3 Key Trends in the Use of Corporate Records to Fight Financial Crime

Introduction

In our recent webinar, Charles Brown, Head of Community at Blackdot Solutions, and Hugo Veazey, Financial Crime Compliance Industry Practice Lead at Moody’s Analytics, discussed three key trends in the use of corporate records data (CRD) in financial crime risk management (FCRM).

Why CRD?

“At every single stage of the process, corporate records are fundamental to the plot. They are absolutely critical.”

Hugo Veazey, Financial Crime Compliance Industry Practice Lead, Moody’s Analytics.

Although CRD is sometimes underutilised, it is a crucial resource in the fight against financial crime. From initial Know Your Customer processes to perpetual monitoring, CRD can play a huge part in accurately identifying potential risks. It’s a key component in every stage of the FCRM process, but practitioners aren’t always using it to its fullest potential.

As we will discuss, its use need not be static. Innovative technology solutions and reputable data providers are enhancing the benefits of CRD, despite recent difficulties faced by FCRM professionals such as budget cuts and restricted access to data. In this article, we’ll recap the main trends and innovations discussed in the webinar to give you a better understanding of how CRD can be harnessed to transform FCRM operations.

Trend 1: Combining technologies for maximum impact

“…it’s interesting to see the market shifting away from the acquisition of standalone tools and point solutions to more integrated, full-spectrum solutions,”

Charles Brown, Head of Community, Blackdot Solutions.

Even the most skilled analysts and investigators have their limits, but the right technology solutions can help them work faster and more efficiently than they can alone. Increasingly, companies are looking to acquire tools with a holistic approach. Rather than specializing in one phase of the investigation process, these technologies offer a wide range of services to support investigators from beginning to end.

However, these technologies don’t exist in an isolated ecosystem. Blackdot’s Videris, for example, is an end-to-end technology solution that streamlines investigations, increasing efficiency and accuracy. Though it may be a powerful tool on its own, its integration of quality data sets is what sets it apart. In a short demo, Charles Brown conducted an example investigation into a company using only Videris and its integration of Moody’s Orbis – one of the largest corporate records data sets in the world. After just five or six clicks of the mouse and in less than five minutes, he had used Videris to gather sufficient data from Orbis to allow the user to make an informed decision as to whether further investigation should be pursued.

As we will see, the best technologies help users to get to the information they need more quickly. Rather than spending the majority of their time gathering and processing information, investigators using technologies like Videris can spend more time on valuable analysis and reporting.

Trend 2: Automation in response to budget cuts

“…they’re spending too much time, dare I say wasting time, on things that quite frankly aren’t risk relevant […] As a consequence, they don’t have the ability to spend enough time on the really important stuff.”

Hugo Veazey, Financial Crime Compliance Industry Practice Lead, Moody’s Analytics.

Though it may sound counter-intuitive to discuss investing in new technologies as a response to budget cuts, equipping teams with the right solution is a crucial step in increasing efficiency and accuracy. Especially when the budget is tight, it’s important to ensure that any investments made have a real, tangible impact.

It is evident from customer feedback and case studies that investing in solutions which use intelligent automation, such as Videris, allows teams to work much faster and is met with clear efficiency gains. But it’s not just about efficiency – automation encourages more accurate and in-depth analysis because it allows investigators to focus on what’s important. Previously, institutions have favoured a ‘quick yes’ when onboarding new clients. In the webinar, Hugo Veazey explained that, by prioritising speed at the expense of accuracy, KYC professionals are at a higher risk of missing something important and onboarding a risky entity. He then described how this approach also means that good business opportunities may be missed. If an entity looks complicated to investigate, practitioners are more likely to favour a ‘quick no’, disregarding a potentially legitimate entity simply because they do not have sufficient time and resources to look beyond first impressions. Automation is a key factor in moving beyond this approach: more in-depth analysis can be done in less time, allowing companies to better avoid risk and engage in more good business.

Identifying risky entities is more important now than ever. The UK government recently escalated the significance and instance of fraud to pose a national threat equivalent to that of terrorism. Despite this, countering terrorist financing is often prioritised above fraud in terms of time, budget and resources. Making use of good corporate records and investing in quality technology solutions that use intelligent automation are two steps institutions can take towards significantly bridging this gap.

Trend 3: More nuanced use of data

“…it’s important not to be reliant on a single source,”

Hugo Veazey, Financial Crime Compliance Industry Practice Lead, Moody’s Analytics.

The European Court of Justice recently decided that the general public’s access to beneficial ownership data constitutes a serious interference with the fundamental rights to respect for private life and to the protection of private data.

Whilst this data is likely to remain accessible to those with a legitimate interest in accessing it – including AML practitioners – the movement to protect the rights of the private individual underlines the need to make use of multiple sources of data going forward. Indeed, many banks have already begun to move in this direction by utilising new data types, including live internet data, to ensure they are able to establish a complete picture of a subject of interest.

To demonstrate how using multiple sources of data can be a major asset to an FCRM investigation, Charles Brown led second demo. Videris allowed him to:

• Enrich existing data with that from other sources.
• Access a wide range of data, including sanctions lists and web searches.
• View relevant data points from different sources at the same time.

In just a few minutes, he was able to uncover information that was not initially obvious, providing ample basis for an investigator to make a judgement on the entity based on their institution’s risk appetite.

Watch the webinar now

Although the current trends in the use of CRD to fight financial crime highlight many exciting and important developments, it’s clear there is still much that can be done to improve FCRM procedures. At the end of the webinar, we looked to the future: both panellists indicated that we can expect to see developments in FCRM in the coming years as it is becoming increasingly clear that the current approach has its limitations.

Watch Charles Brown and Hugo Veazey discuss these trends in more depth in the webinar, which is available to watch on our website now. From highlighting the importance of CRD to discussing how innovative technologies are transforming the landscape of FCRM, it’s a fascinating watch for anyone who wants to stay informed about the fight against financial crime and understand how it may change in the future.