Five Ways Entity Resolution Increases AML Efficiencies and Effectiveness

It’s never been more important for financial services organizations (FSOs) to truly understand who they are doing business with. Knowing who is who and who is related to whom is critical for identifying bad actors, ensuring compliance and effectively managing risk.

Entity resolution, now a core component of the Actimize AML suite, provides a unique and unambiguous 360-degree view of all parties and their relationships. When entity resolution is added to AML workflows, teams gain a more complete and automatically updated understanding of entities that will dramatically increase efficiencies and effectiveness while reducing risk throughout the entire customer lifecycle.

Entity resolution benefits FSOs in many areas, including customer due diligence (CDD), enhanced due diligence (EDD), transaction monitoring, alert investigation and case management, and perpetual KYC or event-driven refresh processes.

1) Improve Customer Due Diligence

Entity resolution helps FSOs streamline CDD processes and increase the accuracy and speed of applicant identification and risk assessment.

The technology provides a more complete and comprehensive view of applicants and their relationships to better detect obfuscated information such as synthetic identities or manipulated attributes. When entity resolution is in place, CDD investigators can more quickly determine when a suspicious activity report (SAR) should be filed or EDD steps are required.

2) Speed Up and Increase Enhanced Due Diligence Effectiveness

EDD investigators benefit from a more complete understanding of applicants and related parties when entity-resolved data is used for risk-based assessments. They gain even more insights if applicant profiles are enriched and resolved using data from additional internal and external sources.

Entity resolution helps investigators more accurately segment high-risk customers, determine the origin and ultimate beneficial ownership (UBO) of funds, and confirm an applicant is legal and not on any prohibited lists (e.g., PEP, adverse media, negative news and special interest entities).

3) Boost Transaction Monitoring Accuracy and Reduce False Positive Alerts

Transaction monitoring rules and results are enhanced when entity-resolved data is used.

Accurate and complete views and links of parties, counterparties, and related networks associated with each transaction are available sub second, fast enough to benefit alert generation.

Entity resolution technology helps detect more transactions related to financial crimes, including money laundering, human trafficking, terrorist financing, tax evasion, bribery and corruption. In addition, the technology speeds up investigations and ensures compliance by significantly reducing the number of false-positive alerts while detecting a few elusive false negatives (missed alarms).

4) Streamline Investigations and Increase Case Management Efficiencies

Entity resolution introduces huge efficiency gains for investigation teams. By providing holistic and contextual views of all parties and corresponding transactions associated with an alert, the technology slashes the time required to collect and collate the information needed for an investigation. Furthermore, it enables alerts about the same party, or related parties, to be aggregated into super alerts.

These new capabilities and insights quickly identify connected accounts and transactional activity and uncover hidden relationships that would have been impossible to detect through manual processes. As a result, investigators can work alerts and prepare comprehensive SAR filings much faster than before.

5) Easy Migration to Perpetual KYC and Event-Driven Refresh Processes

Perpetual KYC or event-driven refresh processes require immediate access to changes in customer information, dynamic updates to customer records and risk scores, and the ability to trigger CDD and EDD investigative alerts as required.

Choosing entity resolution technology that supports real-time streaming data helps FSOs future proof their investment by ensuring they can easily add perpetual KYC. Compared to today’s periodic KYC refresh methods, real-time entity resolution allows financial institutions to rapidly identify changes in customer status and reduce the number of expensive remediation projects.

Quickly Find Out Who You’re Truly Doing Business With

It’s critical for your financial compliance teams to have a complete 360-degree view of all parties and their relationships to others, whether you’re onboarding customers, refreshing KYC profiles, monitoring transactions or conducting investigations. By adding entity resolution to your AML workflows, you can dramatically increase your team’s efficiencies and effectiveness while identifying more bad actors and ensuring compliance.

With a true understanding of who is who and who is related to whom, your teams can quickly find intentionally obfuscated identities, hidden and nonobvious relationships, and reduce your risk throughout the entire customer lifecycle.

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