One of the biggest challenges foreign banking offices face is compliance, including the establishment of consistent anti-money laundering (AML) and sanction programmes aligned with global regulation. Financial systems are integrating more complex, digital technology by the day. As a result, the ease with which criminals can transfer money without a trace has never been greater.
Aiding firms is Exiger, a US-based tech company that provides firms with a global governance, risk and compliance framework that enables companies to report to central banks and regulators. In 2013, Michael Beber and Mike Cherkasky were selected by the US Department of Justice to serve as HSBC’s monitor following a $1.9 billion deferred prosecution agreement with the bank, which exposed a range of weaknesses in its internal controls.
Rather than simply oversee HSBC’s compliance efforts, Beber and Cherkasky used the opportunity to build a business – and Exiger was born. Since then, BlackRock and the Agricultural Bank of China have been added to the firm’s client list.
“Our AML solution is naturally aligned with central banks’ mission and guidelines for AML,” says Brandon Daniels, president of global technology markets at Exiger. The firm’s software uses data analytics to identify high-risk indicators with greater accuracy and ensures “solutions are contextually subject-specific” by eliminating false positives and duplicates.
The firm has recently begun integrating new technology to ensure its products remain the best in the market. Drawing on financial crime compliance experts, Exiger’s engineering team built an artificial intelligence (AI) application that delivers know-your-customer, counterparty risk management and transaction monitoring. The programmes use AI and natural language processing (NLP) techniques in more than 30 native languages to identify relevant risk about subjects and their related entities.
The technology considers AML-relevant data points such as name variations, corporate addresses and other elements when matching transactions. “Exiger’s NLP technology extracts facts from unstructured and structured content, related to a customer or third party to detect whether a risk event is relevant, and/or material to an institution or a regulator,” explains Daniels.
Over the next two years, Exiger plans to expand its AML capabilities to include the identification and risk assessment of ultimate beneficial owners and the inclusion of credit risk indicators in AML monitoring. The firm also has plans to collaborate with new partners within the central banking community. In July 2019, the firm secured $80 million in investment from Carrick Capital Partners to continue developing its technology.
More than ever before, banks need to come to terms with the escalating cost of compliance, and Exiger has set itself apart with its technology by creating products that meet regulators’ requirements for consistency and auditability.