How can you disrupt today’s financial crimes with yesterday’s technology?

5 minutos de lectura 16 may. 2018

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Technology can change how we combat financial crime, but on its own isn’t a solution — we need to collaborate to prosper.

The nature of financial crime is rapidly evolving. Technology has created a host of new pathways for criminal gangs to launder the proceeds of their illegal activity, from cryptocurrencies to peer-to-peer transactions. This means that governments, law enforcement and regulators are often having to play catch-up.

To successfully combat today’s tech-savvy criminals, financial institutions and regulators must develop a new technology toolkit of their own. From machine learning to automation, both the authorities and the international banking system are increasingly looking to leverage the latest digital technologies in their quest to disrupt financial crime.

But technology alone will not halt the movement of dirty money. We also need new ways of working and cross-border collaboration to compete with criminals operating in a rapidly-changing landscape.

woman on computer
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Chapter 1

Making the technology work

Emerging technology can help identify suspicious behavior, reduce the number of false positives and improve response times.

The scale, complexity and costs associated with addressing the challenges of financial crime are necessitating an evolution in the approach taken by banks. While historically much of the focus has been on compliance, there is a growing realization that investment should go beyond plugging gaps and into the building of systems and services that proactively target criminal behavior.

Emerging technologies, such as advanced behavioral analytics, artificial intelligence, machine learning and robotics, can all help with this. Deployed well, they can help identify suspicious behavior, reduce the number of false positives and improve response times.

But this is not a question of the individual technologies involved — instead it’s about properly understanding the nature of the evolving challenge to apply the right combination of these technologies for a specific purpose, in the right place and at the right time.

Traditionally, when banks notice some suspicious activity, the investigation process is predominantly manual. Individual analysts would review a batch of financial transactions to identify fraudulent behavior. This can lead to significant inefficiencies and a high likelihood of error, as each person typically operates in different ways depending on their experience and training, while their limited capacity means that as the volume of transactions increases so does the potential for mistakes.

EY, recognizing this challenge for banks, developed the Cognitive Investigator tool which combines machine learning, robotic process automation and natural language processing to replace these low-level manual investigations, prioritizing risks and flagging potentially fraudulent activity.

hooded person on a laptop
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Chapter 2

Hiding behind a digital mask

Less-regulated financial technology platforms, such as cryptocurrencies, are offering the levels of privacy and anonymity that criminals crave.

Anonymity is, of course, the criminal’s best friend when it comes to exploiting the international finance system.

Criminals set up multiple fake accounts via front organizations to enable them to launder the proceeds of their illegal activity. The rise in digital banking has exacerbated the situation, enabling vast sums of money to be shifted around the world almost instantaneously.

And while banks invest billions in developing new systems that more effectively root out the wrongdoers, a swathe of new, less-regulated financial technology platforms, such as cryptocurrencies, are offering the levels of privacy and anonymity that criminals crave.

Having systems in place that can better determine someone’s true digital identity is, therefore, critical. Financial institutions need to be confident that the customer really is who they say they are. Creating a technology platform for the secure and traceable exchange of customer information, shared through digital channels controlled by authorized users, is a way to address this. A form of digital passport that can promote trust.

financiers collaborating
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Chapter 3

Are privacy and security complementary or incompatible?

How do you protect citizens’ rights and protect citizens at the same time?

Where do governments and regulators around the world draw the line between maintaining their citizens’ privacy and having the appropriate level of scrutiny or transparency that can help provide security from criminal activity? How do you protect citizens’ rights and protect citizens at the same time?

The solution doesn’t lie in fighting fire with fire, or a FinTech arms race where you hope to stay one step ahead of the criminals by utilizing the latest tech innovation.

Instead, what is needed is a new way of working to combat these kinds of illegal activities via a collective, collaborative effort by both the public and private sector.

This will require the creation of global data standards by government regulators, working closely with the international banking community, that balance data protection with the ability to share secure data across both borders and sectors. It will need the development of better mechanisms through which financial institutions can confirm suspicious activity. The role of technology is simply to improve the scope, the efficiency and the effectiveness of these processes.

Ultimately this is a question of trust — both in terms of individuals trusting their governments and banks over the proper use of their data, and banks and regulators in having a greater confidence in the identity of account holders.

Collaboration is key

To achieve this, there again needs to be a commitment to collaboration. To building a new framework that enables better data sharing across sectors, between banks, governments, regulators, security agencies and technology firms that increases transparency and security while maintaining individual privacy.

Technology can help with the security of this system, but it will take concerted effort by the new public-private partners in crime-fighting to develop the trust and processes that will be fundamental to its success.

To disrupt today’s financial crimes, in other words, financial institutions and law enforcement agencies alike don’t just need new technology — they need to adopt a new way of working.


Financial institutions and regulators need new technology and ways of working to halt the movement of dirty money.