The FinCEN files: lessons for the business community

What lessons can businesses learn from the FinCEN files? How can they stay compliant and protect their brand reputation? We believe Artificial intelligence has a role to play.
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It started with the Panama Papers. Then came the Paradise Papers. And now the FinCEN-files are grabbing global headlines. Three data leaks that journalists worldwide have brought to the attention of the public. In our hyperconnected world, news travels extremely fast. One thing these leaks teach us is the growing difficulty of shielding sensitive data from the public eye. Corporates, governments and high-profile individuals are under constant scrutiny, and must assume that anything private can sooner or later become public. Whether they like it or not.

Public indignation
Meanwhile, in parts of the world at least, unethical practices are causing growing indignation. Corporates and their leaders who are found to be involved with such practices suffer massive reputational damage and risk heavy sanctions. The second lesson, therefore, is that accountability has become key to survival. For companies and their managers, monitoring and giving account of their own behaviour must be part of their standard routine.

Shifting rules
But what are these standards that we measure ourselves by? Laws and regulations, obviously, but complying with them is not enough. Legal is not the same as ethical, certainly not in the eyes of the public. What society perceives to be “right” is broader than that. The problem is that the regulatory landscape is constantly shifting and morality, too, is a shifting concept: what was OK a decade ago may not meet today’s ethical standards. Lesson three, therefore, is that solutions of the past must be constantly revisited in the light of today’s legal requirements and moral standards.

Businesses have to find the information that matters, and find it fast.

Growing sphere of accountability

Another issue that organisations and individuals face is determining what falls under their sphere of accountability. After all, it’s not just their own behaviour that must meet ethical standards. They are also accountable for the practices of parties they are related to. Suppliers, customers and intermediaries, for instance. Their own staff. Being accountable for one’s own behaviour these days also includes being accountable for that of others. This is a hard lesson we learned in 2008. It is why, for instance, Know-Your-Customer and Customer Due Diligence processes have become so all-important. But even now, many of the organisations most in need of this lesson have not yet fully internalised it.

Diving into data
So what do businesses need today to stay compliant and protect their brand? Information. The most comprehensive and up-to-the-minute information around. The good news is that, with the rapid advance of digital technology, the amount of data available has grown exponentially. But businesses have to find the information that matters, and find it fast, because in today’s high-paced economy, they cannot afford to get bogged down by their compliance processes. This is not a problem that can be solved with human capital. There is no way hiring can keep pace with the rapid expansion of data and regulation. This is a problem that calls for an IT solution. State-of-the-art compliance screening software. A tool that can provide certainty on this topic.

Solve the paradox
Luckily, the technology to search and analyse data has also advanced, thanks to artificial intelligence (AI). An AI-enabled search engine can efficiently sift through masses and masses of data, identify relevance more quickly and effectively than ever before, and also recognise patterns in that data. This technology allows corporates to constantly monitor their compliance and reputation risks. For financial institutions, more specifically, it solves the paradox they now face: performing more and more exhaustive KYC and CDD processes, involving more and more data, in less time, with less staff.

Input for decisions
All AI does, in fact, is make behaviour and relationships transparent. It’s up to management to act on this information. Harnessing AI does not automatically make behaviour ethical, but it does provide the best intelligence available, so managers can take well-founded ethical decisions.