Data has been hailed as the new gold, the silver bullet, and the missing link in financial crime compliance efforts. However, many organisations have encountered obstacles in delivering on the promise of Big Data in terms of tangible Financial Crime Compliance (FCC) improvements. At an insightful session ‘Data Matters – Diving into the right data, at the right time’, at Napier’s inaugural Disrupt Fincrime event in London, Gem Conn, Vice President, Content Strategy & Quality, Dow Jones Risk & Compliance, shed light on the key reasons behind these challenges, and the ways to tackle them.
Untangling the data web: overcoming the pitfalls of poor or insufficient data
Inadequate or poor-quality historical data is a common challenge for compliance teams. Established financial institutions may struggle with large volumes of incorrect, unmaintained, or outdated data, while new entrants might lack historical data altogether. Inconsistent data structuring further compounds the issue, making it difficult to derive meaningful results with certainty.
Compliance teams should treat data as a specialised product rather than a mere input. A comprehensive data strategy requires understanding the importance of quality external data, as well as consistency and formatting of internal data. The need for such housekeeping to consolidate, standardise and cleanse internal data is especially important for instances where data is gathered from different sources without uniform structures.
Major data warehousing or pooling projects have often failed to deliver the desired data state. They require careful oversight to ensure alignment with relevant use cases, milestones, and stakeholder agreement. Instead of boiling the ocean and attempting to tackle their entire data portfolio, compliance teams should consider the right data, at the right time. For example, in client and transaction screening, filtering to screen only the most impactful data points saves time, energy, and resources. An organisation should complement its micro-view (of its own customer portfolio) with a macro-view (of the global market) to enhance risk assessments.
Creating compliance consensus: aligning tech and FCC teams
Misalignment between technology and financial crime compliance teams can often lead to inefficiencies in data management. Lack of knowledge, time, resources, or commitment to projects creates unproductive tension which in turn can jeopardise successful implementation, and hinder collaboration with external partners and stakeholders.
Enhancing communication channels, nurturing a culture of collaboration, and ensuring that compliance considerations are integrated into the design and implementation of technical solutions can help bridge the gap between teams. In the absence of unified policies for data management in financial crime compliance teams; It's important to recognise that even a minor data error can result in significant repercussions. For instance, a simple mix-up of UK and US date formats for birth dates serves as a compelling example of how such inaccuracies can have far-reaching implications for sanctions compliance and correctly identifying Politically Exposed Persons (PEPs) within your customer base and transactions.
The devil in the data detail: empowering compliance through data strategy
Quite often, people don’t go far enough, or do too much, and miss the sweet spot when it comes to data management. Adopting a risk-based approach is pivotal because pain-points vary from client to client; excessive matches, high false positives and negatives, unnecessary data overload (both internal and external), or applying actions meant for high-risk clients to those with low-risk profiles, to name a few.
You can never outsource your compliance obligations fully. But you can turn to trusted, reliable partners to support your decision-making processes in financial crime compliance. A change in data strategy holds the potential to drive better outcomes and empower financial crime compliance. Beyond avoiding fines, enriching data with specialist sources can help organisations identify untapped markets, retain clients, and make informed risk-based assessments.
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We have partnered with the world’s leading data providers and other technology vendors, including Dow Jones Risk & Compliance to extend and augment Napier’s financial crime compliance solutions. If you have a product or technology that could extend the Napier offering or if you already have an integration use case, please get in touch for a technical discovery call.
