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For a long time, financial crime prevention has been a massive issue for banks. This is because of several often complex navigation around rules and regulations, such as AML, KYC, CTF, and SAR. However, a bigger issue has emerged. As more and more transactions happen and financial crime networks get smarter, the bigger problem is the way banks handle data.
In the recent conversation on the Don’t Panic It’s Just Data podcast, host Herb Blecher, Research Director, Data and Analytics, Enterprise Management Associates (EMA), sat down with guest Manish Andhy, Financial Services AI & Industry Executive at Teradata.
They talked about how criminal enterprises are changing fast, like the internet, while compliance systems are still using old methods. Andhy tells Blecher, "The difference between how fast criminals can change and how slow compliance systems are is a big weakness."
More than $3 trillion in money moves through the global financial system every year, but only a small part of it is caught. Banks have spent a lot of time and money building systems to stop money laundering. Many of them still have separate systems for onboarding, transaction monitoring, investigations and risk management.
The strange thing is that big financial institutions have already spent a lot of money to solve this problem. They built data warehouses to get rid of systems and data lakes to put all the information in one place. In fact, they often created the same separate systems they were trying to get rid of.
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Takeaways- Over $3 trillion of illicit funds moves through the global financial system annually.
- Only about 1% of illicit funds are detected or intercepted.
- AML programs have grown in a fragmented, siloed way across enterprises.
- The pace of change in compliance has historically been slow.
- Traditional rule-based systems generate enormous amounts of false positive alerts.
- Data silos persist due to organizational and technology issues.
- Data products allow for a unified view of data without creating new silos.
- Generative AI can automate parts of the compliance process.
- Financial institutions must treat data as a strategic asset.
- Compliance can inform broader business decisions beyond regulatory obligations.
Chapters
- 00:00 Introduction to Financial Crime and Data Analytics
- 05:06 Challenges in Financial Crime Compliance
- 10:05 Data Silos and Their Impact
- 15:12 The Concept of Data Products
- 19:57 Modernizing Financial Crime Strategies
- 24:59 Conclusion and Key Takeaways
For more information on financial crime and how financial institutions should manage their data securely and compliantly, follow Terada across its official channels:
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