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Answers Magazine

We need to talk about financial crime

David Craig  President of Financial & Risk, Thomson Reuters

David Craig  President of Financial & Risk, Thomson Reuters

“Creating a Shared Future in a Fractured World” is the theme at Davos this year as we witness cracks appearing across global political, economic and social spheres.

Now more than ever, there is a pressing need for public and private organizations to work together across borders to secure our future by developing new strategies for data sharing in the fight against financial crime.

When many people think of financial crime, they frequently think of it as a crime with no real victim or cost. Perhaps they think it is simply a matter of insider dealing or fraudulently making a claim against an insurance company. No one actually loses “real” money or suffers true harm.

Sadly, this perception is very far from the truth. From human trafficking in Malaysia to prostitution in Romania, from victims of the drug wars in Mexico to the occupants of dangerous buildings in Kenya, the human cost of financial crime is very real.

Corruption and financial crime are not new; they have been a feature of society for millennia, since the concept of money was first developed. What is new is the sophistication of financial criminals and their ability to use technology to facilitate money laundering.

Banks, financial services companies and public institutions are in the vanguard of fighting this crime. They need ever-more sophisticated tools to monitor and track criminals and the transactions they undertake.

Currently, only a very small amount of illegal activity is detected in the global financial system. In 2011, a United Nations Office on Drugs and Crime report  estimated that less than one percent of criminal funds flowing through the international financial system every year is believed to be frozen and confiscated by law enforcement. Move forward six years and we find a similarly low percentage.

That is why it is so crucial to use all the tools at our disposal to step up the fight against financial crime. One of these tools is data.

Big Data gets a lot of discussion these days, whether it’s scrutiny over what data is being collected, or ways it can help businesses and the economy grow. But it is also at the heart of today’s conflicts. Data is the 21st century arms race. As the old adage goes, information is power, but we’re perhaps only now really beginning to see its full implications.

The amount of data in the world is proliferating at a fantastic rate, and detecting signals in the noise can be a significant challenge. This includes determining whether the data and its provenance are reliable, how to collate it, how to ensure it is up-to-date and how to transform it into something that provides valuable insight.

Technological advances can help connect the dots and do it quickly, so that we can spot the patterns that are evidence of crime and prevent malicious activity from happening in the first place. For instance, Big Data analytics can use structured and unstructured raw data from different sources, such as geo-location data, and those from mobile devices and social media. They can then detect fraudulent activities, unearth hidden connections between accounts and track the relationship between the sources and the beneficiary.

But it is also imperative that public and private sector organizations work in partnership with each other to develop strategies for the exchange of data and information sharing across borders to really make an impact on the global networks behind financial crime and the untold societal harm it can bring.

In order to address some of these issues, more than 20 countries have committed to developing public-private financial information-sharing partnerships (FISPs) that bring law enforcement and other public agencies together with groups of major financial institutions to tackle money-laundering and terrorist-financing risks more effectively. We need more of these partnerships.

Tackling financial crime is near the top of every policymaker’s agenda. If we can successfully challenge illegal financial dealings, we can also tackle many societal issues.

Technology is an enabler of crime as its perpetrators become ever more sophisticated and move increasingly online. But it can also be one of the most powerful tools that we have to fight it.

Only by working together and harnessing technology can private and public institutions really take the fight to the child traffickers, drug cartels and prostitution rings – and hope to win it.


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