Electronic Communications Supervision, and the new FCA Money Laundering Handbook

18th June 2019 by Brielle Hewitt

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Money Laundering

The FCA have released a thematic report on Understanding the Money Laundering Risks in the Capital Markets. The results of which are summarised in a pdf here.

The FCA have also launched a formal Handbook.  Called the Financial Crime Guide: A firm’s guide to countering financial crime risks (FCG).  It’s not a manual on how to do the crime but it will help you recognise what is going on and what your responsibilities are.

For clarity, there are two types of Transaction data in any Suspicious Transaction (money laundering or market abuse).

Structured Data.  This is typically easy to get to as it’s stored in trading systems, order tickets, market data.  Analysing this data to find the Abuse Needles in the Innocence Haystack is now a multi-Billion dollar business.

Unstructured Data.  This data is may be archived (email/Bloomberg) or may not be depending on your organisations technology capabilities (instant message, FaceTime, WhatsApp). These may be archived, but difficult to search through and analyse in any meaningful way (Voice & Mobile).  Analysing the entire steam of a firms voice and electronic communications data is typically a labour intensive, manual process farmed out to a junior officer, or to an external company (which may have it’s own privacy and security issues).

The trouble for Firms is that the intent for most frauds (suspicious trading, market abuse, money laundering) is hidden in the Unstructured Data, a Call here, a BBG IB there, maybe a surreptitious Instant Message or WhatsApp.

Re-constructing the suspicious trade is easy with the Structured Data but re-constructing the actual fraud is impossible without the Unstructured Data.

The FCA states:


Voice and e-communications surveillance2.42 Firms adopt electronic communications surveillance to address risks in relation to poor employee conduct and market abuse. Some participants told us that, given the potential correlation between some market-abuse behaviours and money-laundering behaviours, electronic communications surveillance is an existing resource that may also help to identify money-laundering risk. This is particularly true if electronic communications surveillance information is used to give further context to a transaction-monitoring alert.We observed good practice where participants revised terminology or lexicons for their electronic communications surveillance systems to incorporate lessons learned from money-laundering case studies in the media, such as the Deutsche Bank case


We provide a solution to answer these regulatory requirements for compliance and risk departments, with our  Fingerprint Platform.

We’ve been working on the technology for 4 years now and have over 55 firms on our platform. If you would like to discuss your Unstructured Data and how it can be leveraged for MAR, AML or just better general supervision give us a call on t: +44 (0)20 3011 4145 or email us at hello@fingerprint-supervision.com

James


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