How a bank used network analytics to uncover trade-based money laundering (TBML) is the subject of one of ten case studies in the Hong Kong Monetary Authority’s (HKMA’s) new report on the adoption and use regulatory technology (Regtech) in their anti-money laundering and counter financing of terrorism (AML/CFT) operations.
AML/CFT Regtech: Case Studies and Insights presents a wide range of case studies on and insights into how banks are seizing opportunities to leverage Regtech in banks’ AML/CFT operations (Trade Based Financial Crime, 25 January 2021, TBML case study features in HKMA’s new report on innovative Regtech AML/CFT approaches).
Wide data range
The bank anonymously presented as Bank F in the report identified high-risk customers and transactions based on a variety of internal and external data.
These included wholesale client data, correspondent banking data, trade data, payments data, and other external data such as company registries, internet domain registries and adverse media databases.
Innovative TBML approach
Among its many AML/CFT Regtech initiatives, Bank F has been using innovative technologies to address challenges associated with commercial fraud involving trade products and TBML.
One of the key challenges for the bank was bringing together parties across multiple jurisdictions.
In this case, a relationship manager gathered intelligence regarding TBML related to a drug cartel in one account, and used the connected-parties functionality within the bank’s customer relationship management tool to link this to another account.
Additional links uncovered
Prior to the introduction of their network analytics tool, this and other even more manual approaches to reviewing documentation for signatories were the only means to make these connections.
By introducing the network analytics tool, Bank F was able to identify additional companies that were linked to the first two parties by using linked phone numbers and email addresses.
Further analysis of account activity determined money laundering concerns related to some of the companies now established within this network.
Categories: Trade Based Financial crimes News