Financial crime has become vastly more sophisticated as rapid advancements in technology have given terrorists and financial criminals new ways of exploiting vulnerabilities. To keep up, regulation has become more stringent and also broader in its reach.
Although financial institutions receive the largest fines, about 70 per cent of US Office of Foreign Assets Control enforcement actions over the last three years were against non-financial institutions, including telecoms, travel and insurance firms. Financial and non-financial organisations alike have a vital role to play in preventing criminals from moving funds around the global financial system.
Organisations need the right systems in place to comply with regulations and limit any fines if a breach does occur, making it imperative to implement robust policies, processes and procedures.
But while regulation is increasing, most compliance budgets aren’t. This creates a huge challenge for compliance teams to not just keep up with the complexity of international sanctions programmes and ever-deepening sophistication of techniques used to evade them, but also overcome many operational barriers.
Large organisations are frequently burdened by legacy platforms and fragmented IT, and compliance platforms require significant resources to manage, configure and contend with the output. Higher transaction rates and regulatory requirements lead to more cases and false positives for already overworked compliance professionals to review, increasing the risk of error and process failing.
These challenges are heightened when there are disparate systems or overly manual effort, such as in the area of trade and cargo, often meaning issues aren’t identified in a timely manner.
Now, more than ever, investing in screening technology is a critical decision to keep up with regulatory expectations, while keeping operating expenses under control
“Organisations involved in international trade or the transfer of funds may sometimes feel like they are dancing on the head of a pin,” says Kev Conder, UK business manager at Accuity, which has been delivering payments and financial crime screening solutions to banks and businesses worldwide for 180 years.
“On the one hand, they can be fined for not adopting a framework that encompasses a set of technical, organisational and human capital requirements, even if there is no evidence of a sanctions breach. On the other hand, if they do adopt such a framework, any breach will likely result in a fine, albeit reduced if self-declared. In the case of sanctions, this can be significant.”
Accuity powers compliant and assured transactions with a suite of innovative solutions ranging from comprehensive data and software, managing risk and compliance, to flexible tools that optimise payments pathways. As compliance teams face increasing regulatory pressures, Accuity has built solutions that enable them to do more with the same resources by focusing its developments and investments on the effectiveness of screening, efficiency of process and ‘explainability’ to regulators.
“By effective, we mean providing solutions that ensure our customers do not enter into relationships or engage in transactions that put their reputations at risk,” says Conder. “By efficient, we mean delivering that effectiveness while reducing operational overheads. We utilise the latest technology to safely reduce the noise levels of what compliance professionals understand as false positives by up to 80 per cent.
“Explainability means companies can easily demonstrate they are exceeding their anti-money laundering and counter terrorist financing requirements. We have developed solutions that provide transparency to screening processes and supporting decisions, whether they’re made by technology or the compliance professionals involved in the process.”
Automation is central to the future of compliance and extending the value of stretched compliance teams. Applying artificial intelligence (AI) techniques to the screening process removes some of the manual burden, enabling teams to focus on higher-value tasks, such as investigating true matches, rather than contending with high volumes of noise and false positives.
“AI can be of tremendous benefit if used in conjunction with human oversight,” says Conder. “We build models that automatically disposition alerts based on granular probability of matches and levels of exposure, and based on a specific risk approach. The models can then be reviewed and adjusted in a documented and explainable way.
“Now, more than ever, investing in screening technology is a critical decision to keep up with regulatory expectations, while keeping operating expenses under control.”
For more information please visit accuity.com/sunday-times