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Customer & Third Party Risk

Big Data and RegTech team up in the fight against financial crime

Malcolm Wright

25 Oct 2017

Photography: Jason Reed
Photography: Jason Reed

In the fight against financial crime, how is Big Data and the growing influence of RegTech helping drive innovation in KYC?

Financial institutions act as vital gatekeepers by screening new customers and carrying out ongoing checks so that those with criminal intent don’t use banks and businesses to launder money and conduct corrupt business practices.

But as criminals become increasingly sophisticated in their approach, so the need for transparency in business relationships grows ever more prevalent.

KYC survey

However, Know Your Customer (KYC) processes can be costly for banks and frustrating for their clients, while still allowing opportunities for some criminals to evade detection.

Download article — Know Your Customer (KYC) Innovation: The Rise of Jurisdictional Managed Services

Growing role of RegTech

This is where RegTech plays a vital role.

Using automated, digital systems can speed up client vetting and more effectively identify potential risks.

According to Big Data — a Twenty-First Century Arms Race, published by Thomson Reuters and The Atlantic Council, RegTech’s role is set to become even more important thanks to the ongoing data revolution.

That’s good news for a sector that is growing fast and is expected to be worth £120 billion by 2020.

How Big Data boosts RegTech

Financial institutions’ KYC processes require information to be analyzed from both private and public sources in different languages and formats.

New data techniques mean that RegTech providers can aggregate data worldwide to make this process faster and more effective.

By gathering information from a wider variety of sources, including social media, Big Data can help to reveal hidden relationships.

Machine learning, which gives computers the ability to learn without being explicitly programmed, offers new opportunities to monitor for suspicious transactions across millions of accounts.


Find out how the Client On-boarding solution from Thomson Reuters addresses the inherent challenges of the onboarding process to save you time and money

Advances in data science, such as blockchain technology, also make it easier for registries to be created and maintained.

One example is beneficial ownership, where new rules are designed to crack down on the efforts of some criminals to disclose their interest in companies by hiding behind complex, ‘hands off’ ownership structures.

Watch video — Ultimate Beneficial Ownership (UBO) and the risk of not knowing

Creating digital identities

When a bank onboards a new client, or checks the status of an existing one, it involves the compliance department contacting clients and then electronically filling out KYC forms.

Given that corporates have, on average, ten global banking relationships, with each financial institution carrying out its own checks, this is a lengthy and costly process.

Onboarding times rise

Download Report: Big Data — a Twenty-First Century Arms Race

Digital identities offer a solution by providing a single, secure means of keeping and maintaining all the data banks need to carry out their checks.

This can then be used across different platforms and institutions, making the KYC onboarding process much more efficient.

Watch video — KYC Pain Points for Financial Institutions: A Global Perspective

Power of data analytics

In the future, the fight against financial crime will be won by those with access not just to data but, due to its ever-growing volume, the ability to collect, store and analyze that data quickly and effectively.

Watch video — Thomson Reuters World-Check – Committed to helping global business fight financial crime

With hundreds of trained research analysts across the globe, Thomson Reuters World-Check delivers the widest financial crime-related coverage available.

Our data is collated from an extensive network of credible sources and can be accessed using purpose-built screening platforms, APIs and selected partner software.

By making sense of vast amounts of open source information, Thomson Reuters World-Check can be used to identify and check individuals, while uncovering hidden connections and associations.

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