Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Wealth firms given financial crime warning

Wealth firms given financial crime warning

An explosion of 'big data' platforms could have serious implications for wealth firms, according to data firm Anomaly 42.

Data warehousing is increasingly being vetted by regulators in their investigations into potential financial crime.

Anomaly42, a data-as-a-service provider, believes the exponential growth of big data will trigger a sharp rise in UK financial services firms being investigated. 

As a consequence wealth firms will be forced to pay careful attention to their 'Know Your Customer' (KYC) procedures.

In recent years a number of leading banks have been hit with fines following probes using sophisticated big data tools to scan vast data ecosystems to uncover fraudulent and other illegal activities.  

These include Barclays, ABN Amro, ING, Credit Suisse, Standard Chartered and HSBC, who collectively paid more than $5 billion for money violations.

Anomaly42 director of strategy & innovation Freddie McMahon warns this heightened level of forensic investigation by legislators and regulators globally is set to 'cascade' through the financial services sector as a whole, affecting even the smallest firms.

While wealth firms are unlikely to face fines as large as the banks, the reputational damage could be profound.

'For UK financial services firms of all sizes, the rising intelligence and falling cost of big data analysis is proving a double-edged sword. On the one hand, big data platforms are being used in-house to uncover new market intelligence and customer insights, McMahon said.

'On the other hand, they are increasingly being used by financial regulators and legislators to expose financial crime and any firms mixed up in it, even unwittingly.  

He added: 'Moving forward, compliance departments are going to have to be even more forensic in their KYC processes. To properly defend their firms' reputations and bottom lines in a newly transparent market, one-off, or infrequent, KYC will rarely be enough.

'A new form of KYC that is embedded and ongoing will have to become the modus operandi, or firms will suffer the consequences.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: 'new normal' now is as dangerous as when it was applied to tech

Profile: 'new normal' now is as dangerous as when it was applied to tech

7IM's CIO Chris Darbyshire says he has been re-energised by his new role, but has little time for 'new normal' doom-mongers

Wealth Manager on Twitter