Posted by & filed under AML General, Negative News.

Second in a series.  See part 1 here.

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Searching for negative news is among the most inefficient, inconsistent, and risky parts of AML.

Whether new customer KYC, high-risk customer EDD, or suspicious activity investigations, negative news searching involves too many systems, too many manual steps, and too much likelihood something critical is missed.

No wonder every AML investigator remains frustrated about this part of their job.

 

Negative News is the Best AML Risk Indicator

Searching for negative news is often the best way to identify AML risk. A news story about a customer’s involvement in a corruption scheme tells us more about risk than a wire transfer to Brazil.

nsyncThere is no defensible explanation when an auditor, or worse, a regulator, finds negative news that an investigator failed to find. It may be the difference between a good exam and a disaster.

Yet searching for negative news has changed little over the past 15 years. AML investigators are using the same approaches today as they did when N’Sync said bye, bye, bye at their last group performance 15 years ago in 2002.

 

Breaking Down Negative News Inefficiency

Negative news searching is inefficient for three main reasons:

  1. Existing negative news databases are small and miss more information than they find.
  2. Because of this, every AML investigator ultimately relies on Google.
  3. Google (and Bing) are not designed for AML investigators.

 

Existing Databases are The Facade of Negative News

Negative news databases have been around for 20 years and most AML departments subscribe to one or more of them. Using these databases give AML officers and regulators a sense of comfort. Unfortunately, it is a false sense of comfort. Most know it and those who don’t should. Why?

I have asked this question hundreds of times to AML officers: “So, you use, (insert name of negative news database here) to find negative news. Do your investigators also use Google?”

Answer 100% of the time: “Yes. Of course.”

Let that sink in for a moment.

Banks spend significant money on these databases, in some cases hundreds of thousands of dollars a year, and yet everyone relies on free search engines because they know that the negative news databases fail to find needed information. (Here is the reason for this).

Despite the fact negative news databases contain few of the records you need, they still somehow generate piles of false positives.

And it is crazy that when negative new databases identify a potential match, the AML investigator still must go to somewhere else (Google) to finish their investigation. Database profiles are incomplete and the hyper-link to the original news report is typically no longer active!

Using multiple databases and search engines is inefficient, adds time to every piece of work, and still does not ensure negative news is found.

 

Search Engines are Inefficient AML Tools

Search engines are better than negative news databases and therefore everyone in AML uses them. However, search engines are not designed with AML investigators in mind. Because everyone fears they will miss information and later be blamed, investigators compensate by conducting multiple Google or Bing searches which just keeps adding more time to work.

There is no consistent approach to how to use search engines to find negative news. Attempting to bring a measure of consistency though, AML investigators use “search strings” hoping to target negative news and reduce irrelevant results.

Search strings help, but are still insufficient. Google places limits on the number of search words allowed in each string. This means investigators are faced with two unappealing options: (1) Hope the search string they used was good enough or, (2) conduct multiple searches using different search strings adding yet more time to their work.

 

Calculating the Inefficiency

Because of the problems with negative news databases and challenges using search engines, what should be a simple and fast process ends up take two, three, or four times as long. What is the impact of adding 5, 10, or even 15 minutes to negative news searching on every alert, every investigation and every EDD review?

Inefficiency builds slowly. One extra step here, another extra step there, and soon the AML officer is wondering, “Why does clearing an alert take so long?” and more concerning, “Am I going to have to hire more people again next year?”

 

Achieve Efficiency and Better Searching

Searching for negative news should be simple, fast, and encompass exponentially more information than existing negative news databases provide. Relying on creative Google or Bing search strings still leaves gaps and takes unnecessary time.

It is nuts that in 2017, investigators are still relying on tools built for an AML world that existed more than 15 years ago. It is time AML investigators were given tools that enable them to move faster and complete work with a stronger sense of confidence.

One or two searches in just one application should be all that is needed to find something negative, or, just as importantly, be confident there is nothing negative to find. Picture the productivity gains and improvement of AML if investigators needed to only conduct one search and know immediately if there was something negative or not.

Instead of adding 5, 10, or 15 minutes to each EDD, alert, or case investigation, you’d be reducing work by that much. This adds up significantly over a day, a week, a month, a year.

Using modern computer science, AML teams can now do this.

Next week we discuss the frustration and inefficiency investigators face when reviewing negative news search results.

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