Big data could mean more regulatory fines for smaller firms

The warning follows a string of high-profile cases of international banks facing multi-million pound fines for breaking anti-money laundering rules and sanctions violations - but is set to cascade down the financial services sector and affect even the smallest firms.

Big data platforms are increasingly being used by regulators to automate the process of scanning vast amounts of data for financial crime.

As a result, they are helping them to expose fraudulent and other illegal activities and the companies that are embroiled in them far more quickly.

While the fines faced by smaller financial services firms won’t be anywhere near as large as those faced by the major international banks, the reputational damage done to them, in relative terms, could be profound.

Freddie McMahon, Director, Strategy & Innovation, Anomaly42, commented:

“For UK financial services firms of all sizes, the rising intelligence and falling cost of Big Data analysis is proving a double-edged sword. On the one hand, Big Data platforms are being used in-house to uncover new market intelligence and customer insights. On the other hand, they are increasingly being used by financial regulators and legislators to expose financial crime and any firms mixed up in it, even unwittingly.

“Moving forward, compliance departments are going to have to be even more forensic in their KYC processes. To properly defend their firms' reputations and bottom lines in a newly transparent market, one-off, or infrequent, KYC will rarely be enough. A new form of KYC that is embedded and ongoing will have to become the modus operandi, or firms will suffer the consequences.”