Abstract
Revelations of lax control in financial institutions’ know your customer (KYC) and anti-money laundering (AML), associated regulatory fines, and growing scrutiny from political authorities and the general public are exposing the limitations of traditional approach in AML-KYC operations. In response, financial institutions have started experimenting with new technologies such as advanced analytics, artificial intelligence, machine learning , and new data solutions such as KYC utilities and managed services.
A critical area that has seen relatively less progress is the issue of information sharing– within a financial institution (across geographies and business lines), among financial institutions (such as counterparty or correspondent banks), and with regulatory and law enforcement agencies. Information sharing at present is very limited and inefficient because it is conducted manually and it can take weeks and months to elicit a response from counterparties such as other financial institutions.
Duality Technologies, a privacy-enhancing technology startup specializing in privacy preserving information sharing in financial services, has come up with a solution to facilitate information sharing using advanced Homomorphic Encryption techniques. It allows different teams to securely query one another’s data, for example, by asking questions about accounts and transactions and receiving an answer in seconds. Its solution is currently being adopted by the Cyber Defence Alliance which is a consortium of banks and law enforcement agencies in the UK, and Canada’s Scotiabank for information sharing across its global teams.
Duality Technologies is working on an area that has been highly a manual, sensitive, often face-to-face process. Therefore, this exercise, although very important, has been essentially taking place on the sidelines of core AML functions such as transaction monitoring or watchlist screening. By automating secure data sharing and collaboration from “months to seconds,” this solution should enable information sharing—often a forensic exercise—to be inserted into the normal flow of AML operations.