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FRAUD, COMPLIANCE AND DATA P R IVACY TECHNOLOGY – ADVICE FOR COMPANIES IN EU R O P E REPRINTED FROM:
RISK & COMPLIANCE MAGAZINE JAN-MAR 2014 ISSUE JUL-SEP 2015
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FEATURE
The evolving role of ������� the chief risk officer ���������������������������������
������������������������������������� EXPERT FORUM Managing���������������� your company’s regulatory exposure ������������
�������������������� HOT TOPIC ��������������������� Data privacy in Europe ���������
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MINI-ROUNDTABLE
M INI-ROUNDTABLE
FRAUD, COMPLIANCE AND TECHNOLOGY – ADVICE FOR COMPANIES
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FRAUD, COMPLIANCE AND TECHNOLOGY – ADVICE FOR COMPANIES MINI-ROUNDTABLE
PANEL EXPERTS Stu Bradley Senior Business Director SAS Security Intelligence Practice T: +1 (773) 490 1442 E:
[email protected] Stu Bradley has established SAS as a market leader within fraud and improper payments, regulatory compliance and security solutions. He drives SAS’ end-toend strategy for marketing, product development and delivery of these solutions, from data integration to analytic detection to investigation management. His practice also provides advisory services to clients across the banking, capital markets, insurance, health care and government sectors. Mr Bradley has 20 years of experience delivering technology solutions across industries to address clients’ most difficult business problems. Prior to SAS, he was an executive manager for a leading global consultancy in the risk and regulatory space.
David Stewart Business Director SAS Security Intelligence Practice T: +1 (919) 677 8000 E:
[email protected] David Stewart leads strategy development, drives product management and provides key marketing counsel for financial crimes solutions worldwide. In addition to working closely with financial services institutions and regulatory agencies, Mr Stewart collaborates with SAS research and development and implementation teams to deliver industry best practices for financial crimes solutions. Previously, he served as a SAS Business Manager for one of the world’s largest financial institutions, managing a team responsible for implementing enterprise-scale projects devoted to customer relationship management and AML initiatives. In addition, Mr Stewart has held various relationship management responsibilities for financial services customers over the past 20 years.
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FRAUD, COMPLIANCE AND TECHNOLOGY – ADVICE FOR COMPANIES MINI-ROUNDTABLE
RC: In terms of recent trends, could you interfaces, thus enhancing the investigative power provide an overview of how technological and supporting identification of emerging threats. The analytics themselves are also advancing. developments are helping to combat fraud and guide corporate compliance with cyber security procedures? Specifically, how “One of the areas that banks don’t get does this relate to detecting enough credit for is the significant role malware and other online attacks they play in working with law enforcement more quickly? Bradley: The concept of enterprise
to assist in the prevention, investigation and prosecution of criminal activity.”
fraud management is changing. It still requires a focus on aggregating data across channels, and building holistic customer profiles, however with the
David Stewart, SAS Security Intelligence Practice
application of behavioural analytics in real time, organisations can realise more accurate and
Machine learning techniques are being utilised to
faster decision making. In addition to this continuous
continuously improve detection models based upon
monitoring, enterprise solutions are now optimising
recent trends and indicators.
simulation and providing proactive forensic environments across a broader set of information. Through in-memory analytics, simulation that once took hours now takes seconds, allowing fraud analysts to test multiple methods. They can then deploy these new models much more quickly to better respond to flash fraud, and zero day threats that can manifest themselves in the online channel.
RC: When it comes to financial crime, how should companies address the role of big data and technology in today’s globalised world? Are new ways of applying analytics, such as Transaction Monitoring Optimisation (TMO), the way ahead?
Using storage technologies like Hadoop, more data can be stored and quickly surfaced within analytically driven discovery and visualisation
Stewart: When we think of the biggest financial crimes risks companies face, the reputational risk of doing business with criminal rings, sanctioned
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FRAUD, COMPLIANCE AND TECHNOLOGY – ADVICE FOR COMPANIES MINI-ROUNDTABLE
entities or regimes, or allowing your customers’
accounts, and those accounts to parties, and if
financial credentials to be compromised must rank
applicable to households or corporate parents.
highly. Given the speed and sophistication of these
Rather than have an analyst review individual work
attacks, big data analytics can help firms assess
items, we aggregate the work items to the subject.
their exposure, or collaborate with law enforcement
This reduces the number of widgets worked, and
to stem their exposure in near time versus learning
provides the analyst with a more complete view
about it after the fact. Leading firms are using
of behaviour for the subject. Next, we focus on
analytics to validate and optimise their automated
presenting the appropriate level of information to
monitoring and detection systems to reduce false
understand “Why are there events on this subject?”,
positives, improve the quality of detection and
“Who are they?”, “What’s normal for this subject”,
reallocate some of their investigative staff to focus
and whether the ‘triggering transactions’ and risk
on complex cases and rings. Transaction monitoring
rating for the company merit further investigation.
systems are very good at generating work items
The role of technology throughout this process
on subjects of interest, but visualisation tools can
is to reduce queries to source systems, increase
more quickly illustrate trends in flow of funds,
efficiency and provide governance through
correspondent bank activity, cross-border activity,
automated workflow to provide dual controls for
and so on, at a global portfolio level that may
investigation and filing of regulatory reports.
represent emerging risks to the firm.
RC: Once suspicious activity is discovered, what advice would you give companies as far as the initial steps to be taken? What role does technology play at this point in terms of understanding and reporting?
RC: To what extent are Financial Crimes Investigation Units (FCIU) in banks and other financial institutions assisting in the detection and prevention of global financial crime? Stewart: One of the areas that banks don’t get enough credit for is the significant role they
Stewart: Firms need to be more efficient in
play in working with law enforcement to assist in
detecting, triaging and building investigations on
the prevention, investigation and prosecution of
potentially suspicious activity. The first thing we
criminal activity. Leading institutions are building out
do during an implementation is stage the data so
proactive intelligence units that scour negative news
that transactions can be bridged to associated
events, referrals, case data, social media, consortium
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FRAUD, COMPLIANCE AND TECHNOLOGY – ADVICE FOR COMPANIES MINI-ROUNDTABLE
data and cyber events to detect previously
still miss the mark. They collect but do not enrich
unknown risks to their customers and reputation.
the information or provide the depth of analytics
Institutions are deploying distributed in-memory
required to make an impact. Cyber security is one of
data architectures, global search, text mining,
the most critical areas where the variety, volume and
visualisation and network analytics to piece together bits of information across silos of data to identify gaps in coverage or trends within specific markets. When attacks occur, or when assisting law enforcement on critical events, institutions now have the tools to provide immediate answers. These technologies
“There has been mass investment in cyber security technology. Yet despite this investment, the average time to detect an intrusion is still measured in months, not minutes.”
are absolutely necessary if the industry is committed to prevention.
RC: How would you characterise the role that cyber security analytics plays in enabling detection, triage and response to breaches?
Stu Bradley, SAS Security Intelligence Practice
velocity of data can be a barrier to understanding an organisation’s true threat landscape. Existing technologies look at a narrow area of security
Bradley: There has been mass investment
without effectively scaling to leverage enterprise
in cyber security technology. Yet despite this
information to detect and mitigate risks.
investment, the average time to detect an
Organisations must take advantage of their data
intrusion is still measured in months, not minutes.
assets and evaluate this information in much greater
This highlights the fundamental issue with the
granularity that ever before. Understanding the
current approach to addressing cyber risk.
normal and abnormal behaviour of an organisation’s
With the constantly changing variants of cyber
network requires the correlation and enrichment of
attacks, organisations can no longer simply rely
billions of daily network transactions with business
on the known attack vectors profiled in existing
context and threat information across the enterprise.
perimeter or endpoint solutions. Storage and
This creates ‘smarter’ data that can be analysed in
event management solutions have advanced, but
multiple different combinations and peer groups to
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FRAUD, COMPLIANCE AND TECHNOLOGY – ADVICE FOR COMPANIES MINI-ROUNDTABLE
drive better identification of anomalous behaviour.
state. Banks want to shut down anomalous sessions
The ability to apply these behavioural analytic
before their customers are compromised.
techniques in real-time captures a continuous picture of active security risks and helps security organisations better prioritise threats for further triage and mitigation.
RC: In your opinion, how useful is behavioural analytics to detect suspicious customer activity and ultimately prevent fraud?
RC: What do you see as the next major innovation in fraud detection and prevention? How do you expect the landscape to evolve over the coming years? Stewart: Given the millennial generation’s demand for convenience and frictionless commerce, the biggest challenge will be authenticating that the
Stewart: Behavioural analytics are absolutely
user is who they say they are, while not impeding
essential if we want to detect unknown risks
the customer journey. We will continue to see
or behaviours. Fraudsters are clever enough to
convergence of cyber data with behavioural profiles
outmanoeuvre rules-based systems, so adaptive
used for fraud detection. Real-time prevention
analytics that compare activity to the norm are
will be faster and scale to higher transaction
required. In a fraud context, the ability to profile
throughput, models and signatures will incorporate
the historical norm for an account, a card holder, a
more data, such as biometrics, consortium, device,
customer, a merchant, a POS terminal, a device, a
voice, and so on. Some of the information sharing
web session, and so on, is phenomenal. The more
among merchants and institutions is an interesting
profiles available for a customer across multiple
approach, but has much room for efficiency. It will
accounts, the richer our understanding of whether
be interesting to see how much privacy consumers
a payment transaction or new product application is
will forego in exchange for convenience. We’re
legitimate. It’s exciting where in-memory and event
already seeing that innovative fraud operations
streaming architectures will take us in the ability to
are more focused on improving the customer
present more behavioural data to our models during
experience and being an enabler in revenue growth.
the authorisation process. From a mobile and online
Ultimately, some combination of biometrics, near
perspective, being able to analyse session behaviour
field communications and analytics will drive
prior to any payment activity is the desired end
further reduction in fraud and improved customer & experience. RC
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EDITORIAL PARTNERS
E D I T O R I A L PA RT N E R
w w w. s a s. c o m
SAS As the leader in business analytics software and services, SAS transforms your data into insights that give you a fresh perspective on your business. You can identify what’s working. Fix help organisations turn large amounts of data into knowledge they can use, and we do it better than anyone. It’s no wonder an overwhelming majority of customers continue to use SAS year after year. We believe it’s because we hire great people to create great software and services.
KEY CONTACTS
what isn’t. And discover new opportunities. We Stu Bradley Senior Business Director Chicago, IL, US T: +1 (773) 490 1442
[email protected]
David Stewart Business Director Raleigh-Durham, NC, US T: +1 (919) 677 8000
[email protected]
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