Software is patrolling the financial system, looking for crooks
KEEN, no doubt, to stay alive, drug traffickers tend to be prompter payers than most. For software firms, this is just one of many clues that may hint at the laundering of ill-gotten money.
Anti-money-laundering (AML) software, as it is called, monitors financial transactions and produces lists of the people most likely to be transferring the proceeds of crime.
Spending on this software is soaring. Celent, a research company, estimates that financial firms have spent roughly $825m on it so far this year, up from $675m last year.
Technavio, another research firm, reckons the market is even bigger and will grow at more than 11% annually in coming years. This is partly because authorities are increasingly quick to punish institutions that let down their guard.
Deutsche Bank, for example, has been hit with fines worth at least $827m this year alone. Governments, eager to appear tough on crime, are urging prosecutors to go after not just institutions, but also their employees.
The number of anti-laundering regulations is climbing yearly—by nearly 10% in America, Canada and the EU, and by roughly 15% in Australia, Hong Kong, Malaysia and Singapore, says Neil Katkov, a regulatory analyst at Celent. Even the red-tape-slashing administration of President Donald Trump is unlikely to cut regulation in this area.
David Stewart, head of anti-money-laundering systems at SAS, a software giant based in North Carolina, reckons that efforts to abide by such rules now take from a half to about 70% of most banks’ entire spending on compliance.
A survey this year by Duff & Phelps, an advisory group, found that financial firms typically spend about 4% of revenue on compliance, a figure expected to reach 10% in 2022.
大卫·斯图尔特（David Stewart）是北卡罗莱纳州软件巨头SAS公司的反洗钱系统主管。他认为，现在遵守这些法规的工作占到大多数银行合规总支出的一半到70%左右。咨询公司道衡（Duff & Phelps）今年的一项调查显示，金融公司通常将收入的4%用于合规，预计到2022年这一数字将达到10%。
Many clues that lead software to block a transaction, or to flag it for a human to investigate, are straightforward. Round sums are more suspect than jagged ones. Spikes in transaction volumes and amounts are suspicious. So is cash deposited in an account via multiple branches.
An area’s culture also matters. Sasi Mudigonda, of Oracle, says its software considers transactions linked to eastern Ukraine riskier than the west of the country, where Russian influence is weaker. Even age counts—crooks who move money disproportionately steal the identities of old people and young adults, says Michael Kent, chief executive of Azimo, a remittances firm.
甲骨文公司的萨希·穆迪岗达（Sasi Mudigonda）说，甲骨文的软件认为与乌克兰东部有关的交易风险高于该国西部，因为俄罗斯对后者的影响力较弱。就连年龄也与风险水平有关。汇款业务公司Azimo的首席执行官迈克尔·肯特（Michael Kent）说，转移钱财的犯罪分子会大量盗用老人和年轻人的身份。
Software also hunts for clues that someone on one of hundreds of watch lists has concocted a fake identity—the giveaway could be the opening of an account with a password or phone number once used by a corrupt official.
ComplyAdvantage, a firm based in London, licenses software that generates long lists of suspected criminals by sifting through hundreds of millions of articles, including those in The Economist, and then determines which transactions may benefit one of them.
Moving the proceeds of big-ticket crime conventionally involves disguising them as legitimate trade payments. Software from a Singaporean firm, AML360, is designed to flag instances of this.
Daniel Rogers, the company’s boss, says it monitors “a jigsaw puzzle” of factors such as ship itineraries, the locations of commodity producers and fluctuations in their prices. The software notices if a firm imports expensive stainless steel when a cheaper source of the material is closer at hand, say, or if an importer’s spending on copper rises as its price falls.