Coming Together After Unprecedented Scandal

December 16, 2019 3 minute read

In the wake of gigantic data breaches, punitive fines and global scandals, now is the time for the financial compliance industry to come together.

Taking the Next Step

That was the sentiment expressed by our Founder & CEO, Charles Delingpole, as he took to the stage at the British Library to kick off proceedings at this year’s ComplyAdvantage Conference addressing digital transformation in compliance, #CACON19.

Charles labeled the anti-money laundering, terrorist financing and financial compliance industry as “decrepit.” Calling on the collected compliance leaders to bring some technological adventure to compliance and to begin an innovation-led revolution in the industry.

Unsustainable Data

The ‘State of the Nation’ panel welcomed Jennifer Page, SM, Financial Crime Technology at KPMG; David Dry, Head of Compliance UK and Europe at World Remit; and Nick van Benschoten, Principal, Economic Crime at UK Finance.

Nick from UK Finance recapped the pros and cons. Even though there’s a lot of good data available, there is too much, and it is not sustainable. At the moment, this data deluge leads to too many false positives and too many alerts being created — very few lead to useful actions. Financial institutions struggle due to manual processes and a lack of adaptability.

The panelists were asked what’s exciting them in the industry right now. For David Dry, it’s behavioral analytics. In an age where financial institutions offer money transfer services, wallets and current accounts, they have unprecedented access to user-behavior data across platforms. If we can better understand customer behaviors, we can build smarter risk management processes.

Jennifer Page, KPMG, wanted to see even more activity in data sharing. Jennifer explained that most FS companies only see their part of the picture, whereas sophisticated criminals spread their activity across financial services institutions. Jennifer explained that synthetic ‘masked’ data sets of six organizations have been created, which led to the detection of three international organized crime groups.

David Dry added a smart rejoinder, that financial compliance needs “good old-fashioned program management.” Essentially, the new tech is very welcome, but if program delivery and leadership is lacking, the outcomes will not be optimal.

Does Security Exist?

When commenting on what criminals will do next and how the compliance industry can keep up, Nick van Benschoten argued that the industry is not ready for a fully digitized financial sector, as the idea of ‘bank-level’ security cannot exist.

His reasoning relied on a great number of financial crimes beginning with hackers targeting smartphones, and users often give away ‘the keys to the back door’ of their online security. As there is not currently a regulated social media environment, there cannot possibly be an open data environment, Nick explained.

It’s an interesting take in a financial center that’s set for more and more openness with the advent of Open Banking, admittedly a scheme which has not got off to a flying start. But with strong customer authentication and increasingly secure methods of identifying customers being formulated, it begs the question of how long the argument against an open data environment can hold up.

We’ll have even more insights from our conference for you soon.