Advances in the intelligence-led approach

Introduction

In the face of stricter regulatory requirements and an evolving risk landscape, an intelligence-led approach to anti-financial crime is paramount. Experts have contended that an intelligence-led approach is about returning to the fundamental reason why financial institutions have controls in the first place: to spot unusual customer activity and potential instances of financial crime. A risk-based approach is inherently intelligence-led and investigator-centric because it requires discerning the level of risk and determining the consequent mitigation measures in a way that leverages human analysis and different types of intelligence. The Financial Action Task Force (FATF) has long advocated for a risk-based approach, highlighting the need to understand customers throughout the entire lifecycle and deploy compliance resources effectively.  

In line with the increasingly complex nature of financial crime, financial institutions are responding with new intelligence-focused tools. From information-sharing initiatives to technological advancements like data analytics, artificial intelligence branches such as machine learning and natural language processing, and geolocation capabilities — the focus on intelligence-led approaches is advancing anti-financial crime efforts. This blog outlines some ways financial institutions increasingly use an intelligence-led approach, touching on these significant technological developments.

Enhanced due diligence

Enhanced due diligence (EDD) is an essential part of a risk-based and intelligence-led approach. As financial institutions concentrate resources on high-risk clients and their activities, they can more effectively manage risk. Many jurisdictions mandate EDD measures for high-risk customers, such as politically exposed persons or clients that engage in risky industries such as gambling or construction. Through performing EDD, a financial institution can glean a more comprehensive understanding of the risk a client poses and can take the appropriate steps for mitigation. An intelligence-led approach is inherent to EDD as investigators collect more information from various external sources to confirm details and conduct analysis. An integral component of this is adverse media screening, which involves scanning the public domain for targeted information which can unveil hidden financial crime risks.  

Many financial institutions are already demonstrating an investigator-led approach to EDD, using advanced screening tools and leveraging less traditional intelligence sources like social media or online forums. Social media accounts can be rich with information on financial crime, evidenced by Instagram, TikTok, and Snapchat accounts openly promoting fraud and even selling fraud ‘how-to’ guides. Cross-referencing information from other sources, like online forums, can reveal abusive or manipulative trading activity, such as the high-profile short squeeze of GameStop on Reddit. Additionally, media articles from non-traditional sources can point to emerging scandals like the original ‘Tinder Swindler’ article that made groundbreaking accusations against a now well-known romance scammer and felon.  

The recognition of open-source intelligence as an important part of EDD exists alongside advancements in artificial intelligence, such as natural language processing and machine learning. These technologies benefit compliance staff by allowing them to focus on more analytical tasks associated with relevant findings rather than merely determining their relevancy and processing false positives.

Network analysis

Criminal organisations and their activities are getting more complex, often utilising extensive networks for both the underlying criminal activity and the illicit finance. Reflecting this complexity, organised crime has never been more transnational, leaving financial institutions with the task of unweaving intricate cross-jurisdictional webs. To tackle complex organised crime more effectively, firms are increasingly turning to network analysis. Network-centric approaches consider the broader network of a subject or transaction, looking at their relationships with other individuals or businesses to gain a fuller picture. Technological solutions that harness the power of network analysis provide a way of visualising these relationships. Studies have shown that visualising information in graphs helps humans with comprehension and faster decision-making. As such, analysts tasked with investigating a subject benefit from the display of information in an easily decipherable way, leading to better and more efficient outcomes.  

FATF contends that tools and techniques like network analysis assist with identifying links which “are more likely to go undetected when data is fragmentary” or when technological tools used by investigators are “geared towards compliance-style checks on individual entities”.  An advanced analytic approach which includes network analysis, equips financial institutions with the ability to scale their financial crime risk efforts and be more proactive with the identification of risk. Increasingly, intelligence-led approaches rely on using data to spot patterns, trends, and networks and then giving analysts the critical thinking tasks of scrutinising relationships to determine if they are suspicious or not. These data points may include information such as location or transaction data, which can point to connections that may otherwise go undetected.  

Data points useful for network analysis and visualisation include: – Shared identifiers such as physical addresses, phone numbers, or email addresses  – Risk indicators such as high-risk jurisdiction footprint or criminal record history – Transaction data such as transfers, payments, withdrawals – Geolocation, including IP addresses

Collaboration and information sharing

Increased collaboration and information sharing are a nearly universally recognised component of effective anti-financial crime compliance. The regulatory sentiment is pro information-sharing, as recognised in the UK with the launch of INDEX, a cross-government digital information and data exchange designed for the intelligence assessment community. Another example is Singapore’s COSMIC platform, which allows financial institutions to share information on customers that exhibit red flags on a secure digital platform. FATF itself recognises the benefits of applying advanced analytics to data shared by multiple financial institutions, highlighting its ability to reveal trends or potentially suspicious activities that are harder to detect by a sole institution.

“Data and information-sharing initiatives are an important component for anti-financial crime and an intelligence-led approach. I think we can expect to see more advancements in this space that are more proactive and in real-time than the current state, which is quite reactive.”

– Former head of client intelligence at a large multinational bank

Just as FATF recognises the importance of information sharing and calls attention to the limited and partial view that financial institutions often have, other industry bodies have discussed the importance of cooperation. The Wolfsberg Group recently published a paper on effectiveness through collaboration, highlighting the importance of dialogue to achieve better outcomes instead of operating in a silo. By providing valuable intelligence, data and typology sharing help fortify financial institutions’ defences.

Looking ahead

Looking forward, the intelligence-led approach will undoubtedly continue to emphasise the effective use of technology and information sharing initiatives. As the focus increasingly centres on gaining meaningful insights from data points and ever-growing open source information, analytical and data skills will become more in demand. The intelligence-led approach will focus on achieving harmony between human critical thinking and analysis from technology-led insights. 

“Especially with regulators emphasising the concept of ‘effectiveness’, firms are reminded of the need to champion an intelligence-led approach. That means using and investing in technological solutions or tools, learning more technical skills, and being able to navigate data.”

– Former head of client intelligence at a large multinational bank

Implementing an intelligence-led approach with an OSINT solution

OSINT solutions like Blackdot’s Videris help support an intelligence-led approach for financial institutions in all of the areas discussed above.

EDD

Videris streamlines due diligence research and investigation in a single interface. It allows investigators to search across multiple disparate data sources (such as search engines, news and social media, corporate records) to quickly identify relevant information on their subject. AI capabilities also allow for high volume risk screening against live internet data, allowing investigators to take full advantage of OSINT without reducing efficiency.

Network analysis

Videris allows investigators to gain a faster understanding of a subject of interest by visualising connected data in a single interface. It aids analysis by flagging possible links, automatically mapping known connections and providing an intuitive overview of ownership hierarchies.

Collaboration and information-sharing

To ensure the most complete intelligence and facilitate the best possible outcomes, Videris allows organisations to access internal and custom data sources alongside open source data. Teams can collaborate on cases with ease, with secure access control for sensitive work. Videris also promotes easy sharing and reporting on findings – intuitive charts can be downloaded and presented to key stakeholders.

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