The paper brings together the experiences of major banks in using data analytics techniques to combat financial crime. It provides an understanding of the current state of data analytics deployment in the area of AML/CFT, by sharing well-established use cases as well as more experimental work. The paper also provides examples of effectiveness improvements, such as the 40% reduction in false positives and 5% increase in true positives delivered by one bank’s proof-of-concept conducted on a machine learning solution for transaction monitoring.
Recognising that this is a nascent field, the paper also provides practical suggestions, drawn from the experiences of major banks, to address key governance and implementation issues. These include important considerations on the validation, audit, and explainability of DA models to gain assurance that the models built can reliably improve the detection of illicit activities.
The paper also highlighted areas in AML/CFT analytics where closer industry and private-public cooperation could yield significant benefits. These include working with the Institute for Banking and Finance (IBF) on dedicated career paths and skills development for AML/CFT analytics professionals, as well as workshops for financial institutions, MAS and CAD to collectively address key policy and operational issues in AML/CFT analytics such as model governance and using DA to target high-risk areas.
Ms. Ho Hern Shin, Assistant Managing Director (Banking and Insurance), MAS and co-chair of ACIP, said “MAS strongly encourages the use of data analytics in AML/CFT, which has the potential for bringing about transformative change in our approach to combating financial crime. The strong showing by analytics solutions providers during the recent Singapore Fintech Festival shows the growing opportunities to adopt such techniques. We are heartened that the ACIP banks are willing to share their experiences with other financial institutions looking to embark on such projects. MAS also looks forward to working with the industry on areas of collaboration in AML/CFT analytics.”
Mr. David Chew, Director, Commercial Affairs Department of the Singapore Police Force and co-chair of ACIP, said, “Data analytics is an invaluable tool in identifying and preventing financial crime, by helping financial institutions sieve through the large volumes of data generated daily to identify suspicious transactions. The industry must be ever vigilant against the abuse of our financial system and we hope that the paper will encourage the industry to build robust data analytic capabilities to strengthen Singapore’s resilience against such threats.”