With over 90% of all alerts usually resulting in being a false positive, Financial Crime professionals can be inundated with mounting false positive results. These alerts can be a huge financial burden to banks and financial institutions, as they require a lot of manual intervention to discount and can slow down screening infrastructure. This results in an unnecessarily labour intensive and costly AFC program. In the below article, we highlight the false positives trends to look out for, keeping you on the right side of regulation.
Managing The Data
It is important to have a clear and concise understanding of your watch lists and screening data to identify false positive trends. This will allow for a targeted approach to creating a more stable and cost-effective AFC program. By identifying these trends institutions can increase productivity, mitigate financial and organisational risk, as well as improve the speed of their AFC infrastructure.
Data Trends
1. Misunderstanding Data
How well do you understand your data, be it customer or payments data? It is important to comprehend in which fields you are expecting certain hits, from customer and payment data. Often financial institutions do not fully understand their data from a screening point of view, which can create unnecessary false positives. Usually there are multiple systems providing data in various formats to be screened and misinterpreting your data can be costly for your business by resulting in unnecessary alerts.
2. Unstructured Data
It can be difficult to identify patterns to reduce false positive alerts when data is unstructured. With customer records from multiple sources and various payment types such as SWIFT and XML, along with differing message types within these, it is easy for data to come into screening in many formats and structures. Unstructured data can make it difficult for screening systems to effectively remove false positives through rules and settings/algorithms and can introduce unnecessary risk to your screening systems.
List Trends
1. Duplicate List Entries
When last did you do a thorough review of your screening watch lists? Often FI’s fail to keep internal list data up-to date, with various lines of business adding their screening requirements. Many financial institutions find themselves with duplicate list entries that are prevalent. This covers internal lists that duplicate external lists, or where an internal list has duplicate entries from differing lines of business. If your list is not managed correctly then duplicate entries mean duplicate alerts, which is unnecessary.
2. Lack of List File Information
A list entry with a common name can be tricky to discount a hit, however a list entry with a common name, country and DOB gives you many more data points with which to discount as a potential false positive. Whilst external lists should contain all relevant information, it is easy for internal lists to become a haven for creating false positives through a lack of information contained in them.
Conclusion
Many false positive trends can be fixed safely with the right knowledge and skills through improving data quality and tuning out false positives through rules and “good guys” (exceptions).
At Contineo FRS we understand payments and customer screening and what hits should be expected in certain fields. Our extensive knowledge and effectiveness testing can assist you to better understand your data and allow you to reduce your false positives through targeted tuning. Request a brochure and get in touch to find out how we can help your organisation.
