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Financial Services Companies Wasting 75% of Their Time Dealing with ‘False Positives’, Yet Continue to Unknowingly Do Business with Criminals and Terrorists


Data integrity specialists, Datanomic Ltd, today revealed findings from its extensive customer research programme, providing a unique insight into the state of data quality inside major UK organisations. The research, which is based on Datanomic’s review of more than 300 million customer records, more than half of which are in the financial services arena, gives a worrying perspective into the state of real world customer data management.

Financial Services companies are typically wasting seventy five percent of their time each month dealing with recurring ‘false positives’ produced by inefficient and ineffective matching of their customer records with lists of known or suspected criminals and politically exposed persons (PEPs). In spite of their efforts, an alarming number of companies in the Financial Services sector are unknowingly doing business with criminals, terrorists or money launderers.

The typical number of SARs (Suspicious Activity Reports) that a Money Laundering Reporting Officer raises following an audit by Datanomic on even in just sub-set of a financial services company’s data is between five and nine SARs. For example, a recent review of thirty percent of customer data from a large well known London-based investment house resulted in seven SARs. Typically, a Datanomic audit reveals around four percent of an organisation’s customers are matches to World-Check’s Watch & PEP List, and a quarter of these relate to financial crime.

Compromised data exposes organistions to operational, financial and reputational risk, yet is typically used as the foundation on which many business decisions are made.

“Data quality affects just about every aspect of a business. At one end of the scale, customer databases bloated with inaccurate details are just the tip of the iceberg in terms of cost to the business. At the other end of the scale, inadvertently facilitating crime, terrorism and breaching strict financial regulations – even in ignorance - are some of the more serious side affects of poor data management. The end result is the same: a fractured, confused view of the business that impacts customer relationships, partnerships, and leads many key business decisions astray,” said Dr Jonathan Pell, CEO of Datanomic Ltd.

Money Laundering Reporting Officers (MLROs) are faced with increasing Know Your Customer challenges. The EU 3rd Money Laundering Directive, which comes into force on 15th December 2007, requires financial services organisations to fortify their systems against access by money launderers, criminal gangs, known terrorists and others whose activities may compromise foreign policy or national security. The scale, cost and complexity of matching customer records against sanctions lists (‘Watch Lists’) and named Politically Exposed Persons has become a major administrative burden for compliance departments. The legal requirement to continually, accurately screen entire customer bases means organisations have to continually review large volumes of customer data.

“Prior to pending legislation, Financial Services companies would typically need to check their customer list against a sanctions list of around 5,000 people. However, the EU 3rd Money Laundering Directive will escalate this figure to around 500,000 people or more when it comes into effect in December. We think many MLROs are unprepared and unaware of the actual ramifications of this new legislation,” added Pell.

Datanomic’s Watch & PEP List Management solution enables users to define how closely any two records match. Standard comparisons are pre-configured but can be edited, removed or new ones added in a risk-based approach. When the defined thresholds are met, the decision of Match, No Match or Review can be automated. Most importantly, Datanomic’s match rules mean manual decisions made on reviewed records will automatically be remembered next time the data is processed, unless either record has changed. This eliminates repeating the search on ‘false positives’ every time the records are checked.

Datanomic reduces the manual review effort by a factor of four. By reducing the amount of manual matching required, Datanomic’s solution frees up resources to focus manual effort on more complex tasks. Moreover, improving the effectiveness of enterprise data applications further enhances corporate performance and competitive advantage.
Datanomic’s Watch & PEP List Management solution delivers a rapid return on investment and fast implementation. The solution can be purchased as a technology package that is owned in year one, rather than as a service commanding an annual fee.

About Datanomic
Datanomic’s holistic approach to data management enables its growing list of European and North American blue chip clients to rapidly achieve a Return on Investment by exposing and correcting deficiencies in information the business relies upon. Our clients come from a wide spectrum of industries including financial services, telecommunications, government, professional services and engineering. We are proud to count Barclaycard, Alliance & Leicester, Deutsche Bank, GAM, Davy, PricewaterhouseCoopers, KPMG, BellSouth, AMEC Oil & Gas and a number of NHS Trusts among our customers.

For further information, please contact:

Kim Squire
Devonshire Marketing
Tel: 0870 7000 166

This press release was distributed by ResponseSource Press Release Wire on behalf of Devonshire Marketing in the following categories: Computing & Telecoms, for more information visit http://pressreleasewire.responsesource.com/about.