Financial crime risk: Balancing data needs and privacy concerns

We have collaborated with industry experts to create a new webinar that unpacks the fundamental need for – and challenges that surround – data in the global fight against financial crime.

• The continuous fight against financial crimes: How to address one of the greatest challenges: collaboration on sensitive data.
• Data: Different types, where it is sourced, who collects it, who “owns” it?
• Solutions: What it´s currently available, considering privacy enhancing technologies, including regulatory viewpoints.

In this exclusive webinar, industry experts delve into organisations’ need for data to turn the tide against financial crime, as well as the challenges that surround this data. These range from acquiring and collating it to extracting meaningful insights, and from collaborating with multiple stakeholders to ensuring that privacy and data security are maintained, especially where sensitive data is concerned.

Webinar speakers go on to look at the best solutions available in the market today – notably privacy enhancing technologies – and how these solutions support and enable collaboration.

Che Sidanius, our Global Head of Financial Crime and Industry Affairs, explains that organisations have a fundamental need for data if they are to meet regulatory requirements – but more than this, the right data is crucial to enable effective financial, reputational, enforcement and other risk mitigation.

Managing volumes of data in an efficient and timely manner, however, is far from straightforward, especially for companies with a global presence. Many simply do not have the human capital or processes in place to collect, collate and manage the necessary data, and may therefore choose to work with a risk intelligence data provider.

Sidanius captures the complexities of gathering and managing data by citing sanctions data relating to the war in Ukraine as an example. He points out that there are approximately 65 different sanctions authorities and hundreds of different sanctions lists that companies would need to access. Not only must they gather all the necessary data from open source forums, but they must also ensure that they are meeting their compliance obligations.

While this may sound straightforward, Sidanius stresses that the practicalities can be anything but simple, explaining that an organisation with a global footprint may need to cover 65 different languages and potentially 245 different countries. Moreover, sources across different geographies are likely to have different data typologies, standards and definitions. When presented this way, the scale of the data management challenge begins to become apparent.

Sidanius also points out that fighting financial crime is no longer just about money laundering or even anti-corruption. It has become a far broader challenge that extends to the need to manage brand and supply chain reputation, strengthen risk control infrastructures, and address environmental crime and sustainability concerns.

Dr. Shlomit Wagman, former Director-General of the Israeli Money Laundering and Terror Financing Prohibition Authority, agrees that volumes of data are necessary if organisations are to be successful in investigating financial crimes.

Moreover, she underlines that companies should consider as many sources of data as possible. This data needs to be machine readable before the process of adopting a data-driven, risk-based approach to identifying patterns and detecting potential crime can begin.

Gathering data, cross-referencing internal and external data – such as that accessed from open sources and public databases – and leveraging the wide range of relevant governmental data that is available are some of the first tasks to undertake, but almost immediately companies will encounter a major challenge: data privacy requirements.

In many countries, there are limitations on the abilities of law enforcement authorities to share data, especially across borders. Consequently, Wagman highlights the importance of international collaboration, stressing that financial crime is not limited to one jurisdiction. Stakeholders must therefore find ways to share data in the most secure way possible – exchanging as much data as is needed, while taking care not to reveal too much.

Interestingly, she points out that companies don’t always need to access the data itself. Often it is enough to make use of privacy enhancing technologies that indicate the existence of potentially concerning data, and thereafter commence proper legal procedures to initiate further investigation into potential crime.

Ronen Cohen, VP of Strategy, Duality explains the pivotal role of technology – not only in terms of acquiring and ingesting volumes of data into systems, but also in terms of extracting meaningful insights, boosting efficiency, and meeting tight timeframes.

He also addresses the cross-jurisdictional challenges of solving financial crime while complying with privacy regulations, explaining that this is where technology – and in particular a class of technologies called privacy enhancing technologies – becomes game changing.

Only by employing advanced technology can companies ensure that different stakeholders’ concerns around privacy, security, confidentiality, competition, and more are addressed.

Technology can help companies create the right data environment – one that demonstrates to the regulator that they are taking enough steps to manage data privacy concerns. Examples include anonymising data and implementing appropriate operational and technical governance around access to and analysis of data.

The key takeaway and an important point on which all panellists agree is that through collaboration and leveraging the right technology, companies can manage the many challenges that surround data and its management.

Data capture, analysis, the efficient and timely generation of insights, data sharing and, importantly, the protection of innocence via advanced data privacy controls, can all be achieved if stakeholders work together and make full use of the game changing technologies available in this space.