A Tale of Two Investigations: Transforming Financial Crime Risk Monitoring and Investigations

Elizaveta_Savinykh

The adoption of technologies to enhance financial crime risk monitoring has become ubiquitous within the banking sector. These technologies span a spectrum, ranging from the automation of fairly binary controls to the deployment of black-box Artificial Intelligence (AI) models. 

Regulators are increasingly advocating for organizations to embrace technological advancements in their fight against financial crime, as exemplified by:

• FCA, MAS, HKMA all have RegTech support initiatives with digital sandboxes to promote solutions to complex regulatory challenges;
• MAS provides RegTech grants for Singapore based FIs looking to enhance their risk management and compliance functions with the use of technological solutions;
• HKMA’s recent AML Regtech: Network Analytics report promotes the adoption of network analytics capability to strengthen the response of banks’ anti-money laundering (AML) systems to deception and other financial crimes.

In addition to improving risk identification, many solutions are dedicated to enhancing the actual investigation process by eliminating manual, historically time-consuming and inconsistent steps such as data collation or narrative production for SAR/STR filing. These solutions hold significant appeal as they can streamline resources while maintaining comprehensive risk coverage.

The benefits of risk mitigation and operational optimization offered by such tools are widely recognized and discussed. However, what is less frequently discussed is the need to transform the underlying investigative process itself.

The most cutting-edge tools may fall short of their full potential if they are not accompanied by process innovations. Transformative technologies demand transformative approaches, that often includes a cultural and mindset shift, as well as a technical one.

To illustrate this point, let's examine a financial crime case study through two different investigative lenses and how they can lead to materially different outcomes:

https://drive.google.com/file/d/1wNpfBlT39ET0d0RQVZC9m09-bTU1IipI/preview