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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.'

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