YOU MAY WORRY ABOUT THE COSTS OF FALSE POSITIVES; I WORRY ABOUT THE COST OF FALSE NEGATIVES AT ACCOUNT OPENING

 

While commercial software providers of platforms that allow financial institutions to  efficiently explore the world's sanctions lists each tout their product's abilities to reduce False Positives, the focus upon that specific advertised vertue misses the boat, in my humble opinion. Rampant corruption in the government of the developing world, Citizenship by investment (CBI) passports, and modern technology have all combined to give financial criminals, and particularly money launderers, the ability to morph into clean identities, supported by apparently legitimate documents, which will not come back in a legacy sanctions search as anything other than a low-risk normal new account applicant at Account Opening.

My fear is that these False Negatives, which is the only way to refer to them, are one of the reasons that the War on Money Laundering and the War on Terrorist Financing, are both abject failures, with perhaps more than 95% of the global criminal activities of laundrymen occurring with impunity. How can compliance officers succeed when they fail to ascertain the true identities of identities of new bank clients? The answer is, they cannot, full stop.

For some reason, the universal use of facial recognition technology, which has now achieved a level of accuracy and legitimacy allowing it to be employed with confidence, has never occurred in the compliance sector. This is a fatal mistake, as money launderer consistently anonymize themselves through the artful use of alternate, yet totally legitimate, identities acquired to defeat compliance each and every day of the week. Only through the proper and regular use of facial recognition programs can the compliance world identify the bad actors in real time, and be the gatekeepers that they are supposed to be. All bank compliance departments must join the 21st century, and add facial recognition programs to their mandatory CIP platform tools. Laundrymen can change their identities, but they cannot hide their faces.