Some people have argued that the next frontier in the fight against financial crime is using new technology to detect money laundering. New technology could well be the next frontier, but new technology alone is never the answer. It forms a part of the people, process technology and data mix, that is brought together to find solutions to problems. Whilst new technology for example could help the industry in producing less false positives or be able to handle them more efficiently, we have to expect more from ourselves and our partners than simply doing less of the work we shouldn’t be doing in the first place.
The bigger challenge is to make sure we are able to accurately understand the true costs and benefits of the new technology, and importantly whether it helps those relying on our work to more often and more effectively interrupt the illicit actors benefitting from financial crime. There are plenty of RegTech offerings, that make claims to advance the cause of fighting financial crime and many are still trying to find their niche and competitive edge. Some have started to deliver tangible benefits and two of these, Quantexa and Silent 8 featured here, are already making positive contributions.
Quantexa
Founded in 2016, Quantexa has grown from six to over 160 people, with offices in London, New York, Boston, Brussels, Toronto, Singapore & Sydney. Whilst at BAE Systems and EY, CEO Vishal Marria tried to help clients better understand their own clients, but his dream of being able to offer clients the opportunity to instantly form a clear view of their customers at the click of a button, was elusive. He could see that firms were investing in technology but still couldn’t turn data into actionable insight. Quantexa technology allows its clients to build a more accurate image of their customers leveraging internal data and integrating third party sources to build a 360° customer view and so creating context. This helps clients to better understand who their customers are, what’s good or bad about them, and perhaps most importantly who they really are connected to, so better decisions can be made from available data which includes helping tackle problems such as money laundering, fraud, and illicit trafficking.
At the core of the offering is AI technology that helps connect the dots and create a single view of the customer. It is not unusual for example in banking, that multiple account holders are onboarded but recorded with somewhat different names, although they are in fact the same person. Currently, many Banks view each individual name as a different entity, which can lead to missing links, misinterpretation and criticism from regulators, who increasingly look to Banks to oversee clients holistically.
One client using Quantexa’s technology thought they had 120 million customers when, in fact, they only had 70 million. This creates the opportunity for fraudsters to go undetected as FI’s find it difficult to link the activity. AI helps knit together data sets to build a more accurate picture.
According to CEO, Marria the future for Quantexa is clear. “Over the next 12 months, our plan consists of ongoing innovation and expanding our international growth even further. We have an impressive team of data scientists working hard together to make sure that our solution is always helping to solve our client’s problems – no matter what they are.”
Silent Eight
Silent Eight is a Singapore based RegTech that specialises in using artificial intelligence to combat financial crime. Silent Eight were the winners of the FinTech Abu Dhabi Innovation Challenge, the Monetary Authority of Singapore’s 2017 Fintech Hackcelerator award and recently won the top FinTech/RegTech award in Australia.
Silent Eight are partners on “Screening Optimisation,” at Standard Chartered Bank, an initiative that aims to apply machine learning and natural language processing techniques from the AI toolkit, to improve the name screening process where customer and related party names are matched against various regulatory, external and internal watch lists using fuzzy logic.
By analysing historical case decisions, the Silent Eight powered optimisation engine “learns” to replicate the assessment in the same way that a human analyst would proposing a response to the case. The machine reviews each risk event using both private and public domain data, to provide true or false match recommendations. These recommendations are supported by a written narrative explaining in plain English the decisions or recommendation. The machine continually learns over time, constantly enhancing and fine tuning its algorithms to further improve the quality and completeness of its recommendations.
By automating the research and enriching the cases the Screening Optimisation engine will replicate analyst actions during assessment and the results provided should help the analyst reach a decision much faster thus significantly reducing the time it takes for an analyst to review cases. The tool also helps to further improve case quality through a consistent and comprehensive review of all the attributes factored into each decision.
Co-Founder and CEO of Silent Eight, Martin Markiewicz, wants to “help revolutionise how Screening will be done in the future. Introducing AI into this space is not straightforward, with regulatory oversight and tolerance for errors extremely low. Still we have shown, that we can do it and we have proved that AI can play its part and augment the work FI’s are doing, particularly in screening, and we and our FI clients are pleased with the results.”
Markus Schulz, Global Head FCC Controls; SCB and ACAMS Advisory Board Member.
