Banking Insights:

How Banks Can Address the Increase in False Positive Alerts

Stephen Blackburn, Senior Financial Crime Consultant, BAE Systems Applied Intelligence

Three things are making the struggle against money laundering more difficult. Transaction volumes are rising, launderers are adapting their tactics, and regulators are insisting on more detailed Suspicious Activity Reports (SARs) from institutions. Combined, these ratchet up the pressure on financial institutions to submit more reports, while the number of false alarms surges skyward.

The good news is that there are a number of short and long-term approaches you can take to address this problem. Read this report – part of our Banking Insights series – to learn how a shift to intelligence-led Anti-Money Laundering (AML) could help you reduce the volume of false positive alerts.

Read on and unlock all chapters to discover the short-term steps and long-term measures you can employ to reduce false positives and support sustained change for your organization.

The false positive paradox

INTRODUCTION

The false positive paradox

For money launderers, the more false alarms are raised about legitimate transactions, the better they can camouflage their activities.

INTRODUCTION

Step one: Tuning detection systems

STEP ONE

Step one:

It’s not the easiest of steps, but it is one of the first ones to take; invest in tuning your detection processes and systems to cut down on the volume of false positive alerts.

STEP ONE

Step two: Triage alerts with artificial intelligence

STEP TWO

Step two:

Machine learning algorithms can be trained to triage alerts with predictive analytics and calibrated to take into account the past experience of investigators.

STEP TWO

Step three: Encourage intelligence sharing

STEP THREE

Step three:

There are strong arguments for sharing intelligence between fraud, compliance and cyber units.

STEP THREE

The future for false positives

STEP FOUR

The future for false positives

Without big change to inspire organizations to adopt a common goal, progress towards more effective reporting won’t happen.

STEP FOUR

Get in touch

Stephen Blackburn

Senior Financial Crime Consultant, BAE Systems Applied Intelligence

Stephen Blackburn is a Senior Financial Crime Consultant at BAE Systems Applied Intelligence. He works with financial institutions in retail, commercial and investment banking, applying his knowledge of Financial Crime solutions together with experience in the banking business to help tackle the challenge of remaining compliant in an increasingly complex regulatory landscape.

Stephen is a Certified Anti-Money Laundering Specialist (CAMS) with a decade of experience in AML transaction monitoring. Over the last 20 years he has also been involved in Sanctions and PEP screening, payment filtering, Know Your Customer (KYC) and Customer Due Diligence (CDD).