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Financial Services Information Sharing
The risks for Financial Services information sharing are multiple. Yet on balance there is a risk to also not sharing.
A risk of compliance failures.
This post describes the concept of sharing data between and external to the financial services industry and the benefits of doing so.
With greater regulation of data and privacy, banks have a difficult job balancing sharing or not sharing data. Global privacy laws protecting the banks end customer restrict and regulate what can and cannot be shared.
In addition with the threat of cyber attacks while the data is in transit or held with a third party, banks can be held to account if a breach happens outside the banks firewall.
There are also commercial reasons a bank may not want to share data.
For these reasons banks are reluctant to share customer or transaction data that could cause them regulatory issues when a breach occurs.
Yet it isn’t difficult to protect data so that it need not leave an institutes firewall and still enable the sharing of it with other banks or the public sector. Doing so can benefit the entire sector by mitigating the chance of money laundering, terrorist financing or even fraud.
With the whole industry able to cross check for previous suspicions of bad actor behaviour or actual identified fraud it is possible to close the door to fraudsters and thieves.
In the UK the Government Agency Intelligence Networks (GAIN) operate in regional organised criminal units to share intelligence.
GAIN is a multi-agency group that draws together intelligence and investigation operators mainly, but not exclusively, from the public sector enforcement agencies.
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GAIN solves problems through a multi-agency approach and provides a regional process for different national, regional and local agencies to work together.
The agencies can exchange information within legislation boundaries, jointly participating in enforcement, joint training and sharing resources. The outcome is reduced threat, risk and harm to communities.
GAIN enhances each region’s ability to tackle serious and organised crime through the sharing of knowledge and intelligence to disrupt criminal activity and identify and seize the proceeds of crime.
There is no reason a network such as GAIN cannot work within a Financial and Law enforcement network. This could be further enhanced by Artificial Intelligence managing the risk and dissemination of data to each institute in the network.
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Properly graded and managed information/intelligence could be shared to ensure risk mitigation is possible when dealing with potential criminals trying to access the financial markets.
It is also possible to homomorphically encrypt data in transit so the real data never actually leaves an institutes firewall, rending it useless to criminals trying to intercept the data.
Add in the obfuscation of the requesting party and the response from the receiving party and this protects commercial interests in a customer under scrutiny.
Information sharing agreements (ISA) between parties that sign up to such a network establish a legal footing upon which the ‘rules’ for sharing are established. By ensuring every party within the network signs the same agreement the basis for sharing is not only ethical and lawful but fair.
ISA’s are a well entrenched method to share information between parties. They ensure the end customer is aware what is happening with their data and provide restrictions on what it can be used for. They provide for checks and reviews to ensure compliance and provide a way for regulators to satisfy themselves data is being handled appropriately and securely. Indeed, minimum security practices would be enforced to enable a party to sign up to an ISA.
The National Fraud Initiative (NFI) is another example of information sharing between the public and private sectors to combat fraud. The problem with this initiative is it runs only biennially. With fraudsters and criminals operating 24/7 a new way to manage data sharing is needed on a live basis. However the NFI is credited with saving GBP 1.39 billion per annum in fraud attempts.
With an improved model to share information and intelligence, informed by significant sources of open and closed source data, the financial services industry can reduce the capacity for money laundering, fraud and terrorist financing significantly.
Building alongside any solution,it is essential a model to ensure C-suite executives/boards have access to a strategic threat assessment of fraud/ML/TF. Aligning a process to operationally manage it through tasking and coordination would put a significant burden on organised criminal gangs.
The financial services industry would close loopholes quicker and manage risks more effectively. Especially with key performance indicators written into the processes to drive activity to prevent and detect threats.
Here at CYW Solutions we are building the first wholly inclusive intelligence system and strategic business model to combat financial services industry criminality. Whether that means identifying internal threats or criminal typologies our software and strategic threat management system will reduce criminality in the banking industry.
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