Identity Resolution is The Missing Piece in Being Effective at Fighting Financial Crime

Ted Sausen, Subject Matter Expert, NICE Actimize AML Line of Business
Entity Resolution is The Missing Piece in Effective Entity Risk Profile Management

Understanding your entities and their relationships is a crucial part of any risk management program. Over the years, the regulated sector has increasingly adopted new financial crime compliance systems and is now starting to use the latest technology to help monitor and detect suspicious activity effectively. However, in their current form, these controls are not sufficient on their own, as there is frequently still a gap in effective financial crime compliance. These shortfalls are often traced back to an organization’s data management processes and their ability to provide a trusted understanding of the true identity of the entity and their relationships. How can the industry continue to understand entities better and efficiently identify links and relationships across their data while maintaining operational effectiveness?

Identity Resolution is the missing puzzle piece that makes entity-centric FinCrime prevention possible. Identity Resolution provides organizations with a single truth—a comprehensive view of the entity, supported by their data – giving compliance teams a clearer understanding of the entity, improving the accuracy of suspicious activity detection, streamlining investigations, and enhancing reporting quality. This single truth enables a seamless customer experience. The best part is – some Identity Resolution engines leverage AI and machine learning, so the results only get better over time. 

What is Identity Resolution?

Identity Resolution is the process of creating links among a plethora of data records and using those links to visualize and understand the data better. During this linking process, identity resolution can recognize when two observations are the same entity, despite some differences, and when two observations are not the same entity at all, despite some similarities. 

Why is Identity Resolution Important for FinCrime Operations? 

Financial services organizations continue to expand the amount of internal and trusted third-party data they access and use to strengthen compliance and detect suspicious activity quicker, with greater accuracy. With all this data on hand, it’s imperative to use technology that streamlines the data input via deduplication, expediting any data linkage processes to safeguard data quality and processing times.

Identity Resolution is critical in this data streamlining and linkage process. It provides an extra layer of intelligence on top of existing data by determining relationships already present in the different components of the data sets. This derived knowledge can be used to create network views of the data that compliance systems can easily understand and interpret.

Not only does Identity Resolution find existing links amongst data, but it also further monitors the data for behavioural patterns between entities and effectively identifies hidden relationships throughout each entity’s network. This technology adds the necessary context to the various data points across internal and external data sources to enrich customer profile data, providing a consolidated, precise view of the entity and their relationship network. This consolidated view gives compliance teams the information needed to manage risk quickly and effectively to confidently make informed decisions. 

What Are the Key Benefits of Identity Resolution?

  • Improved suspicious activity monitoring and detection: Identity Resolution deduplicates entities in real-time, allowing for a single, centralized, and reliable view of the entity, their risk and the identification of hidden links and obfuscated records. This understanding enables entities to be appropriately risk-rated and segmented, ensuring appropriate monitoring is performed on the entity based on a comprehensive and trusted understanding of their risk. This understanding will result in higher quality alerts and reduced false positives based on a true understanding of what should be normal and abnormal for each entity.
  • Increased investigation speed and effectiveness with reduced operational costs: The elimination of duplicate entity data enables investigators to trust they have a single view of all risks and relationships associated with the entity, even if those relationships were previously hidden and unknown. It also avoids false positives resulting from multiple potential alerts for the same duplicated entity and eliminates the need to search for entity data across multiple records. This means that investigators will always have a clear view of all the parties involved, shortening the data gathering and research phases of investigations, improving the productivity of investigators and analysts, and resulting in faster, yet higher-quality investigation outcomes.
  • Shortened onboarding time: Identity resolution allows for better data matching during KYC and screening processes, shortening the time it takes to review and approve new customers.
  • Unified third-party data: Being able to resolve external data quickly and accurately against the correct internal entity data records increases the ability to identify and detect high-risk activities, mitigating financial crime risk. Resolved entities also make the process of automatically searching third-party data more effective because there will only be one call out for the data rather than multiple call-outs for the same data.
  • Strengthened evidence on compliance reports: Identity Resolution is a critical contributor in bolstering data quality, making sure that organizations have the data clarity necessary to provide clear and accurate evidence of suspicious activity on relevant compliance reports or regulatory filings.
  • Quick time to value: Implementation of some Identity Resolution engines uses a plug-and-play approach, allowing organizations to improve decision certainty in days, without interruptions to productivity. 

The Impact of Identity Resolution

Identity Resolution should be fully integrated and embedded across financial crime technology, from KYC to screening, transaction monitoring, fraud detection, and surveillance monitoring. With fully embedded identity resolution, your teams will have immediate access to:

  • Real-time data resolution.
  • Relationship enrichment.
  • Hidden network identification.
  • Constant learning and improvement.

Embedded identity resolution allows organizations to enhance customer experiences, improve suspicious activity detection, streamline investigations, and deliver accurate, high-quality reporting, today. An integrated approach does not interrupt existing data enrichment processes and flows and allows any external data flow to be switched on anytime, seamlessly. Identity Resolution plays a vital part in Customer Lifecycle Risk Management by building relationships and understanding links across multiple data sets, ultimately enhancing the detection and investigation of suspicious activity, achieving positive outcomes and delivering effectiveness across Financial Crime and Compliance programs.

To learn more about Identity Resolution and its role in Customer Lifecycle Risk Management, check out our webinar series, The Art of FinCrime Risk Management.

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