Search and Match: Navigate Muddy International Waters
Geopolitics entering Banking IT
Author: Jan-Kees Buenen
The global financial system is weaponized in the war that the US and the international community are waging on rogue states and individuals. Regulators harness the international financial and banking system for strategic-political purposes. Countries like North-Korea, Iran and Russia are hit through boycotts. But also high-level individuals and their business entities are targeted. Oligarchs in Putin’s circle have been blacklisted. And recently, the US authorities have cut off members of the Iranian Islamic Revolutionary Guard Corps from international financial services. Global efforts on anti-terrorism financing are also intensified through Customer Due Diligence (CDD).
Banks and other financial service providers need to step up their initiatives for identifying suspect transactions, people and businesses. This goes far beyond the traditional detection procedures for money laundering and fraud detection. Banks falling short may be punished severely, as several European cases have demonstrated recently. There is only one way for financials to meet the challenges that this new geopolitical environment brings about. And that is automated leveraging of all their data. All data in all processes should be scrutinized to find suspect people, entities and money or to see patterns that may indicate suspect activities. A single truth version of the data has become a must have!
In finding illegal things, any bank has two scenarios that may apply:
- Pattern recognition: look for unusual patterns or for patterns that are typical for suspect actions and transactions. In the long run, this scenario may be very effective, as is proven on a daily basis in the cyber security domain where pattern recognition is now one of the main defense practices. But pattern recognition requires immense and time-consuming efforts in creating a monitoring infrastructure, building a rule base, machine learning and validation of the outcomes. Nevertheless, it’s coming. Augmented analytics, an approach that uses machine learning, natural language processing and other automation tools, is poised to dominate the data analysis and business intelligence markets by 2020, according to Gartner.
- Search and match: find the needle in the haystack by vetting all available data for clues. Basically, well known concepts and initiatives follow this approach, such as Know Your Customer (KYC), Customer Due Diligence (CDD), Periodic Due Diligence (PDD) and Anti Money Laundering (AML). These are just some of the typical processes that banks and financial service providers have or should have in place. The Search and Match scenario also comes with substantial investments in time and money as the workloads are increasing dramatically as the scope of the associated processes is stretched and will be stretched even further. Regulators are bringing significant more customers under review. Search and Match processes are to a large extent done manually, driving the need for improving economics. And while these processes need to scale up, the human factor limits the scaling capabilities of the process. You simply do not resolve the scaling problem by bringing in more people, even if they could be found in an overheated labor market.
How to scale?
So how to scale then? Synerscope’s view on the challenge:
- A single truth of data in the structured and unstructured domain comes first
- Reduce noise / cut the crap
To keep costs in check SynerScope delivers a triage solution that reduces the number of files to be inspected. This will significantly lower the cycle time of the individual client files from 4 hours to 20 minutes per file. - Look into unstructured data
In order to find a needle, the whole haystack needs to be examined. Not only the parts of the haystack that are clean and dry, but also the messy, dirty patches. The same applies to the data sources of the bank. The unstructured data in social media, emails, Whatsapp messages, docs and sheets must be analyzed as well to get a 360o view of the subject of investigation and its relations. Not only the ‘easy’ part of clean and structured data in databases must be inspected. Remember: 80% of data is generally considered unstructured data and is left unused for decision-making. - Use visualization as a means for accessing and interrogating data
The right tooling for visualization can offer much more than just presenting analysis in a pretty way. The tooling will help to maneuver in and between complex data sets in search for those ‘needles’ you need to find.
The SynerScope platform is a point solution for Search and Match in all its appearances. Most companies already have a lot of automation available. Unfortunately, these technologies are not always making it easy to be compliant with the new regulations. The SynerScope platform helps you to be compliant without having to replace your existing critical automation, by analyzing and assessing your whole data lake of structured and unstructured data.
SynerScope helps you to steer clear of criminals, adversaries and unwanted customers in a complex global network of transactions. Visit us at www.synerscope.com