Advancing Correspondent Banking Insights: Managing Respondent Banks Risk
As a follow up to my previous blog on Managing non-customer risk in Correspondent Banking, I have written a new blog on Managing Respondent Banks Risk. 3 key points from the new blog are: Correspondent Banking Risks: The article explores risks in correspondent banking, covering both macro and micro aspects. FATF Recommendations: FATF advises correspondent banks to manage risks through updated customer due diligence on Respondent Banks, considering their customer types, and profiles, with a focus on leveraging technology. Quantexa's Solution: Quantexa's Decision Intelligence platform, using Entity Resolution and Advanced Analytics, offers a tech-driven solution for understanding and managing risks in correspondent banking. Read more in the new blog: How to Manage Correspondent Banking Risk - Quantexa
Don't miss our new 'A day in the life of... an Investigator' series 🔎
Did you know we've recently added a new section for investigators to our A day in the life… series? Check out the series (login required) to read about a typical day of some of the best investigators using Quantexa, as well as some of their top investigation success stories. Interested in contributing your story? Let us know at community@quantexa.com
A Tale of Two Investigations: Transforming Financial Crime Risk Monitoring and Investigations
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:
Investigating Network Fraud: 4 Key Areas for Investigators
Following on from my article on why networks are important – I regularly talk with investigators on how best to identify and investigate organised network fraud. I am mindful that there are a lot of seasoned investigators out there so in this article I will be talking basics and from a perspective of using technology only to investigate network fraud. The first principle of investigating network fraud is to have all available data in the hands of the investigators – this sounds quite basic but often we speak to investigators who use different data sources, capabilities, and sources of alerts that are not integrated into one platform. The best technology platforms I have seen take a best of breed approach and provide the ability to integrate easily and onboard data as efficiently as possible to allow for greater data coverage and better investigator efficiency. The second principle is to think of fraudsters as business people, and from that lens we should understand that fraudsters want to “sweat their assets” (vehicles, synthetic IDs, group resources etc.) to make their business (illicit streams of money through fraud) as profitable as possible in the shortest time-frame whilst taking the minimum operational risk. Read the full article here (login required): https://community.quantexa.com/kb/articles/203-investigating-network-fraud If you are not a customer or a partner and would like to see the article, please comment below.
All Investigations are created equal…right?
Intelligence-Led Investigations: Simplifying the Chaos There’s an open investigation. We’ll investigate. An investigation is underway. Everyone has heard of these terms before. For some, the terms might transport them to a classic Sherlock Holmes novel, or perhaps a gritty detective show that enthralled them. But for others an investigation is something that is much more real – it’s what they do on a day-to-day basis. Investigations are at the heart of the hard work performed by people in financial crime units across the public and private sector. But what exactly is an investigation? What does the process entail? While an investigation, no matter the industry, can be summed up in a few words; it’s a complex process that involves navigating many red flags, data points and multiple steps. All investigations are the same. Right? Investigations are not as simple and straightforward as gathering the facts (nothing but the facts) to determine what transpired. For many investigation units, the process of completing a thorough investigation is dependent on a number of factors such as: What was the catalyst for initiating the investigation? How many other cases are in the queue that also need attention? How much time is left to complete this case? How much data (i.e., information) was initially provided to start the investigation process? Will the investigator need to go out and gather a lot more information to understand the overall context of what took place? Has any of the data already been triaged by a system? Is it trusted and/or need to be validated as part of the investigation? Are there unknown entities involved or leads to explore? Where is that information held – multiple applications, different lines of business/departments or external to the organization? Does the investigator have the experience and expertise in which to process the raw facts of the investigation into an actionable outcome and decision? In the most basic terms, an investigation needs to answer the who, what, where, when and why questions. Depending on the type of investigation, this might involve collecting different artifacts such as individual / business activities, forensics, financials, legal documents, open-source records, communication records, copies of videos and more to support any investigation. These are critical in defending a determination when a case is escalated or closed, as each investigator needs to document the steps and reasoning behind an action or decision. Context brings all these together and plays a critical role in any investigation to help identify criminal, terrorist and fraudulent activities. A lack thereof will hinder an investigator’s ability to make a sound decision on the outcome of the case. Leading potentially to an incomplete understanding of the entirety of what took place and whether that activity is indicative of criminal actions. Finally, how an investigation is completed can vary and largely depends on the factors listed above. As such, investigation units should have procedures to assure that operational processes are adhered to. Often these processes are simply called “workflows” and can be manual, automated or in most situations, a combination of both. Regardless of the process, there are a few similarities that need to be applied to most investigations to be as efficient and effective as possible. A complex example Imagine, as a practical example, a financial crime investigator is tasked with looking at a few transactions taking place from accounts held by entities in different regions, several hundred miles away from each other. There are cash transactions coming into the accounts of one entity through bank branches in one area but transferred into accounts of the counterparty located in another region within a day of the incoming funds. On the surface, it’s an example of rapid movement of funds. As an investigator you’re trained to follow the movement of money to determine a reason why this activity took place. At first, there are at least two entities involved to begin the investigation, but as the money is traced from one entity to another, the list of entities that needs to be reviewed as part of the transaction string grows. And not just the entities receiving or sending money, but the owners and signers of the accounts that are reviewed as well. There are several questions that an investigator will need to consider and answer to determine if this activity is suspicious or not. Are the individual transactions in low amounts, but aggregate to large amounts? Are the transactions being conducted by the same people? At the same locations? Do the businesses appear to be conducting activity that is consistent with their industry? Do any of these businesses appear to be shell companies? Where are these businesses registered and who are the owners? Do the owners receive the benefit of the funds, or use the funds for personal gain? Are the owners on any internal or external watchlists? How do I know that this person associated with one business is the same as other businesses – or named in multiple different documents? The investigation process must comprehensively answer: Who is involved? What are the businesses and the activities for? Where are these entities located and the activity occurring? Why is this taking place? How did the activity occur? Which oftentimes results in the investigation becoming much more labor intensive and complex from gathering data that could take up to 80% of an investigators time. How can the paradigm be shifted? Although at times this process may seem daunting, advanced capabilities, such as those that underpin the Quantexa Intelligence-Led Investigation’s platform, exists to help investigators automate the collection of different internal and external data points, build connections via relationships, social and financial interactions, determine common points of interest and compile these into an easy-to-understand, meaningful outcome. For traditional systems, these continue to be labor intensive steps, where investigators usually spend hours, if not days, leveraging multiple systems, looking through data sources, loading data into spreadsheets and uncovering new leads to review, before analyzing the findings. In turn, by automating these steps and creating a frame of reference investigators can spend more time focusing on analyzing the information that coincides with their intuition for a more confident decision. An important first step is to ensure that there is a holistic view of each relevant party involved through Entity Resolution. This involves building a unified view of profiles and accounts to ensure that James, Jim, Jimmy, Jamie and Jay are all the same person associated by a phone number, or address, or who owns or is connected to a business. This is something that can be done not only for subjects of interest for an organization, but also for external parties as well. Doing so can also define and identify personas such as victims, perpetrators, and accomplices. By taking this important step, investigators gain a clearer picture of the parties involved as well as their relationships without the need to manually pull it all together. Once this step takes place, financials, forensics, communications records, timelines, corporate hierarchies, geolocation mapping and/or other external data sources can be overlaid into the entity structure. By including these data elements, a network build can be generated to show hidden relationships between seemingly unconnected entities and key events. The outcome of these steps provides investigators with an enriched view into the true number of parties to be included in the investigation, how they are related and the activities taking place between them. Quantexa’s Intelligence-led Investigations automates these steps and has been proven multiple times to reduce the overall investigation time by up to 60%. We eliminate manual process so that more time is dedicated to analyzing and assessing critical data points, flipping the paradigm to 80% of their time assessing and only 20% gathering data. With many investigation case queues in the double digits, providing automated insights will generate context for holistic decision making and ease time management constraints. Summary Whether a complex or straightforward investigation, innovative tools exist to help automate and streamline the manual steps many investigators face per case. Quantexa provides comprehensive views of entity profiles, their relationships to other parties and the patterns of activity that take place between those parties. By taking a transformative approach that involves enriching our understanding of activities, such as the breadth and complexities with subjects of interest, movement of money, and uncovering relationships and activities, we create the context needed to drive investigators to automate their efforts while at the same time, make more informed, intelligent decisions.Did you know we offer an AML Investigator Program through the Quantexa Academy?
This program teaches individuals how to combine many of the key components of the Quantexa platform that they have learnt about in the Quantexa Foundations program in such a way as to facilitate their ability to conduct an AML themed Investigation. (Duration: 4 days) Having completed the program, learners will understand the relevant core concepts and how to use the key UI components of the Quantexa platform based on a Know Your Customer (KYC) use case. Modules include: Quantexa User Foundations Program - Introduces the core concepts of our platform, including Networks, Documents, Entities, and Entity Resolution. This Program also introduces Search, Investigation and Task components of the Quantexa platform’s UI. Quantexa Investigations Series: AML Investigator - Teaches how to combine many of the key components of the Quantexa platform that you have learnt about in the Quantexa Foundations program in such a way as to facilitate your ability to conduct an AML themed Investigation. Outcome: On successful completion of the program and its associated Knowledge Check, learners will be awarded the Quantexa Investigations Series: AML Investigator completion badge. Read more about the courses we offer and how to sign up in our Introduction to Quantexa Education Services and the Quantexa Academy Join our KYC- Know Your Customer User Group for all the latest KYC news!
How innovation is helping organizations navigate complexities of Capital Markets AML
Join Andrea Walser, and for a short Fireside Chat session where they discuss evolution of transaction monitoring landscape and how contextual monitoring and advanced technologies can help organizations in enhancing their capital markets AML controls. You can also read our Anti-Money Laundering in Capital Markets: Time to Embrace Innovation blog (must be logged in to view)Anti-Money Laundering in Capital Markets: Time to Embrace Innovation
Detecting money laundering risk in capital markets is a challenge which the industry has long struggled to effectively overcome. It is clear that the traditional rule-based transaction monitoring systems are not working and capital market firms need to adopt new technologies and approaches to stamp out money laundering. Read about this complex problem and how Quantexa is helping to solve the issue Anti-Money Laundering in Capital Markets: Time to Embrace Innovation - Quantexa Community IntroductionDetecting money laundering risk in capital markets is a challenge which the industry has long struggled to effectively overcome. Capital markets inherent risk characteristics, such as high volumes of transactions, cross-border activity, direct market access and complex product offerings complicates risk… Or watch our short Fireside Chat session:
