network.
Pitney Bowes® software also digitally presents information in such a way that bank investigators can easily visualise, explore and dynamically query the customer's history with its networks and the institution itself. The software can also model relationships across roles, processes and interactions.
Solutions like those offered by Pitney Bowes can help you "use technology a little bit more intelligently to resolve identities, find relationships, and balance the operational and investigative costs that are typically incurred in the KYC and KYCC space," said Robert Mara, Principal of the Ernst & Young Advisory Services Practice and webcast co-host.
Mara and Stevenson pointed to the Panama Papers as an example of AML technology at work. The International Consortium of Investigative Journalists used the same type of technology as that offered by Pitney Bowes to study more than 11.5 million leaked documents, then connect real names to offshore accounts used for the purpose of tax evasion, fraud and other crimes.
Hear more about the Panama Papers and learn how to use technology in the fight against money laundering.
Listen to the webcast. (registration required)