February 26, 2024

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Data Analytics to combat financial crime

Financial crime is gaining ground. The presence of new technologies has given criminals new opportunities for seizing huge amounts illegal gain through insidious methods. Financial crime is bound to get bigger in Industry 4.0.

In light of the developments, The Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Industry Partnership (ACIP) launched a paper to encourage the adoption of data analytics solutions by financial institutions.

Set up in April 2017, the ACIP brings together both stakeholders from industry and government and provides a dedicated platform to discuss key transnational illicit finance risks confronting Singapore’s financial and non-financial sectors. ACIP also identifies and promotes areas to uplift ML/FT risk understanding in Singapore.

How Data Analytics can Fight Crime

New data analytics methods are widely agreed to be beneficial in AML/CFT. The paper reads, “Through the leveraging of data, existing and rapidly developing technology, and data analytics models, FIs could potentially improve the effectiveness of their AML/CFT measures and address some key weaknesses with the current AML/CFT approaches.”

Major banks shared their experiences in using data analytics techniques to combat financial crime in drafting the paper. There are well-established use cases and more experimental work detailed in the paper. Thus, the paper provides an understanding of the current state of data analytics deployment in the area of AML/CFT.

Mr David Chew, Director, Commercial Affairs Department of the Singapore Police Force and co-chair of ACIP, said, “Data analytics is an invaluable tool in identifying and preventing financial crime, by helping financial institutions sieve through the large volumes of data generated daily to identify suspicious transactions. The industry must be ever vigilant against the abuse of our financial system and we hope that the paper will encourage the industry to build robust data analytic capabilities to strengthen Singapore’s resilience against such threats.”

Details of the Paper

Additionally, the paper has examples of effective improvements to learn from. An example is the 40% reduction in false positives and 5% increase in true positives delivered by a bank’s proof-of-concept conducted on a machine learning solution for transaction monitoring.

Key governance and implementation issues are addressed in the paper since the field is still nascent. Important considerations on the validation, audit and explainability of data analytics models to gain assurance that models built can reliably improve the detection of illicit activities are included.

Areas in AML/CFT analytics for closer industry and private-public cooperation are highlighted. The paper suggests this could yield significant benefits. By working with the Institute of Banking and Finance on dedicated career paths and skills development for AML/CFT analytics professionals, and workshops for financial institutions, MAS and the Commercial Affairs Department can collectively address key policy and operational issues in AML/CFT analytics. This includes model governance and using data analytics to target high-risk areas.

Ms Ho Hern Shin, Assistant Managing Director (Banking and Insurance), MAS and cochair of ACIP, said “MAS strongly encourages the use of data analytics in AML/CFT, which has the potential for bringing about transformative change in our approach to combating financial crime. The strong showing by analytics solutions providers during the recent Singapore Fintech Festival shows the growing opportunities to adopt such techniques. We are heartened that the ACIP banks are willing to share their experiences with other financial institutions looking to embark on such projects. MAS also looks forward to working with the industry on areas of collaboration in AML/CFT analytics.”

The full paper can be read here.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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