We previously mentioned the importance of integrated RegTech Systems. In this article, we discuss the technologies that an integrated RegTech system must include.
Banks and financial institutions generally perform compliance processes such as Know-Your-Customer (KYC), Customer Due-Diligence (CDD), and sanction list scanning through different technologies by different analysts. All the results are compiled during the case analysis stage. On the other hand, getting insights from different results generally depends on an investigator’s perspective. Missing any critical point may cause adverse results for all the team members.
Performing all these monitoring and scanning processes on a single platform during the case analysis under the control of all related team members provides a modern approach to the compliance processes in terms of identifying and reporting suspicious activities. Thus, this kind of integrated method makes financial crime detection easier.
System Resilience
System resilience means that users can customize the system without the need for advanced IT knowledge. All modern data analytics systems should adopt a data democratization approach*. To provide this democratization, in other words, to make data accessible and analyzable for all users, the system should enable non-IT users to add some specific functions.
Datactive Query Language, which is a query language developed completely by us, allows users to define functions easily with zero code. From the management panel, users can quickly add all the features that are needed for their analysis such as the definition of entities and sub-entities, or right-click actions, which are the prominent feature of data discovery through the network visualization screen.
By the constant development of payment systems and technologies, the data which are necessary to be analyzed by compliance units are growing. As a result, analysis methods should also be improved and detailed accordingly. Rule-based systems (PLSQL or TSQL) may not be able to keep up with these developments with the same agility. For example, when we evaluate the issue through the Russia-Ukraine crisis, as in this war case, the world agenda is constantly changing. The abrupt outbreak of the Russia-Ukraine War leads to sanctions against Russia. These sudden and critical sanctions induce compliance experts to investigate cases more carefully to avoid violations. Therefore, the importance of advanced and agile systems that can respond to such rapid and sensitive changes is clearly understood once again.
Uncovering Hidden Links with Graph Visualization
Graph visualization is defined as the latest approach for detecting all types of organized crimes. Hence, it is also very effective in the detection of financial crimes. This approach, which provides the discovery of hidden insights between data by visualizing the explicit or hidden connections, provides users to capture fine details that are normally hard to be detected by manual or rule-based systems. For example, during the KYC controls, by using this approach, integrated investigation of customers is possible by viewing all their information such as the companies that the person is a partner of, other partners of these companies, the risk status of these partners, etc., on a network structure together. Hence, by uncovering indirect connections as well, the system can generate risk status accordingly.
Datactive RegTech Solution offers all these capabilities and more with its advanced graph visualization feature. In addition, through Datactive’s visualization screen, the features of each real relationship, such as images, icons, colors, etc., can be completely managed by users. By the conditional formatting feature, critical points between connections are distinguished quickly through visual data mining techniques.
Connecting the Required Data Quickly
The system should reach the relevant data as needed to generate accurate risk scores automatically. To provide this, the connection between internal systems and data sources (internal or external) must be ensured.
Due to the nature of the systems, data are collected from different applications and stored in different data sources. However, they are one of the most critical evaluation elements for compliance units. Therefore, it is necessary to connect all these data through a single platform. Datactive enables the analysis of all data from distributed systems and visualizing them on a single platform.
Datactive queries data on their sources and connects all data sources including web services directly. Therefore, the system can update all information automatically in line with the flowing data. Besides, API sources such as facial recognition systems, sanction list services, and so on, can be integrated with analysis.
AI Support for Risk Detection
Smart automatization enables time-consuming routine works to be completed within the shortest time and saves analysts’ time for more complex investigations. For example, machine learning algorithms come into play in KYC and CDD processes to make the system constantly feed itself and create a risk score. The more accurate computation of enriched data from internal and external sources, the more correct risk scores are generated. Hence, the accuracy of analysis and scanning results increases while false positives are minimized.
Being on sanctions and PEPs lists or appearance in the news are considered during risk score generation processes. In nonbank transfers such as EFT and SWIFT, or in cases of being on the sanctions list, the person’s name may diverge from his/her principal name. At this point, name similarity algorithms are critical to avoid the missing of any detail. Additionally, natural language processing (NLP) is utilized to interpret scanned news. This process is called sentiment analysis and is used for the detection of positivity or negativity of the news for risk scoring.
Although it is assumed as complex, the system which includes all these technologies increases productivity substantially. Datactive RegTech has all the technological competence that is necessary for the compliance needs of banks and financial institutions.
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