Terrorists and fraudsters are finding increasingly inventive ways to obfuscate their true identities to get past financial screening systems, says Datanomic
Compliance screening has become a ‘Technology Arms Race’ with criminals, terrorists and fraudsters finding ever more inventive ways to hide their true identities in efforts to circumvent financial institutions’ screening systems, according to Risk and Compliance Screening specialist, Datanomic.
Criminals are well aware of the limitations of many traditional transaction and customer screening technologies used by banks and other financial institutions and deliberately take measures to avoid triggering these monitoring systems. Often, simple variances in customer account details or payment information such as transposing first and last names, spelling mistakes, variances in dates of birth, country information and other data issues are sufficient to confuse many mainstream screening technologies in use throughout the financial sector.
“The need for leading edge technology that can keep pace with terrorist financing, money laundering and other criminal activity has never been greater,” said Simon Pearson, Vice President of Risk & Compliance Screening for Datanomic. “Unfortunately, screening systems that were implemented as recently as two to three years ago may now be out of date. We see many so called state-of-the-art screening systems that are failing the very companies that are relying upon them to detect risk and keep them compliant with legislation. Many systems lack the advanced data analytics capabilities required to deal with discrepancies in customer data. The sanctions and watch lists that regulated firms are required to screen their customer against also pose what can seem like insurmountable challenges – only sparse data is available for many entries on these sanctions lists yet for others there is almost too much information. Some sanctioned individuals have more than thirty or forty aliases, many have multiple dates of birth and others are listed as being domiciled in five, ten or more different countries. There are wide variances in the quality of source data that make life difficult for financial services firms to comply.”
Technology is becoming cleverer in the way that it deals with such diverse data. As more firms adopt advanced customer screening systems others cannot afford to be left behind, using weaker systems than competitors, as the financial, regulatory and reputational risks are too high. According to Pearson, “It is imperative that financial institutions keep pace with screening systems if they are to stay ahead of the technology arms race.”
To stay ahead of this race, companies are adopting advanced 4th generation customer screening technologies such as Datanomic’s dn:Director for Sanctions & PEP (Politically Exposed Persons) Screening. Due to its innovative data analytics capabilities combined with the industry’s most powerful screening algorithms, dn:Director helps firms achieve far greater accuracy than traditional systems, dramatically reducing false positives (erroneous matches) and the consequential workload and cost burden suffered by firms in the regulated sector by as much as 70%.
Some of the world’s largest banks, insurers, asset and wealth managers and other financial services firms now use Datanomic’s dn:Director to reduce global Compliance risk and this pattern is spreading to other industries. Datanomic has been adopted in several industries that require stringent Know Your Customer (KYC) compliance requirements. In 2009, the company signed major new customers in the tobacco, diamond, parcel forwarding and courier industries and is in daily use in screening millions of customers, employees and supply chains for risk in those industries. The company forecasts acceleration in the widespread adoption of its technology as diverse industries face increasing Anti-Money Laundering, Counter-Terrorist Financing, and Risk & Compliance requirements.
Datanomic’s dn:Director is now the UK’s de-facto standard Risk & Compliance screening system – systematically screening more than five billion client records every month. The company estimates that at current growth rates, by 2012 the firm’s technology will be used to screen 10% of the world’s population, which would likely see it as the premier choice for Risk & Compliance screening across the globe.
About Datanomic
Datanomic’s flagship enterprise Compliance Screening and Data Management software, dn:Director, helps organizations remain compliant with legislation, save money, streamline business processes, reduce waste and seize more opportunities. dn:Director’s broad capabilities enable organizations to identify and eradicate problems in customer, financial and product data, improve compliance performance and better manage business risk. Headquartered in Cambridge, UK, with an office in New York, USA, Datanomic was founded in 2001. www.datanomic.com
For further information, please contact:
Jeremy Jones
Datanomic Ltd
Tel: +44 (0) 1223 228418
Email: jeremy.jones@datanomic.com
Vanessa Land
Devonshire Marketing (PR for Datanomic)
Tel: + 44 (0)870 242 7469
Email: vanessa@devonshiremarketing.com