As the banking and financial service sector continues to embrace a suite of digital technologies from cryptocurrencies to other alternative forms of payments, a new age of financial crime has been ushered in. As technology has grown, so has financial crime, and while continuing to provide convenient and accessible services to their customers, financial institutions also need to ensure they are protecting them from emerging financial crimes. Here are the technologies and tactics being used to combat financial crimes such as terrorist financing, money laundering, and payment fraud, and to ensure banking compliance.
Know-your-customer (KYC) enhanced due diligence
This documentation is a key pillar in the financial crimes compliance (FCC) framework for banks and financial institutions. By assessing a customer’s background, including establishing their identity using their personal information, institutions can predict what risk that customer poses. They can also lay the foundation for sophisticated functions such as transaction monitoring and sanctions screening to ensure a potential customer is not on any money laundering or counter-terrorism financing watchlists. Used when dealing with high-risk or high-net-worth customers and large transactions enhanced due diligence enables institutions to conduct a deeper level of scrutiny of potential business partnerships to highlight any risks that are not detected by customer due diligence.
Digital identification verification solutions
Financial institutions are increasingly adopting digital identity verification solutions such as facial recognition. As remote banking becomes an increasingly popular choice for consumers, identity verification solutions help financial institutions comply with their KYC regulations, reduce the risks of application fraud during onboarding, and offer remote customers a secure way to verify their identities.
Focus on cryptocurrencies
As criminals shift towards digital currencies, regulators are also shifting their focus to custodian wallets, flat currencies, virtual assets, pre-paid cards, and the relevant KYC requirements for these areas. Newer systems that utilise machine learning and artificial intelligence (AI) are being used to detect transactional behaviour and analyse patterns in blockchain and cryptocurrency.
Adoption of automation processes
Compliance professions are automating their tasks to spend less time gathering information and more time managing higher-level risks. The next step is for financial institutions to turn the data they are gathering through automated processes into actionable insights. Anti-money laundering (AML) AI can be used to determine if a particular behaviour constitutes money laundering and notify the authorities about suspicious activities that could be seen as a precursor to a crime or a threat to public safety.
Stay secure and compliant with Eastnets
Increasingly sophisticated threats mean future regulations will only continue to expand and successful businesses need to defend themselves from hidden attacks. Eastnets’ comprehensive crime and compliance offer include anti-terrorism and AML screening and monitoring products as well as anti-fraud, consumer due diligence and trade compliance capability.
We empower our customers to increase their compliance and efficiency through solutions based on AI-advanced technologies creating risk scores, identifying anomalous behaviours to reduce false positives. Customers can adapt and configure these products to provide seamless integration with the many different systems and platforms already in use within their organisation. Read more about our solutions here.
Saeed Patel, Group Product Development Management Director
Saeed Patel is Group Product Development Management Director at Eastnets. Saeed has over 25 years' experience working in capital markets, risk management technology firms and as technical advisor to European regulatory boards. Saeed is a Chartered Management Accountant and holds a BA (Hons) in Business & Finance.