Data analytics helps unmask financial crime, Secret Service expert describes

Delena D. Spann is a fraud analysis expert of the United States Secret Service based in Chicago where she is assigned to the Electronic and Financial Crimes Task Force. For well over 15 years she has developed an expertise in linking patterns and trends of fraud schemes and anomalies in financial transactions to establish patterns of criminal activity. A member of the ACFCS Threat Finance Task Force and the Charter Class of Certified Financial Crime Specialists, Spann will be speaking at the ACFCS International Financial Crime Conference and Exhibition on Feb.5-7, 2014 in New York on the Threat Finance and Big Data panels, where she will share some of her expertise on these topics.  In preparing for her speaking appearance, ACFCS asked her these questions.

What is data analytics from your perspective?
Data analytics is a way to combat fraud by analyzing transactional data in an organization’s accounting records and financial statements.

 How does a fraud investigation use data to uncover and zero-in on fraud?
A fraud investigation uses data to uncover fraud by examining and understanding the data that has been provided via a subpoena or other means of legal compliance. Key elements to facilitate the fraud investigation:

– Review the data and the information to analyze prior to approaching the fraud investigation, analysis process and/or fraud examination.
– Strategize your approach to the fraud investigation.
– Understand the complexity of the data & verify the validity.
– Determine the necessary documents needed for review (financial statements, checks, deposits, withdrawals, tax returns, and wire transfer receipts)

The noted elements are a start for a concise and thorough analysis.

After you gather the data, how can it be analyzed?
Data can be analyzed in a variety of ways; however, it depends on the organization and their determining factor of what process will be most useful.  I would think that most organizations will apply the most effective approach in determining the direction of the analysis, querying data, confirming associations through link analysis, commodity flow analysis, strategic analysis or a more straight forward apparatus.
Henceforth, after the analysis process a much vital component is knowing how to interpret the data; and within the data mining process lies the identity of red flags, patterns and schemes that are associated within the fraud investigation.

 How can structured compared to unstructured data, such as social network information, be used to conduct a fraud or financial crime investigation?
I am not privy to unstructured data within the data analysis process. Most of the information connected with a financial crime investigation is structured. Structured data is consistent, reliable and it verifies the source. Knowing the source of the data is critical. However, with unstructured data, you would never know the unknown or invisible actors.  An example would be the virtual world-whose actors are known as “AVATARS” who use and provide information anonymously. Within the realm of financial investigations there is always a need for more information than less to support your findings and recommendations. Most prosecutors rely heavily on accurate analysis.

What would you consider the biggest obstacle when searching for data and analyzing it in a fraud or other financial crime investigation?
The biggest obstacle would be sifting through a plethora of documentation. Whether, you’ve been provided  the information in electronic format or paper, the most viable assertion is time.   I cannot speak for all professional entities; however, from a general perspective; what once took months and years-now takes a week or depending upon the magnitude of data-a few days at the most.  I applaud the technological industry for creating more sophisticated fraud analytic tools that provide the efficiency and speed.

Is there any human element that still remains important in this investigation process?
The human element that is so vital to the investigation process is having a keen eye of  the information attained and understanding the information.No one needs to reiterate   that the devil is in the details; a fraud investigation is approaching and the perpetrator must be exposed. The end result lends itself to the following—exposing the various schemes and uncovering the nefarious workings.

 (Hear Delena D. Spann speak on data analytics and the following topics at the ACFCS Financial Crime Conference & Exhibition, at the Marriott Marquis in New York on February 5-7, 2014:

– Definition of threat finance from the perspective of Secret Service and other US enforcement agencies
– Human trafficking as emerging threat, and criminal networks involved
Public-private information-sharing and cooperation on threat finance issues
Virtual currencies and virtual worlds, and their use by threat actors
– Fraud analytic tools used by Secret Service and other US law enforcement
Tools and techniques and their application in real-world cases
Data sources and types of data needed in order to utilize analytic tools in fraud cases

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