In Context: Enhancing KYC and AML Efforts With Innovative Technology

Today’s banking environment is rapidly evolving thanks to new technologies that are allowing organizations to get a full, 360-degree view of their customers to provide increased levels of service and a far deeper understanding from an anti-money laundering (AML) and Know Your Customer (KYC) perspective. Recently, we caught up with Scott Nathan, Managing Director & Global Head of Financial Crime Detection and Customer Insights at Citigroup. Here are a few of his thoughts on the challenges the banking industry faces today and how savvy financial institutions are using technology to meet those challenges.

Quantexa: What are the biggest challenges the banking industry faces today regarding KYC and AML?

Scott: One of the biggest challenges those in banking face today is how to manage technical compliance obligations within the rapidly changing economic landscape. Risk managers are working hard to balance business growth strategies with a highly complex and transformational payments ecosystem, but it’s a struggle. To meet this challenge, financial institutions need to ensure we are continuing to measure and quantify effectiveness and efficiency for both regulators and senior management. Ultimately, we need to be smarter about leveraging data science and technology to safely accelerate the pace of change in AML so that we are prepared for the next chapter.

Q: How do you see technology being used to meet these challenges and prevent potential losses due to money laundering and economic crime?

S: New technology coupled with regulatory support for innovation has finally moved the needle towards an enhanced operating model. We can now leverage proper data science techniques to proactively identify and mitigate risk as we support the needs of clients on a global scale. Open-source platforms enable AML data scientists to develop risk-responsive, behavioral analytic models that isolate signals of interest regardless of the size of the training set. This allows us to find the risk and respond more quickly than ever before, so we can simultaneously improve the client experience while protecting them from harm.

Q: How does the use of Decision Intelligence help your KYC and AML efforts?

S: Decision Intelligence is table stakes. At Citi, we are managing over 400 petabytes of data and fusing it with external signals to produce insights that were previously unavailable. The output of our entity resolution has greatly expanded our feature space and drives not only a better prediction of unusual behavior, but also informs our first-line teams about clients’ needs while reducing the historical friction associated with certain KYC activities. Decision Intelligence produces meaningful context in graph form supporting both bankers and risk managers—when it’s needed and where it’s needed.

Q: In your view, what does the future of the global banking environment look like?

S: The banking industry is changing rapidly. Today, we are embedding digital risk management capabilities into core operations to reduce the distance between tech, compliance, and the customer. The future of banking is built on technology transformation, which enables elastic scale to accelerate risk management in parallel with business growth.

Q: What advice would you give to other banking professionals about leveraging data and technology?

S: To be successful in today’s changing bank environment, I think you need to experiment, accelerate the pace of change, and adopt a hybrid development approach to innovation to accelerate your program. Most importantly, you need to leverage technology platforms with the broadest and deepest set of tools and open-source capabilities, so you can chart your own course.

About the author

Scott Nathan is the Global Head of Financial Crime Detection and Customer Insights at Citigroup. In this capacity, Scott leads a unique team of data science professionals, money laundering risk analysts, and intelligence specialists leveraging contextual-driven insights to understand customer behavior and ensure Citi is effectively detecting financial crime across its global footprint and lines of business. Leveraging advanced technology platforms and analytic techniques, Scott and his team collaborate with business and compliance stakeholders to implement relevant program enhancements and data-driven technology platforms so that Citi can actively manage risk across a dynamically evolving feature space.