UK challenger banks have transformed the financial sector with innovative products and services that offer greater flexibility than their ‘brick and mortar’ counterparts. Research suggests that the value of the challenger bank market will continue to grow rapidly, reaching an estimated global value of $471 billion by 2027. However, the opportunities that challenger banks bring also represent new regulatory challenges with disruptive services increasing the risk of money laundering and other financial crimes.
Challenger Bank AML Vulnerabilities
An FCA review has found that UK challenger banks may be struggling to meet that regulatory challenge, with some failing to effectively implement important anti-money laundering (AML) measures and controls. Initiated in 2021 and published in April 2022, the review identified a rise in the number of challenger bank Suspicious Activity Reports (SAR), raising concerns “about the adequacy of these banks’ checks when taking on new customers”.
The FCA review involved 6 unnamed challenger banks that were relatively new to the financial market and which had a collective customer base of over 8 million people. While the FCA praised the advantages of the challenger banks’ “innovative use of technology” to speed up standard customer identification and verification processes, it also raised areas of concern, including:
- Failures to conduct adequate checks on customer income and occupation
- Failures to apply enhanced due diligence measures consistently for high risk AML alerts
- A lack of sufficient detail in customer risk assessments
- Ineffective management of AML alerts
The review highlights the need for challenger banks to match their innovative fintech capabilities with a safety-minded approach to their AML responsibilities. FCA Executive Director, Sarah Pritchard, emphasised that point, stating that challenger banks remain “an important part of the UK’s retail banking offering” but that their benefits cannot entail a “trade-off” with AML compliance.
The Importance of Customer Data
AML compliance, and the due diligence and screening processes that it involves, may be especially complex for challenger banks since their appeal to customers is their speed, simplicity, and flexibility.
The FCA’s review suggests that challenger banks’ AML problems are attributable to a lack of quality customer data with which to build accurate risk-profiles and make important compliance decisions. When challenger banks struggle to meet their data collection and risk management needs, they are forced to compromise the advantages of their products and services by diverting resources to AML compliance – or risking regulatory penalties.
Challenger Bank AML Solutions
Many challenger banks manage their AML obligations by building bespoke risk management solutions – but often encounter difficulties balancing their compliance responsibilities with a focus on delivering fintech innovation. AML regulatory environments are complicated further by the constantly changing threat landscape, in which new criminal methodologies emerge, and new legislation is implemented constantly.
Fortunately, challenger banks have options when it comes to meeting their due diligence and risk assessment obligations. Rather than relying on a potentially-vulnerable and untested bespoke solution, challenger banks may instead draw on the expertise of established, industry-trusted platforms with dedicated CDD and EDD resources and multi-faceted AML and KYC screening tools.
Built on smart technology, automated AML compliance solutions enable challenger banks to be proactive about threats, integrating customer data from sources across the world quickly and efficiently, and adapting in real time as the risk landscape changes. Trusted AML solutions may include multiple language screening capabilities, helping challenger banks better manage CDD and EDD for international customers without generating unmanageable amounts of false positive alerts.
Learn more about our AML compliance solutions for challenger banks: contact us today
Nordic countries have a reputation as traditionally safe banking destinations, with the financial institutions of Norway, Sweden, Denmark, Finland and Iceland regularly ranking amongst the safest in the world. However, following a series of high profile international money laundering cases involving Nordic banks, that reputation has been shaken, putting a spotlight on Nordic banking AML compliance.
The cases in question involved banks across the region. In 2018, for example, Denmark’s Danske Bank was implicated in a €200 million money laundering scheme connected to its Eastern European and Russian branches. In 2019, Sweden’s Swedbank was also implicated in the Danske Bank scandal after an investigation revealed it had laundered around €20 billion in its Estonian branches for Russian customers. In 2020, another Swedish institution, SEB Bank, was fined SEK1 billion after an investigation revealed poor money laundering controls in its Baltic branches.
In response, in 2021 Nordic governments collectively requested that the IMF conduct an independent review of the region’s money laundering and terrorism financing risks, so that regulators could take appropriate steps to strengthen their regulatory compliance controls.
Given the increased focus on anti-money laundering (AML) and counter-financing of terrorism (CFT) in the region, it is more important than ever that companies understand the Nordic regulatory landscape and the compliance obligations that it entails.
Nordic Banking Regulators
All of the Nordic states have established dedicated domestic authorities, known as Financial Supervisory Authorities (FSA) to provide oversight and supervision of AML/CFT regulation. Key regulatory bodies include:
Norway – Finanstilsynet
The Financial Supervisory Authority of Norway supervises Norway’s financial system, and is responsible for managing the licensing of banks and financial institutions, with the goal of ‘promoting financial stability and well-functioning markets’.
Norway’s primary AML regulation is the Anti-Money Laundering Act. As a member of the EU, Norway implements the Anti-Money Laundering Directives.
Sweden – Finansinspektionen
The Financial Supervisory Authority of Sweden provides oversight of all banking, securities and insurance companies, working to ‘authorise, supervise and monitor all companies operating in Swedish financial markets’.
Sweden’s primary AML regulations are the The Money Laundering and Terrorist Financing (Prevention) Act and the The Act on Penalties for Money Laundering Offences. Sweden is also in the EU and implements its Anti-Money Laundering Directives.
Denmark – Finanstilsynet
The Danish Financial Supervisory Authority is responsible for the ‘supervision of financial undertakings’ of banks and other financial service providers in Denmark. It also assists the government in developing financial legislation, and collects and communicates financial sector statistics.
Denmark’s primary AML regulation is the Act on Measures to Prevent Money Laundering and Financing of Terrorism. As an EU member state it implements the Anti-Money Laundering Directives.
Finland – Finanssivalvonta
The Finnish Financial Supervisory Authority provides oversight for Finland’s financial and insurance sectors, working to ‘enable balanced operations of credit institutions, insurance and pension companies and other supervised entities in stable financial markets’.
Finland’s primary AML regulation is the Act on Preventing Money Laundering and Terrorist Financing. Finland also implements the Anti-Money Laundering Directives as an EU member state.
Iceland – Seðlabanki Íslands
Iceland’s Financial Supervisory Authority merged with the Central Bank of Iceland in 2020, with the Central Bank taking on its supervisory responsibilities. As a regulator, the Central Bank is responsible for monitoring Iceland’s financial institutions ‘to ensure that their activities are in compliance with the law and with Governmental directives’.
Iceland’s primary AML regulation is the Act on Measures against Money Laundering and Terrorist Financing. Although it is not an EU member state, Iceland is part of the European Economic Area (EEA) and adopts elements of the Anti-Money Laundering Directives as part of its domestic AML/CFT legislation.
Nordic Banking Risk Environment
Nordic banking money laundering scandals created financial turmoil across the region. The pattern of compliance failures suggested that Nordic banks were collectively struggling to implement effective AML controls, and failing to adequately address risks. Key compliance vulnerabilities that may have contributed to the compliance failures of the Nordic banking system include:
Information Sharing
Nordic banks struggled to share important risk data across borders and institutional frameworks due to barriers such as data secrecy laws. Following the AML scandals, Nordic banks launched a joint scheme to share information on suspicious transaction patterns.
Compliance Technology
Nordic banks used out of date AML/CFT technology, creating regulatory blindspots and generating high volumes of false positive alerts. The remediation of false positives not only created administrative backlogs, but had a negative knock-on effect on the effective management of true positives.
Manual Compliance
Nordic banks relied on manual compliance processes during important customer due diligence (CDD) processes, leading to poor quality risk profiles and slower alert remediation. The challenges of manual compliance were exacerbated as firms were forced to deal with high volumes of alerts.
Employee Compliance Training
Research suggests that employees of Nordic banks were hesitant or unable to address compliance violations, with up to 62% of employees failing to intervene upon discovery of unethical behaviour. The deficiencies in regulatory awareness reflected a failure in company leadership and a need to enhance compliance training to better spot money laundering red flags.
AML Solutions for Nordic Banking
In the wake of its AML challenges, the Nordic banking community is taking collective action to address its compliance failings, including an effort to enhance the data that it collects in order to perform more robust CDD and build more accurate risk profiles.
The push for better customer data also reflects the need for better financial crime technology solutions. For example, banks that previously relied on manual Google searches of customer names and risk factors, are now implementing automated screening solutions, adding speed and accuracy to their compliance processes, more intuitive name-matching, and the capability to adapt quickly to changes in the risk environment.
Beyond speed and accuracy, the automated screening solutions add depth and detail to customer data processes, with advantages over manual searches that include:
- Name-matching: Automated solutions can screen against a vast range of customer names in different language systems. Similarly, solutions can be programmed to recognise regional naming conventions, aliases, and spelling variations.
- Politically exposed persons: Automated PEP screening enables firms to capture information from a range of PEP lists. In conjunction with other screening tools, automation allows for the swift detection of changes in PEP status.
- Adverse media: Automated adverse media screening solutions can cover a variety of news stories from different foreign countries, taking into account source reliability and political bias.
- Sanctions screening: The global sanctions landscape changes constantly. Automated sanctions screening helps firms know as soon as possible when a customer is designated on a sanctions list and use fuzzy logic algorithms to account for naming discrepancies.
Future Compliance Considerations in Nordic Banking
The Nordic banking community is likely to focus on improvements to its collective KYC framework. The EU’s anti-money laundering directives will also have an effect on Nordic banking AML compliance: the Sixth Anti-Money Laundering Directive (6AMLD) came into effect on 3 June 2021, with an overt focus on the harmonisation of anti-money laundering standards across the EU. The EU also recently announced an update to 6AMLD; particularly relevant to Nordic financial institutions is the introduction of new whistleblowing protections for workers that identify compliance violations within their companies.
Get in touch to discover how Ripjar can support your AML compliance in the Nordics
The Financial Action Task Force (FATF) is a global money laundering and terrorist financing authority that works to prevent financial criminal activity and promote global compliance standards. The FATF was founded in 1989 following an agreement by the G7, which at the time comprised Canada, France, West Germany, Italy, Japan, the UK and the US. The agreement recognised the need for an international organisation that could study emerging financial crime trends, and monitor the anti-money laundering (AML) standards of world governments. In 2001, following the September 11 terrorist attacks, the FATF added the counter-financing of terrorism (CFT) to its mandate.
Upon its foundation, the FATF had 16 member states. By 2022, that number had grown to 39, with hundreds more committed to implementing its AML/CFT policies and recommendations.
What does the FATF do?
The FATF’s stated objectives are to ‘set standards and promote effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system’. The FATF achieves those objectives in two main ways: by developing and implementing AML/CFT policy in the form of a series of recommendations, and by issuing mutual evaluation reports (MER) on individual countries in order to assess their domestic AML/CFT compliance performance.
The FATF’s 40 Recommendations
The FATF’s recommendations represent a list of AML/CFT compliance measures and controls that member states must implement and enforce via domestic legislation. There are currently 40 recommendations, each of which address some aspect of money laundering methodology, and an additional 9 Special Recommendations that address terrorism financing. The 40 Recommendations set out details of specific compliance controls and require member states to adopt the following regulatory principles:
- Money laundering should be treated as a criminal offence and authorities should be able to confiscate its proceeds.
- Member states should establish a national authority known as a financial intelligence unit (FIU) to analyse and process money laundering reports submitted by financial service providers.
- Domestic firms should be required to implement a risk-based approach to AML/CFT compliance, conducting assessments of their customers and transactions and then deploying an AML response commensurate with the risk that they face.
- Firms should conduct suitable due diligence on their customers in order to build accurate individual risk profiles and determine the appropriate compliance response.
- Firms should monitor their customers’ financial activity on an ongoing basis.
- Firms should submit suspicious activity reports (SAR) to the authorities in a timely manner when they detect potential money laundering activity.
- Member states should co-operate with international money laundering investigations and prosecutions.
Mutual Evaluation Reports
FATF mutual evaluation reports are in-depth reports which analyse a country’s success in implementing the 40 Recommendations. The MER process involves a peer review by representatives of different FATF member states who assess the target country’s technical compliance with the FATF’s AML/CFT recommendations, and the effectiveness of those measures in combatting money laundering and terrorism financing.
When an assessment is completed, the FATF publishes the country’s mutual evaluation report. The report sets out a detailed description of the target country’s AML/CFT performance, and provides recommendations for that country to enhance its AML/CFT framework.
A mutual evaluation report is extremely important for a country’s global economic profile. Positive MERs may provide a significant economic boost; the lower the AML/CFT compliance risk, the more likely it is that a country will be able to establish business connections with international partners. Conversely, countries that perform poorly on their MER may be considered too high a compliance risk for many potential business partners.
The FATF Greylist
When a MER reveals serious AML/CFT deficiencies, the FATF may add that country to its high risk AML watchlists. Firms should exercise a high degree of caution when dealing with countries included on the lists since the designation denotes an increased risk of financial crime and regulatory compliance violations. The FATF maintains the following high risk watchlists:
Jurisdictions Under Increased Monitoring
Sometimes referred to as the ‘greylist’, the FATF’s Jurisdictions Under Increased Monitoring list designates countries that have ‘strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.’ Greylist countries represent high AML/CFT risks but have committed to working with the FATF to resolve the relevant deficiencies and facilitate their removal from the list. In 2022, following the addition of Turkey, Jordan, and Mali, there were 24 countries on the greylist.
High Risk Jurisdictions Subject to a Call for Action
Sometimes referred to as the ‘blacklist’, the High Risk Jurisdictions Subject to a Call for Action list refers to countries that the FATF deems to have serious deficiencies in their AML/CFT frameworks and that represent a significant criminal threat. These countries are highly likely to be the target of international sanctions and the FATF calls on member states to apply ‘counter-measures’ when dealing with them. As of 2022, there were two FATF blacklist countries: Iran and North Korea.
How to Comply with FATF AML/CFT Regulations
FATF member states must implement the 40 Recommendations through domestic legislation, imposing a range of AML/CFT compliance standards on firms within their jurisdiction. In the UK, for example, FATF Recommendations are implemented via the the Proceeds of Crime Act 2002 (POCA), the Terrorism Act 2000 and the Money Laundering, Terrorist Financing and Transfer of Funds Act 2017. In the US, FATF Recommendations are implemented via the Bank Secrecy Act and the Patriot Act, and in the EU via the Anti-Money Laundering Directives – the most recent being the Sixth Anti-Money Laundering Directive.
These regulations set out a range of reporting and record-keeping obligations, and require firms to implement a risk-based approach to AML/CFT. Broadly, FATF compliance requires firms to:
- Conduct suitable customer due diligence in order to establish the identities of their customers.
- Screen customers and their transactions in order to verify their status as politically exposed persons (PEP) and to find out whether they are included on international sanctions lists.
- Conduct adverse media screening in order to capture changes in customers’ risk profiles quickly and efficiently.
- Submit suspicious activity reports to the relevant financial authority when money laundering alerts are generated.
FATF Compliance Technology
In order to comply with FATF AML/CFT regulations, firms must analyse a vast amount of customer and transaction data for signs of money laundering, terrorism financing, and other financial crimes. In practice, this means integrating effective compliance technology capable of analysing data with speed and efficiency, helping firms build accurate customer risk profiles, and adapting to future changes to the FATF’s AML/CFT guidance.
Future FATF regulations
As the financial landscape changes, the FATF’s regulatory focus shifts to engage with emerging threats, including the influence of fintech and regtech innovations. Recently, the FATF has highlighted the money laundering risks associated with cryptocurrencies and virtual assets, and released a report in 2020 on Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing. The report included a range of characteristic signs of money laundering involving cryptocurrencies, and was based on research conducted by the FATF into prior money laundering investigations. In 2021, the FATF issued updated guidance on the risk-based approach for cryptocurrency service providers, pointing out that ‘continued monitoring and engagement between the public and private sectors’ would be necessary to protect the global financial system.
Get in touch to learn how Ripjar can help you comply with FATF recommendations
The European Union issues anti-money laundering directives (AMLDs) as a way to ensure that all member states adhere to a common set of financial compliance regulations. The European Parliament introduces new AMLDs periodically, and every government in the EU is expected to implement them by passing appropriate domestic legislation. Although the UK left the EU in 2020, it has implemented similar anti-money laundering legislation in order to keep pace with the compliance standards set out by the AMLDs.
EU AMLDs reflect the changing global financial landscape: each AMLD contains measures to address emerging criminal trends and methodologies, integrate new technologies and Financial Action Task Force (FATF) recommendations, and to address deficiencies in previous directives. When the EU announces a new AMLD, it gives member states a time period in which to make the necessary changes to domestic anti-money laundering (AML) and counter-financing of terorrism (CFT) legislation, and to allow banks and financial institutions to adjust their compliance and risk management solutions. After the implementation deadline the new AML/CFT regulatory environment is considered law across the EU.
The EU’s most recent AMLD was the Sixth Anti-Money Laundering Directive (6AMLD) – which built on the AML/CFT measures introduced in the 4AMLD and 5AMLD respectively. With the EU having announced a new anti-money laundering ‘legislative package’, it is important that obligated entities within the bloc understand their new obligations.
To help your business stay on top of its AML/CFT obligations, read our guide to the most recent EU AMLDs.
4AMLD
The Fourth Anti-Money Laundering Directive came into effect across the EU on 26 June 2017. The directive focused on strengthening the risk based approach to AML/CFT recommended by the FATF. 4AMLD’s key measures included:
Enhanced beneficial ownership: 4AMLD introduced a requirement for member states to compile a national register of beneficial owners. The definition of ‘beneficial owner’ was expanded to include members of a firm’s senior management.
Risk assessments: Under 4AMLD, companies had to factor in new customer data as part of their AML risk assessment process, including customers’ locations and the types of products and services they were using.
Politically exposed persons: 4AMLD adjusted the definition of politically exposed person (PEP) to include ‘domestic PEP’.
Noncompliance penalties: 4AMLD introduced a ‘name and shame’ requirement for firms found to be in violation of AML/CFT regulations. The directive also increased mandatory AML/CFT noncompliance penalties in the following ways:
- A maximum fine of €5 million or 10% of annual turnover for legal persons
- A maximum fine of €5 million for natural persons
5AMLD
5AMLD was implemented across the EU on 10 January 2020 and built on many of the measures introduced in 4AMLD. It introduced a new focus on fintech products and services, including the growing use of cryptocurrencies. Key 5AMLD measures included:
Beneficial ownership transparency: After 4AMLD introduced beneficial ownership registers, 5AMLD introduced a public right of access to the information they contained. Similarly, member states had to ensure that their registers were interconnected with others across the bloc to enable centralised verification.
PEP lists: Like 4AMLD’s beneficial ownership lists, 5AMLD introduced publicly available PEP lists, setting out a list of domestic ‘politically exposed’ roles.
Risk assessments: 5AMLD introduced a requirement that member states publish periodic risk assessment reports in order to raise public awareness of AML/CFT threats.
Virtual currencies: 5AMLD expanded existing EU AML/CFT regulations to cryptocurrencies and cryptocurrency service providers. The new rules meant that cryptocurrency exchanges had to register with domestic authorities and share information with Financial Intelligence Units (FIU).
Prepaid transaction limits: 5AMLD included measures to address the AML/CFT threat posed by prepaid credit cards. Under the new rules, transaction limits on prepaid cards were reduced to €150 (from €250) for in-person transactions, and to €50 for online transactions. 5AMLD also prohibited companies from accepting prepaid cards issued in countries that did not meet the EU’s compliance standards.
High risk due diligence: 5AMLD introduced a uniform set of mandatory enhanced due diligence measures to be applied to transactions involving high risk countries.
High value transactions: 5AMLD extended AML/CFT reporting obligations to transactions of high value goods amounting to values of €10,000 or more. The measure was intended to address money laundering in certain ‘boutique’ industries, such as the art trade.
6AMLD
6AMLD came into effect on 3 June 2021 and is the most recent EU anti-money laundering directive. While 5AMLD expanded the scope of the EU’s AML/CFT regime, 6AMLD is broadly intended to harmonise and clarify regulatory detail, and to help companies in the EU do more to directly address financial crimes. With that in mind, the key measures of 6AMLD include:
Harmonised predicate offences: 6AMLD sets out a harmonised list of 22 predicate offences for money laundering, including offences such as human trafficking, fraud, and counterfeiting. The list includes the two new money laundering predicate offences of cybercrime and environmental crime.
Aiding and abetting: Under 6AMLD, the definition of the crime of money laundering has been expanded to include aiding and abetting.
Liability: Before 6AMLD, only individuals could be prosecuted for the crime of money laundering. Under 6AMLD, that criminal liability is extended to legal persons such as corporations. In practice, this means that organisations can also be punished for money laundering offences committed by their employees.
Penalties: 6AMLD harmonises money laundering criminal penalties and punishments across the EU. The new rules introduce a minimum prison sentence of 4 years for individuals found guilty of money laundering (from the previous minimum of 1 year).
Dual criminality: Under 6AMLD, member states are required to share information and facilitate cooperation in order to prosecute money laundering crimes that span international borders. These dual criminality prosecutions have required some member states to criminalise certain predicate offences, regardless of whether they were already illegal.
How to Comply with Anti-Money Laundering Directives
Any new money laundering directive requires companies within the EU to review their AML/CFT compliance and risk management solutions, and adjust to the new regulatory environment where necessary. This process may require the following steps:
- A review of risk exposure under the new regulatory environment, followed by any necessary adjustments to risk management solutions. Under 6AMLD, for example, companies need to ensure their risk management solutions take into account cybercrime and environmental crime predicate offences.
- A review of customer risk assessment procedures. A new AMLD may alter the risk profiles of both new and existing customers.
- New training procedures for compliance employees. The introduction of new regulations means that compliance employees may need to update their regulatory knowledge in order to continue to meet their obligations.
- A review of internal compliance technology deployments to ensure ongoing compliance.
Future EU Anti-Money Laundering Directives
The EU will continue to issue anti-money laundering directives in response to a changing threat landscape. In July 2021, the European Commission announced that it would be overhauling its AML/CFT rules with ‘an ambitious package of legislative proposals’. In addition to strengthening its existing AML/CFT framework, the package will specifically take into account the money laundering challenges posed by technological innovation.
As part of the package, the EU has announced a new directive which ‘repeals and replaces’ AML/CFT rules introduced in 6AMLD (and previous AMLDs). The directive includes a range of key measures and provisions, including:
- The introduction of national supervisory bodies in all member states.
- A requirement for member states to carry out national risk assessments every 4 years.
- More robust protections for corporate whistleblowers.
- A framework to allow FIUs across the EU to perform joint analysis of suspected criminal activity.
- Clarification on the information which should be included in beneficial ownership registers to ensure that FIUs can ‘obtain up-to-date, adequate and accurate information’.
- New requirements for the processing of personal data to ensure consistency with EU data-processing rules.
To learn more about how you can effectively respond to the EU’s anti-money laundering directives, contact us today
A version of this interview was first published on Cyber News on 6 March 2022.
To discuss the current environment, existing risks for organisations, and their prevention methods, we interviewed Gabriel Hopkins, the Chief Product Officer of Ripjar – a company that designs products for detecting risk and preventing financial crime.
Ripjar’s Background
Let’s go back to the very beginning of Ripjar. How did this project come about, and what has your journey been like since?
The five founders of Ripjar met while working at the United Kingdom’s Government Communications Headquarters – the intelligence and security organisation known as GCHQ. Collectively they spent many decades in that environment and built up a huge amount of technical expertise in the process, including exposure to a wide range of technologies that can be used to make sense of structured and unstructured data.
Initially, Ripjar helped private and public organisations make sense of social media data, understanding political, intelligence, and commercial signals in vast quantities of data. Over time, the company diversified and started supporting many types of clients. Today Ripjar helps banks and other large enterprises around the world leverage complex data to understand risk and identify crime.
Challenges and Solutions
Can you tell us a little bit about what you do? What are the main challenges you help navigate?
Our mission is to help governments and organisations automate the detection, investigation, and monitoring of criminal activity. We have two main products – Labyrinth Screening and Labyrinth Intelligence.
With Labyrinth Screening, we absorb structured watchlists and sanctions data alongside large quantities of unstructured news and media data – generally over 3 million articles every day. We use advanced analytic and machine learning techniques to make sense of all the data and help counter financial crime.
Our clients want to know when their customers match against a watchlist or when there is media that highlights criminal or other problematic activity. For example, when onboarding a new customer – either an individual or a company – there might be found that there is a report of bribery.
Labyrinth Intelligence is our solution for data fusion and analysis, and it gets used for a huge variety of applications – from law enforcement to cyber security investigations. There are several key capabilities that make the solution powerful. Our clients often have data in 10s or even 100s of different systems. We’re able to help them pull data in or access it in a place with all those sources. Then, a range of analytics, tools, and flexible workflows are available to explore, investigate patterns in the data, and provide meaningful outputs.
Our Labyrinth Intelligence clients are searching for patterns and connections in their data. Using powerful search techniques, entity link charts, maps, and other visualisations, they can surface the pertinent facts about suspects in a criminal investigation, transactions related to money laundering, or data compromises after a cyber incident. Clients working with the system supplement the inferences and knowledge from their investigations which are then encoded within the system’s object store to support further investigations.
The system can deal with different classifications of data and air-gapped low and high-side systems, which is essential for many of our customers.
What technology do you use to detect and analyse criminal activity?
There is a range of tools and technologies within the product to address different requirements. To make sense of unstructured data, we utilise machine learning classifiers trained on data from over 20 different languages.
Our entity and identity resolution are critical across all our solutions. Having reviewed the available tools, we determined that we needed to build out our technology which avoids a lot of the pitfalls of legacy approaches and enables us to match across scripts and colloquial name variations, such as Robert, Rob & Bob, in a wide range of languages.
Similarly, Ripjar has created proprietary object linking and graphing technology used to discover and encode knowledge within the system. The technology is used to automatically derive summaries of people and entities within the latest version of our screening solution, which massively simplifies the task of analysts reviewing matches.
What are the most common problems companies can run into if appropriate data intelligence solutions are not in place?
Amazingly, we often find ourselves using the common Donald Rumsfeld phrase “unknown unknowns” to talk about those things which an organisation doesn’t know but could be critical for them. In practice, there are many missed opportunities to detect, disrupt, and respond to criminal and national security threats.
The equation can be complex, but what we’ve seen over the last ten years is organisations accumulating large quantities of often siloed data that go unused because of inadequate technology and a related loss of corporate knowledge through failing to capture and share information in a structured way.
From a banking perspective, we see “unknown unknowns” surfacing regularly, often accompanied by weighty fines. In the UK, the fines amounted to about £500M in 2021. In many of the fines, the organisations had the information they needed, but they were not seeing it clearly. By identifying risky counterparties early – both with new and existing customers – and by pulling together data from across a bank, screening, and intelligence tools turn “unknown unknowns” to “known knowns” and making it simpler for them to do good business.
Outside of banking, the risks can be even more severe, and again, the ability to connect existing data together in the right way shines a light on where policing and governmental organisations should focus their attention.
The Future
The guide is intended to fill in the gaps for those interested in adverse media but would like to know more. Companies everywhere are trying to figure out how to use modern technology and massive quantities of data to understand business risks as they emerge. The guide explains exactly how to do that.
We’ve partnered with Ray Blake from The Dark Money Files – an organisation dedicated to fighting against money laundering and financial crime through education, awareness, and frequent enthralling storytelling.
The result is a simple-to-read, comprehensive overview of everything you need to know – why you should screen against adverse media, which media to use, how to interpret the results, how to use automation, and much more.
And finally, what’s next for Ripjar?
Nothing quite beats in-person meetings, and we’re very excited to see the world opening up again. We were able to see some of our mainland Europe clients face-to-face late last year, and we are looking forward to visiting with clients further afield.
Ripjar’s history so far has been built on innovation, and we know that we need to continue to innovate to provide next-generation capabilities to clients. We are working on some exciting new developments in both our Screening and Intelligence products which will super-charge both solutions and empower the analysts that use them.
As the pandemic hopefully ends, we’re looking forward to the chance to help clients across all sectors – and particularly in banking – to combine and make sense of their own data and other data sources to control risk and fight criminal activity.