The rapid evolution of the digital age and technological advancements in the field of finance have made it difficult for compliance teams to successfully track and stop illegal trade practices. Demand is increasing, therefore, for upgrading the surveillance methods used for monitoring communication between financial firms and their clients.

What is electronic communications surveillance?

The method of tracking, monitoring, intercepting, collecting, preserving, and then analysing the data collected during the various kinds of communication being exchanged in the financial world to prevent financial fraud and compliance breaches is termed “electronic communications surveillance” (ECS).

The growing need for ECS

  • A number of communication styles are used in the fast-changing financial world, due to its volatility and increasing demand – from the old landlines to mobile phones, social media, websites, text messages, email and chats. This makes collecting communications data even more difficult.
  • Financial fraud – such as money laundering, illegal trade, terrorist financing and civil unrest financing – has also increased over time, and sanctions imposed by such bodies as the European Union, Office of Foreign Assets and Control (OFAC) and United Nations are updated frequently to prevent this type of activity.
  • Companies, therefore, need to constantly upgrade the way they collect information –   to incorporate all platforms of communication and ensure their systems comply with all relevant regulation.

 

ECS – its inception and the journey so far

  • The US Electronic Communications Privacy Act of 1986 covers the surveillance of any electronic communication. However, surveillance methods have evolved since then due to changes in the manner of communication, the digital age, the internet boom, and rapidly changing technology.
  • The age-old practice of working on just a sample would not yield the desired results now and may lead to a compliance breach, leading to large penalties, revoking licences, and irreparable business and image loss.
  • For instance, French bank BNP Paribas was fined a massive USD8.9bn in settlement to the US Federal Reserve and the New York Department of Financial Services, as it had violated the trade sanctions imposed against Cuba and Iran and facilitated a trade settlement via these countries.

 

The way forward

  • Companies must now focus on the right kind of keywords or lexicon for scrutiny. Big data analytics would play a major role in understanding relevant data and minimising the amount of data that requires close monitoring. Tough competition does not allow for companies wrongfully suspecting a transaction; therefore, false alarms need to be minimised.
  • Artificial intelligence and machine learning are slowly becoming part of the kind of ECS companies are opting for. Improved technology should be deployed and innovative investigation processes followed to ensure internal and external compliance policies are adhered to.

ECS methods must be used not only to detect but also to prevent a mishap or fraud. The controls must be adaptive and able to judge the intent of the underlying communication. 

 

 

 

 

Author's Bio: 

Alisha Hill is a Freelance writer cum blogger.