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Market Surveillance

Achieving Maximum Impact from Your Surveillance Team with Technology

By creating a symbiotic relationship between human brains and the logic of machines, firms are able to unlock additional value in their investigations processes.

Financial crime is a challenge for banks around the world – one that most of them have spent the past several decades, addressing through both manual and automated detection and investigation processes. In parallel, regulatory authorities have shown little tolerance for firms who are found liable for financial crime, which can cause significant financial and reputational repercussions. To aid in the fight against financial crime, firms have reinforced their financial crime divisions by adding a significant amount of human capital across their risk, regulatory and compliance teams. In fact, the headcount of these functions in some global banks now accounts for up to 15% of overall staff.

In Nasdaq’s 2020 Global Compliance Survey, it was cited that 54% of firms have invested their compliance budget in additional staff for the 2020 year. This continued investment in fighting financial crime is, of course, very positive news; however, human teams alone cannot manage the volume of data and alerts being thrust upon them. In order to gain the maximum impact out of this investment in human capital, firms must look to technology to streamline processes and gain operational efficiency allowing human resources to focus on more complex investigations and compliance processes.

Drivers for Investments in Human Capital

With firms investing consistently in compliance staff over the past several years, it is important to consider what has been driving this trend.

  1. Regulatory change: Frequent changes in regulation are inevitable, and firms must be able to implement associated procedures and standards at pace with regulatory requirements. This often requires additional resources to ensure proper understanding and implementation.
  2. Technology: Although many firms have automated detection methods, without guidance and effective calibration, firms can be left with a considerable amount of false positives and output that requires a significant amount of human resources to review and investigate behind the scenes.
  3. Data: The data required to identify risk is complex, disparate, wide-ranging and often inaccurate, which can require massive teams to gather data and determine its accuracy or usefulness before analysing and delivering risk decision decisions.

How Augmenting Human Resources Can Help

The ability for firms to grow their compliance staff has helped to place additional focus on fighting financial crime. Still, less than 1% of all suspicious activity detected by banks’ monitoring systems yields information that can be used by a regulator or law enforcement agency to prosecute money laundering. The sheer volume of data and alerts is consistently outpacing the rate at which analysts can investigate them.

There will forever be a need in risk management to employ experts that can undertake the specialist and complex process of investigating suspicious activity and referring potential criminal activity such as money laundering to a regulator for prosecution. The cognitive human skills used to analyse and make individual risk decisions are a highly valued asset within banks, and by augmenting these skills with advanced AI technology, firms can supercharge their ability to detect and investigate financial crime.

By creating a symbiotic relationship between human brains and the logic of machines, firms are able to unlock additional value in their investigations processes. Advanced machine learning, like that used in Nasdaq’s Automated Investigator for AML, learns from human experts and, in turn, gives recommendations to humans to guide them whilst continuously learning from data. This ongoing feedback loop enables firms to embrace the subject matter expertise of their best people, while the machine can make streamlined decisions in an automated fashion.

Leveraging Strength to Deliver Additional Value

As the feedback loop between humans and machines progresses, firms can gauge where human capital can deliver the most value. With machines able to concurrently investigate alerts at scale, analysts can focus their time on higher risk and more complex investigations. By assigning machines to low risk, high volume tasks, investigations teams benefit from a streamlined and consistent approach, while meeting the requirements of both internal QA and external regulators. 

Financial crime is at the forefront of concerns for banks and continues to be a challenge. By leveraging technology to create operational efficiencies, firms have the opportunity to invest in high-value human resources who can focus their efforts on detecting real crime.

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Darren Innes


With more than 20 years of experience in RegTech focused on AML, KYC and regulatory data, Darren Innes leads Nasdaq’s expansion of its globally-recognized trade surveillance into complementary areas.

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