By Victor Lessoff, MD, Head of Internal Investigations, TIAA
What for you are the benefits of attending a conference like the ‘Fraud and Financial Crime USA’ and what have attendees learnt from your session?
The Fraud and Financial Crime USA prepares attendees to identify and respond to new and emerging financial crime risks. The beneficial ownership session provided an overview of the various forms of beneficial ownership, how beneficial ownership laws can be abused and how to track illicit or fraudulent funds through beneficial ownership vehicles.
How can risk professionals track the flow of funds to identify fraudulent activity?
Meeting financial service KYC rules requires risk professionals to identify and validate the true ownership of accounts and funds held by and transacted through their institutions. Financial professionals must also be able to track the flow of funds through their companies in order to determine if they are legitimate transactions or indicative of money laundering or fraudulent transactions. Risk professionals must be able identify fraudulent activity by understanding the transaction types, forms and methodologies utilized by clients to determine what is normal and what is suspicious. Often this is on a client by client, account by account basis.
Why is building a central repository to verify information a key concern?
Financial institutions often have customer identification and transaction data disbursed over multiple geographic locations, businesses and products. In addition, financial institutions maintain non-financial and externally sourced data including AML information such as PEP and OFAC lists. Understanding the entirety of information held by the financial institution is crucial in identifying suspicious and potentially fraudulent activity. Regulators expect financial institutions to implement and maintain systems to leverage the entirety of the data within their control to identify suspicious transactions and fraudulent activity. Having a central repository to store, de-conflict and leverage data is becoming increasingly necessary to meet regulatory expectations. Such repositories can also be useful for improving customer service as well as to support other business objectives.
What are the challenges of compliance of financial institutions and how can we combat them?
New payment systems, financial service products and technology have created opportunities for money launderers and perpetrators of financial crime to conduct their illicit activities across geo-political borders with greater anonymity. Those same payment systems and products can also be designed to prevent fraud and improve transparency if appropriately implemented and understood. In addition, technology, machine learning and artificial intelligence can be utilized to identify suspicious transactions, patterns and behaviour that can ultimately prevent or reduce money laundering and financial crime.
What do you see ahead for the future for Increasing transparency to help identify fraudulent activity?