In a Q&A, Lee Garf at NICE Actimize discusses AI, ML, new surveillance efforts, and ways to avoid being a financial crime victim.
Lee Garf
(Editor’s note: The Best Financial Crime Prevention Technology honor from the FTF News Technology Innovation Awards for 2019 went to NICE Actimize and its portfolio of financial crime solutions. Voters singled out the company for the five major financial crime solutions that it launched in 2018 with artificial intelligence (AI) and machine learning (ML) central to these efforts. The solutions included the X-Sight Platform as a Service, a new version of the Suspicious Activity Monitoring (SAM) anti-money laundering (AML) solution, ActimizeWatch, a cloud-based analytics optimization solution, the Fraud Essentials Cloud solutions, and ActOne, an AI-enabled financial crime investigation management platform. The company also introduced e-communications surveillance and voice recording advancements. FTF News got time with Lee Garf, general manager, financial markets compliance at NICE Actimize to discuss surveillance matters and what firms can do to avoid becoming victims of financial crime. Garf oversees product strategy, product marketing, product delivery and go-to-market planning across NICE’s compliance solutions. Before joining NICE Systems, he was executive vice president, product, at Charles River Development.)
Q: From NICE Actimize’s point of view, what is the most important step that financial services firms should take to prevent becoming a victim of financial crime?
A: From our perspective, one process which we consider paramount, and which we believe that financial services firms should implement, is a proactive and comprehensive surveillance program.
The program should surveil both trades and communications in a single platform and be able to efficiently correlate both.
With the advent of such breakthroughs as behavioral analytics, firms can uncover not just activities leading to financial crimes, but also identify intent to defraud more effectively.
Q: What is a common misconception among financial services firms about financial crime prevention?
A: From our conversations with many financial services organizations, we initially found that many firms wrongly believed that there was no effective technology to automatically surveil 100 percent of voice conversations.
While this may have been true in the past, this is absolutely no longer the case.
Current transcription and voice surveillance solutions using machine learning and natural language processing can achieve well over 80 percent accuracy and provide 100 percent coverage.
Q: Why has better communications surveillance become so important to financial crime prevention? How is this area of surveillance impacting operations and compliance staffs at financial services firms?
A: Regulatory change has had a huge impact in elevating the importance and profile of communications surveillance.
At the heart of many of the newest regulations, intent has become more important with regulations such as MAR [Market Abuse Regulation], MiFID II and BMR [Benchmarks Regulation] be identifying this as a critical focus area. According to those regulations, the best and sometimes only way to prove intent is via communications surveillance, especially voice.
Q: What industry conditions are spurring the growth in demand for anti-money laundering (AML) solutions, including know your customer (KYC) and transaction monitoring efforts?
A: We think there are four key conditions that are boosting the demand for AML solutions including KYC.
These four influencers for AML growth include the cost of compliance, regulatory changes, technology changes, and evolving threats.
In terms of those factors impacting the cost of compliance, we see the growth of digital products, transaction volumes, high false-positive rates, and staff turnover.
The key regulatory-related changes stimulating growth include: Ultimate Beneficial Ownership; the increase in the adoption of risk-based approaches to KYC-AML programs; the rise of virtual currency conversions; FATF [Financial Action Task Force] guidance and evaluations; and SAR [Suspicious Activity Report] changes.
With respect to technology, there are expectations among financial services organizations to modernize technologies by leveraging AI and machine learning to foster more automation.
Lastly, evolving threats mean the market is seeing new threat vectors such as those impacting the crypto market. Other conditions spurring growth include new global sanctions and factors such as trade-based money laundering.
Q: What exactly is the concept of “holistic surveillance” and how viable is it?
A: Holistic surveillance combines trade surveillance with ecomms and voice surveillance into a single solution.
This joined capability provides compliance users with a more efficient investigative experience, as sending requests to specialist communications teams is no longer required.
Holistic surveillance is not only viable today, but in production at leading financial services organizations. One of our case studies showed a firm producing a 98 percent reduction in time to reconstruct trades due to the impact of holistic surveillance.
Q: How is compliance with economic sanctions impacting efforts at firms to prevent financial crime?
A: Compliance with economic sanctions has become very complicated over the past few years, especially with the Russian sanctions.
It is not a simple “true hit determination,” but rather an investigation that goes deeper into jurisdictions and specific monetary instruments.
As a result, compliance to economic sanctions has increased the number of resources to support it, resources that could otherwise be focused on other areas of financial crime.
Q: How does NICE Actimize view emerging disruptive technologies? Do any of them show promise for financial crime prevention?
A: NICE Actimize embraces disruptive technologies, including current disruptors such as artificial intelligence, machine learning, natural language processing (NLP) and robotic process automation (RPA).
We’ve already integrated and utilized these technologies within our own financial crime solutions.
For example, NLP is a standard feature of our communications surveillance solution, we use machine learning for anomaly detection, and we’ve even integrated robots into our ActOne case manager.
We are currently looking at ways to integrate other new disruptive technologies to improve how we fight financial crime, reduce costs and boost efficiencies.
Q: What is coming for NICE Actimize for the rest of this year and for 2020?
A: For our compliance solutions, we’re focused on delivering a next generation, cloud-based self-development tool (do-it-yourself), for customers to create their own analytics from a template.
We’re also focused on delivering a comprehensive solution for the SEC’s new Regulation Best Interest (RegBI), leveraging the sales practice and suitability and communications surveillance solutions we already have on the market.
All these offerings are on our short-term horizon for the coming year.
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