by David Janson, Senior Director of Sales, Fivecast
The financial sector’s compliance and risk-management efforts in the UK and beyond face increasing pressure due to stringent due diligence regulations. Amid this challenge, institutions are looking for effective solutions to meet evolving requirements.
In response to complex and overlapping regulations, from the 2017 Money Laundering Regulations to the Economic Crime and Corporate Transparency Act of 2023, banks are navigating a labyrinth of compliance mandates. Globally, banks also must align with entities like the US Treasury and its Financial Crimes Enforcement Network (FinCEN), which has imposed hefty fines for non-compliance in recent years.
A prominent example is TD Bank, one of North America’s largest financial institutions. The bank was fined $3 billion due to failures in its anti-money laundering (AML) processes and inadequate due diligence, particularly in relation to illicit proceeds from a fentanyl trafficking network. Investigations revealed not only gaps in training and a weak organisational culture but also an inability to track illicit deposits made by proxies acting on behalf of the criminals.
At the same time, the European Union’s commitment to fighting money laundering and terrorist financing has also grown stronger. In its expansion of the EU AMLD6 directive, the EU broadened its access to various information sources, including motor vehicle and weapons registers, while extending criminal liability to include the initiators, facilitators and inciters of crimes as accomplices to those laundering proceeds of predicate offences.
Historically, identifying these complex connections between illicit actors has proved challenging, as many criminals deliberately conceal their activities within public records and corporate registries. However, leveraging open-source data from the surface, deep and dark web can reveal these hidden ties, that give a clear picture of a customer’s true risk, despite appearances.
Why timely and accurate data is key
In today’s compliance environment, the speed and accuracy with which financial institutions access and analyse data is crucial. Open-source intelligence (OSINT) not only uncovers hidden connections but also provides faster insights that enable quicker decision-making.
This can be a game-changer, particularly when it comes to detecting suspicious activities across global financial systems where illicit actors often operate through complex and diverse networks. Relying solely on traditional methods would be too slow to effectively track these movements, leaving institutions vulnerable to non-compliance penalties.
The power of online data in AML compliance cannot be overstated. Financial institutions have access to a wealth of information, including social media, watch lists, and databases. These insights are essential for detecting risks across the 22 predicate crimes outlined by the Financial Action Task Force (FATF). In its customer due diligence recommendations, FATF stresses the importance of using “independent source documents” to bolster AML efforts.
To maintain regulatory compliance, financial institutions must modernise their AML and due diligence processes. The integration of AI-driven OSINT is critical for this transformation. OSINT, powered by AI, enables the swift analysis of billions of data points across a wide range of sources: from public documentation to social media platforms and the dark web.
Integrating OSINT into financial workflows
For AI-driven OSINT to truly support financial institutions, it must be seamlessly integrated into their existing workflows. This integration ensures that compliance teams can make timely and accurate decisions based on the most up-to-date data. The use of fragmented solutions or point tools only complicates the process, resulting in inefficiencies and a higher risk of oversight. A unified platform that operates intuitively with existing compliance systems significantly improves the effectiveness of human oversight, reducing both the risk of errors and operational friction.
The speed and scale required to effectively sift through this volume of data cannot be achieved manually. While analysts can examine a variety of sources, no institution has the resources to fully explore the entire information landscape, and it certainly could not do so in a timely manner. AI-driven OSINT platforms, however, offer unparalleled efficiency, providing real-time, actionable insights for compliance teams to make informed decisions.
For maximum effectiveness, financial institutions need AI-driven OSINT solutions that integrate seamlessly into their existing workflows. An integrated platform that complements human expertise, without overshadowing it, is essential for maintaining compliance while reducing operational burdens.
Given the growing complexity of global financial regulations, AI-powered OSINT has become indispensable in the due diligence process. The ability to collect and analyse vast amounts of data at scale is now a vital component for financial organisations to stay compliant and mitigate risk in an increasingly interconnected world.
