Fighting financial crime requires cross-border co-operation

David Craig
Source: Getty

By the time the clock reaches midnight tonight, the world will have created enough data to fill more than 150m laptop computers.

That’s not the historic total so far, that’s the amount for just this one single day. Thomson Reuters alone collects a petabyte (1m gigabytes) of data a day.

It’s not just the quantity of data that is proliferating. Also on the rise is the volume and value of financial crime around the world. Some estimates put this at more than £2 trillion a year, or equivalent to the whole GDP of the United Kingdom. Such crime, be it bribery, fraud, corruption, or drug trafficking, causes incalculable suffering. All have been implicated in the financing of terrorism, human rights abuses, and environmental degradation.

Tackling this is near the top of every policymaker’s agenda. If we can successfully challenge illegal financial dealings, we can also tackle many societal issues.

Technology can be an enabler of crime, as its perpetrators become ever more sophisticated and move increasingly online. But it can also be one of the most powerful tools that we have to fight it.

Today, Thomson Reuters, along with the Atlantic Council, City of London, and other partners, has launched a new report to suggest how this might best be done, and how we might use data to help us.

Big Data gets a lot of discussion these days, whether it’s scrutiny over what data is being collected, or ways it can help businesses and the economy grow. But it is also at the heart of today’s conflicts. As our report title indicates, data is the twenty-first century arms race. Information is power, and we’re only now really beginning to understand what that truly means.

Effectively harnessing the power of this data can be a significant challenge. This includes determining whether the data and its provenance are reliable, how to collate it, how to ensure it is up to date, and how to transform it into something ready for use that provides valuable insight.

Ultimately, we need to use our technological advances to connect the dots that weren’t connected before, and do it quickly, so that we can not only root out bad actors, but prevent malicious activity from happening in the first place. Then we can really adopt a proactive approach to fighting illicit financial flows, and move from the back to the front foot.

Big data analytics can use structured and unstructured raw data from different sources, such as geolocation data, and those from mobile devices and social media. They can then detect fraudulent activities, unearth hidden connections between accounts, and track the relationship between the sources and beneficiary.

This must, of course, be compatible with individual rights to privacy and pay strict attention to data protection regulations. When the UK’s new Data Protection laws, and the European GDPR legislation are enacted, policymakers need to be mindful of how their decisions may impact on the fight against crime. The report suggests that data privacy laws may even be hampering the fight against financial crime by preventing information sharing, and suggests exemptions may need to be made if we are to be effective in rooting out fraud and corruption.

It is imperative that the public and private sector work in partnership with each other to exchange data, share information, harness expertise to help our businesses comply with statutory and regulatory obligations, and, ultimately, prevent financial crime and the untold societal harm it can bring.

Without this partnership model, and confidence in the quality and provenance of data, the unintended consequences of legislative changes is that banks will “de-risk” and withdraw their services from the communities and markets that need them most.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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