Think of crime against a bank and the image that might come to mind is a masked man sprinting to a getaway car with bags of money under his arm.
But the modern reality of financial crime could not be more different. Why rely on just the protection of a mask and a fast car when you can hide behind the anonymity of the web or mingle your loot in with the millions of transactions that are flowing around the globe at any moment?
The defences that banks are building are now heavily focused on technology. These include defences to directly protect customers. But banks also have a duty to prevent the financial system from being used to circulate the illegal profits made from crimes like drug smuggling, people trafficking, or sanctions evasion.
As the Chief Operating Officer in Compliance the challenge that I face in leading the work to build those defences can be seen in the numbers. In 2019, HSBC screened 689 million transactions across 236 million accounts for signs of money laundering and financial crime, every month. That’s over 8 billion transactions a year.
But it’s our ability to manage and make use of that data that holds the key to meeting the challenge.
The impact of new technology
Criminals try to make their transactions look like ‘normal’ transactions to disguise them. By using artificial intelligence (AI) and machine learning (ML), we can develop a much more sophisticated view of what looks out of place across massive volumes of data, in a more timely way. That will make us much better at working out where, amongst the millions of legitimate transactions that we process, somebody is trying to move criminal money.
We are already making use of technologies like these to tackle financial crime. Our Global Social Networks Analytics (GSNA) system, built with the support of a fintech, Quantexa, uses more than 40 billion data points and references over 30 billion transactions to identify the links between different transactions and customers. It gives our investigators a powerful new capability to understand the context of activities and relationships to better identify financial crime one investigation at a time.
To keep ahead of the threats we face, we need technology that can incorporate this new capability to carry out much more sophisticated, contextual investigations and then apply it in a consistent way to detect potential criminal activity across billions of transactions. It will mean that our investigators can focus on the most serious issues that are identified. Innovation is critical to this end.
We collaborate with partners where their expertise can provide a clear benefit in developing new technology. That’s why we are working with experts from Google Cloud to develop what I believe could be a significant advance in the way we identify financial crime.
The system we are building will dynamically support our assessment of the potential financial crime risk presented by an individual customer or entity leveraging AI and ML. We have built a prototype that is delivering encouraging results, collaborating with Google will enable us to speed up the development by leveraging Google’s expertise in developing ML solutions at scale, coupled with our extensive financial crime knowledge.
It’s a bold step forward and a huge challenge. Get it right and we’ll not only be protecting HSBC and our customers, but we’ll have created a blueprint for making the whole financial system a safer place, too.