Obtaining and analyzing relevant data is arguably the most difficult aspect of financial crime cases and other matters. “Big data” is an increasingly popular term, but it is neither a new topic nor widely understood. It was coined to describe sets of structured and unstructured data that grow exponentially and are too large for basic tools to collect, manage and process into relevant information reporting formats.
There is no relief in sight. Data sets will continue growing exponentially as technology advances and new data sources are integrated.
Whether it is a legal expert seeking a court order to obtain records, an investigator reviewing hard copies of records for a ‘smoking gun’ or an accounting expert trying to decipher thousands of journal entries and financial records, extracting relevant and useful data points is now essential to the success of all financial crime matters.
A major strength in the handling of any financial crime matter is the ability to combine disparate sources of data to allow meaningful reports to end users. The acquisition and quality of data are vital components of any information system, especially when the collection is conducted at multiple services and sources. It complicates things when the data is reported in different formats or used it different processes. The legal, investigative and accounting experts must work with forensic technology experts to establish rules for mining specific data values and outliers.
Capturing, storing, analyzing, visualizing
Financial crime professionals should have a plan to implement big data solutions in their cases and other matters. They should begin by defining a strategy to capture, store, analyze and visualize data using reliable big data algorithms, trends and tools. The strategy should not be simply to acquire the data, but to harness relevant data to facilitate sound and productive decisions and conclusions. Extracting useful data is not easy. The expert must implement advanced analytical tools to understand the data and exploit its value.
Beyond technology, there is an important human component of the data. The ability of the financial crime professional to establish data rules to implement algorithms that sort through data and make sense of the extraction is of paramount importance. That assures that the most relevant data serves sound decision-making. Financial crime professionals who utilize big data concepts have been forced out of their traditional roles, fostering programming and systemic adaption. Professionals should utilize their experience to provide solutions in developing enterprise wide data integration platforms to collect and analyze worldwide data sources.
Evolving landscape puts onus on specialists to dominate big data
In today’s business world, financial crime professionals use analytical functions in complicated financial landscapes. Government auditors and contractors can utilize big data analytics to analyze financial records and synthesize qualitative data to build predictive models and establish fraud, waste, and abuse baselines in the government. These functions may be customized based on financial models to pinpoint areas of potential fraud. Internal auditors and compliance officers can utilize these tools to identify specific areas of operational weakness as well as possible embezzlement or misappropriation of assets.
Financial experts, forensic accountants and investigators can use analytical tools and augment their analysis with data mining programs to identify, analyze and document activity that is outside of defined financial parameters. Of particular utility in regulatory compliance for financial institution compliance officers and government regulators, big data analytics can provide useful information to discover instances of money laundering, corruption or other instances of fraud.
Prescription for improvement
What to do? Organizations and financial crime specialists should identify opportunities and weaknesses in their organizations that provide access to important information and material. They should also identify best practices to combine advanced analytics with big data. Several areas should be analyzed: human capital (individuals who perform manual processes or are responsible for summarizing the reports), information technology (the big data infrastructure), management information systems (internal infrastructure and outside agencies and databases that are utilized), and financial or financial opportunities and weaknesses.
Data experts can play a big role in providing practical, solution-driven big data concepts to meet the needs of the financial crime community. By researching the capabilities of the affected professionals and the data sources, soliciting ideas and defining requirements for improvement, the financial crime community, overall, will increase its ability to deal with the growing importance and role of big data. The potential for evolution of these analytical processes is limitless and it is incumbent on financial crime professionals to perfect their skills in this crucial and expanding arena.
All financial crime professionals should be well versed in the application of analytics and how they can be used in combination with data sources to improve results. There are many tools and experienced professionals with advanced capabilities in this field. By leveraging experience with innovation, the financial crime community can provide high-quality results and improve its analytical abilities in order to stand a better chance of competing effectively with global financial criminals and enterprises are.
* John Lash, ACFCS, PMP, is Manager of the Business Valuation, Litigation Support and Consulting Group of Alpern Rosenthal, in Pittsburgh. His expertise extends to white collar crime, fraud, forensic investigations, financial statement analysis, loss of income calculations, regulatory compliance and risk management administration.