Editor | Telindus

To combat the financial crime, financial transactions are subject to increasingly strict scrutiny. These controls, which are part of Know Your Transaction (KYT) operations, must be carried out by the various businesses involved in money transfers, such as banks, e-commerce sites and online gaming platforms.

In the fight against the financial crime, financial transactions are nowadays increasingly controlled and monitored.

Banks, investment funds, trading platforms, e-commerce or online gaming must comply with increasingly strict constraints in order to identify and report money transfers considered suspicious. “For example, players involved in financial transactions must conduct Know Your Customer (KYC) operations to determine who their customers are, whether they are subject to sanctions or, among other things, whether they are politically exposed”, explains Rebecca Marciano, Digital KYC/KYT specialist at Telindus. “In recent years, operators have also been required to implement Know Your Transaction (KYT) procedures, which involve monitoring transactions carried out by their customers in order to identify those that may be fraudulent or illegal. ”

 

The challenge of analysing millions of transactions every day

The question is how to analyze transactions quickly in order to detect anomalies or suspicious behaviour, and to be able to submit reports to the regulators without delay. “It must be possible to carry out these operations in real time, using rule engines, automation and machine learning”, says Frank Roessig, Head of Cloud Applications, Data & AI at Telindus. "For a commercial bank, we're talking about hundreds of thousands or even millions of transactions carried out in one day. Having these volumes of information analysed by humans would just be impossible. ”

Each entity that could serve as a gateway for dirty money to the financial system must therefore define an appropriate control policy. This policy is translated into a set of rules and criteria to identif what constitutes a potentially fraudulent transaction. “The speed of transfers made by a client, their recipient and their location, the single amounts and the cumulative amounts transferred, all of which are linked to the profile of the issuer of the payment, are elements that need to be analysed”, explains Rebecca Marciano.

 

Artificial intelligence as a powerful ally

To carry out such analyses efficiently on a day-to-day basis, the organizations through which payments transit can implement their monitoring policy through rule engines. These will automatically analyse each transaction. “By having recourse to artificial intelligence, an organization can effectively fine-tune the analyses so as to improve detection results while reducing the friction that can be caused by customer verification procedures” says Frank Roessig.

Carrying out this transaction monitoring successfully is a strategic challenge, which must protect businesses from financial and reputational risks. To this end, the policies and resources implemented to combat fraud must evolve over time. “Criminals are rolling out increasingly complex schemes to evade detection” continues Frank Roessig. “Monitoring procedures have to be updated based on the insights gained from the continuous analysis of data flows enhanced by external information. Technology, such as deep learning, for example, makes it possible to detect new types of atypical patterns on large volumes of transactions and thus to quickly identify the criminals' new tactics.”

 

Cross-referencing and enhancing data to boost efficiency

Telindus has been investing in this area for several years, the aim being to help businesses to comply more effectively with their KYC and KYT obligations. “Starting with the available data, the challenge is to link transactions with customer profiles, using a single tool that can build on various data sources to obtain increasingly relevant results”, adds Rebecca Marciano. 

In these extraordinary times, which have led to a significant growth in the number of online transactions, KYT technology is an essential component in combating financial crime in an efficient manner, while at the same time making it easier for clients to conduct business.

 

To find out more, please contact: DigitalKYC@telindus.lu

 

Traduction de l'article "Le KYT, levier de lutte contre la criminalité financière" paru en Français le 22 Janvier 2021 dans le magazine PaperJam.

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