Is it “Sam,” “Sammy,” or “Samantha”?

One reason that financial crime isn’t detected can be as simple as a typo.

Banks have no shortage of customer data. It’s collected via applications, face-to-face meetings, websites, mobile applications, and phone calls. Information is written down, keyed in, and populated into a host of platforms. Yet, much of this data is simply not accurate.

Transposed characters, misspellings, and missing information are common. Add in issues associated with nicknames and name variations, and it’s easy to understand why banks sometimes cannot make connections across disparate platforms and systems. This deficiency particularly impacts banks’ ability to detect and track financial crime and to fulfill related compliance duties.

Regulators have set the bar high for know your customer and anti-money-laundering compliance. With no easy way to accurately see all customer data as it really is, banks are paying the price. In many cases, compliance analysts waste time investigating cases that are not suspicious. Many cases are triggered by what is known as a “false positive.” Unfortunately, even with such a cautious (and costly) approach, bad actors still slip through the cracks because organizations cannot resolve entities with confidence.

That’s why more banks are adopting solutions that generate what’s called a GUID—a Global Unique IDentifier—that supports every aspect of financial crime and compliance. These solutions make it possible to improve outcomes and lower costs at every stage.

Consider this timeline: Amy’s tuition bill is due, so she calls up Dad. He notifies his broker to sell some stock and transfer the funds to his money market account. He transfers this into checking and sends money to his daughter. She deposits that into her account so she can write a check payable to her school.

By the end of the month, the bank’s transaction monitoring system has identified four transactions over $10,000, each one becoming its own case. And this wasn’t a one-time event, as the sequence repeats itself every six months for the four years this girl is in school.  At the end of the day, Amy going to school has led to 32 cases, each one requiring time and effort by an investigator.

Adopting GUIDs can help

What if the relationship between these accounts and transactions was known upfront? What if the bank could make these connections systematically? What if patterns and trends were highlighted?  Using a global unique identifier makes it possible.

With a GUID, banks can spend less time chasing false positives. More importantly, while the above example represents an honest transaction, these same capabilities can help detect and identify bad actors. It sounds simple, but in order to succeed, financial institutions need to enhance their current systems and workflows, adding four capabilities to their financial crime and compliance processes: Find, fix, link, and visualize.

1. Find. The first step is to pull together data. This includes all of the data on customers, accounts, and transactions from across the enterprise, as well as relevant third-party partners.

2. Fix. The next step is to standardize, normalize, and validate this information. The best solutions can effectively deal with complex consumer address issues, deal with nicknames, and compare records against millions of name variations based on country of origin.  By comparing your data to trusted data sources, you can validate addresses and enrich records with additional insights.

3. Link. Once you have data that’s fit for use, you can apply a GUID and identify relationships across GUIDs.

For example: Sam, Sammy, Samantha, and Mrs. Forrester may all be the same person, even if they are listed at different locations. Records that share an email address, mobile phone, or address are marked as related, even if the individuals are not the same. In this way, the bank can correlate, link, and store data on all parties, not just the primary customer.

4. Visualize. An accurate GUID makes it possible to fine tune rules in your transaction monitoring system, which can help increase automation. When cases are handed off to investigators, the GUID also works to increase their productivity.

Instead of combing through multiple screens and rows of spreadsheets, analysts are presented with a visual “map” that graphs how money is moved, identifying when transactions involve the same person or known associates.

Gear shift overlays existing system

While this sounds like a lot of work, today’s leading software technologies make it easy. There’s no need to rip and replace your current systems.

Applications that enable the creation and orchestration of an accurate GUID enhance your existing platforms and workflows. In this way, an accurate, unique single view of customer can improve every aspect of financial crime and compliance, including KYC, AML, and sanctions screening. In fact, the right approach can help banks improve risk detection by as much as 15-30%, while increasing investigator productivity even more.

Issues associated with poor data quality are not new. Today, bad actors exploit these limitations to avoid detection. Your ability to see customers as they really are offers you a powerful new tool in the fight against financial crime. 

About the author

Jack Bullock is a senior vice-president at Pitney Bowes.