By Rebecca “Becky” Schauer Robertson, Director of AML Compliance, South State Bank
What for you are the benefits of attending a conference like the ‘Fraud & Financial Crime USA Congress’?
The benefits of attending a conference like the ‘Fraud & Financial Crime USA Congress’ are the many networking opportunities among peers and hearing how others in the industry are complying in hopes of some type of consistency. Risk and Financial Crimes professionals often wonder how others in the field are complying and questioning “Am I doing too much? Am I doing too little? Have I interpreted compliance requirements correctly?” Being among peers with an open forum for discussion and hearing from industry experts eases some of the angst that comes along with compliance and opens doors for new connections along with a consistent approach of compliance.
How can risk professionals screen transactions for suspicious activity to reduce false positives using technology advances?
An important consideration Risk and Financial Crimes professionals should always involve when looking for ways to reduce false positions and focus in what’s really suspicious is understanding the true risks a financial institution actually faces. When screening transactions, a financial institution should conduct an analysis of historical data to determine what actually has been identified as suspicious within the transactional or customer base of the organization. If credit card fraud has had an impact on the organization for some time, the rules for this type of detection should be tightened around the type of fraud that has been consistently detected. If a certain type of customer base has been showing signs of suspicious activity, create an analytic to review that type of customer and the activity being seen to identify how the normal population of that type of customer operates.
Although customers and entities, geographic locations, products and services and Sanctions all encompass higher risks, a financial institution may not have higher risks in all those areas and should focus efforts on what is truly high risk opposed to looking at everything through the same lenses.
What methods could risk professionals adopt for screening transactions for suspicious activity?
The best method to screening transactions for suspicious activity is to always view activity holistically. If screening only incorporates frequency and volume of a certain type of transaction yet doesn’t also look at the other types of activity flowing into/out of an account or multiple accounts, the big picture is largely missed. In order to determine suspicious activity, all pieces of a puzzle must be identified and considered.
What are the challenges of feeding machines with information on what is considered suspicious activity?
Data integrity is the absolute most challenging when it comes to feeding machines with information to detect suspicious activity. The first line of defence plays the most integral role for successful monitoring, detection, and reporting of suspicious activity. At the time of on-boarding a customer, whether it be on-boarding for a loan or deposit account, or any other type of relationship, if information input in the system is incorrect at the time of customer inception, analysis for suspicious activity detection, customer risk rating, and even a financial institution’s overall risk assessment which are all essential to a financial institution’s compliance efforts will be skewed.
What future methods do you see being utilized for monitoring transactions to identify suspicious activities?
Robotic process automation (RPA) will become more and more important for monitoring transactions to detect and identify suspicious activities. Financial institutions will be better equipped when relying on RPA to quickly detect patterns across different customer, transactional, and account types, geographic areas, etc. that are truly posing risks. RPA will help reduce false positives, allowing analysts to focus on truly suspicious activity.
Although many think adoption of RPAs will reduce staffing, it may be surprising of the level of true suspicious activity identified, creating a higher volume of much more useful and actual suspicious activity to report.