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Customer Information Management

Entity resolution solutions help combat AML and other financial crimes

Firms are now increasing their investments in new sources and types of data along with advanced analytics to improve risk scoring and transaction monitoring.

In order to comply with regulatory requirements to help governments fight crime and terrorism, financial services firms are being required to identify and stop the flow of funds to increasingly sophisticated bad actors. For many firms, this pressure is felt especially by front-end staff responsible for customer onboarding; know your customer (KYC), and transaction monitoring systems that support anti-money laundering (AML) and entity resolution.

To improve customer screening and transaction monitoring, regulators are requiring firms to use more risk based (versus rules based) approaches to regulatory compliance. As a result, many firms are increasing their investments in new sources and types of data along with advanced analytics to improve risk scoring and transaction monitoring. These investments in third party solutions can reduce false positive alerts and increase the effectiveness and efficiency of compliance analysts and programs.

A recent in-depth study by IDC, sponsored by Pitney Bowes, discovered that the investments have paid off. The IDC White Paper “The Business Value of Entity Resolution Solutions for Financial Crimes and Compliance Operations”, not only discusses how entity resolution works to help maintain compliance, it also provides qualitative and quantitative benefits that substantiate the value of entity resolution solutions.

Why firms implement entity resolution solutions

Entity resolution solutions, such as those offered by Pitney Bowes, can help firms prevent, report, and handle suspicious activities or individuals in a cost-effective and efficient manner.

Financial services firms are faced with the challenges of managing regulatory (FCC) environments that necessitate analyzing, synthesizing, and acting on huge amounts of customer-related data. To cost-effectively meet these challenges, firms need to make their KYC, AML and investigations teams as efficient as possible to avoid significant staffing increases or third-party costs. Failure to implement optimal entity resolution procedures hampers the ability of financial services firms to prevent, report, and handle suspicious activities or individuals, who are growing bolder and more technically proficient at avoiding detection and arrest. Implementing state-of-the-art software can help these organizations develop sound internal entity resolution policies for understanding their customers and assessing risk.

One manager observed how his organization’s entity resolution solution helped to manage the regulatory compliance challenge posed by the rising volume of data, accounts, and transactions: “We needed to put a system in place because you can’t manually scan so much data in a timely way. You need to have something to scan data and customer names and addresses. What makes it very interesting is that it’s not just the scanning . . . you also have to think about matching. We’ve found that the matching on the scanning is probably the most difficult part. That’s where you need an entity resolution solution."

Business value analysis tells the story

The IDC study found that participants reported handling changing regulatory environments that require processing and analyzing huge amounts of customer-related data without incurring significant additional staffing or third-party costs. The IDC study’s analysis shows that, as a result, these financial services firms are achieving substantial value with their entity resolution solutions, achieving $1.24 million per year in higher FCC staff productivity per one million accounts on average.

Additional highlights include:

·       63% overall higher productivity for FCC teams

·       81% more productive AML teams

·       59% more productive KYC teams

·       35% more productive investigations teams

·       43% less staff time per investigation

 

Pitney Bowes solutions

Pitney Bowes’ financial crime and compliance solutions help firms create a single view of the customer. Its entity resolution solutions help financial firms comply with a variety of regulations including AML, KYC, and sanctions screening. These solutions provide front-office staff and compliance teams with higher quality data that improves risk profiling and scoring. Improving single views of the customer helps firms satisfy regulatory requirements for advanced data management and risk based compliance tools.

Entity resolution programs also help firms to leverage consolidated entities information to improve compliance alert management. For example, condensing alerts by entity helps firms to better track and prioritize alerts, thus improving the efficiency of investigative analysts.

To learn more about how entity resolution solutions provide valuable insights, download the IDC White Paper, "The Business Value of Entity Resolution Solutions for Financial Crimes and Compliance Operations".

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