A new era of commerce is here

Digital transactions grew 44% YOY to $861B USD in 2020 as growing consumer shifts toward digital commerce were significantly and rapidly accelerated by the COVID-19 pandemic, according to digitalcommerce360.com. An American Bankers Association Study found that mobile and online banking far exceed branch banking as the primary ways customers engage with their banks. Digital commerce is opening broader channels for businesses to interact with customers, extend branding and build revenue. It also exposes businesses to the potential of increased sanctions, money laundering and cybercrime challenges that transcend traditional approaches to compliance risk management. Businesses are struggling to effectively balance digital commerce opportunities with increasing digital risk and its associated rising compliance and regulatory requirements.

Digital transformation extracts a toll on effective compliance

The swift rise of digital commerce has left many compliance teams reeling as bad actors were empowered by increasingly-digital environments. Accelerated transactions, greater anonymity, and a borderless marketplace created opportunities for cybercriminals to exploit legacy compliance controls and escape detection for money laundering, sanctions evasion and fraud. The rapid increase in alerts was overwhelming and costly: according to the LexisNexis® Risk Solutions 2020 True Cost of Financial Crime Compliance Study, the annual cost of compliance rose 33% in the United States and Canada and 18% globally. The burdens resulting from a dramatic increase in false positives, manual reviews and extensive alert remediation demands have had a significant impact on productivity. Together, these vulnerabilities can impact the overall customer experience, contribute to revenue erosion, and increase exposure to sanctions enforcements and reputational damage.

Regulatory focus is rapidly shifting to digital commerce

Global regulatory focus is following the expansion of digital commerce. Sanctions requirements are evolving to include use of IP and location intelligence that may be collected by an organization’s website or app as a sanctions control. In addition, focus is shifting toward ecommerce and non-financial institutions. Recent OFAC settlements include a notable ecommerce retailer, a software company and a digital currency payment processor who all transacted with entities or individuals in sanctioned regions even though they had access to IP address or location information that could have been used to control for the risk. The forthcoming Anti-Money Laundering Act of 2020 (AMLA) regulations signal increased reporting requirements for digital identity and location information and include guidance around utilizing automation, machine learning and other technology-driven efficiencies to focus compliance resources on high-risk transactions.

Legacy solutions can allow risk to enter digital ecosystems

Sanctions compliance has reached a critical inflection point. Traditional compliance controls are not designed to effectively detect risk across the multiple customer touchpoints within a digital ecosystem. Threat vectors fueled by the combination of readily-available dark web identity data and complex technologies like VPNs, proxies and TOR browsers require a level real-time risk visibility and response that retroactive analysis can’t provide. Digital commerce demands more dynamic, risk-responsive compliance tools that recognize trusted customers and detect potentially suspicious behaviors in milliseconds.

Start better identifying digital sanctions risk with digital identity intelligence

LexisNexis® Financial Crime Digital Intelligence is built to efficiently tackle the new risk realities of the digital era by harnessing the power of crowd-sourced digital identity and location intelligence for financial crime compliance. This solution includes a purpose-built financial crime platform module on LexisNexis® ThreatMetrix® that synthesizes digital identity intelligence, device and location data, behavior patterns, and LexisNexis® WorldCompliance™ sanctions data in near-real time to enable compliance teams to:

  • Detect true sanctions risk with confidence
  • Drive efficiencies and decisioning consistency across the customer journey
  • Speed investigations and meet emerging regulatory requirements
  • Eliminate unnecessary disruptions to trusted customer interactions

Financial Crime Digital Intelligence prioritizes the customer experience with a privacy-by-design architecture that supports separate but simultaneous Financial Crime Compliance (FCC) and Fraud policy execution. It is also tailored to support specific financial crime regulatory requirements with access to integrated LexisNexis® Risk Solutions financial crime and investigation products, extended storage capacity (up to 10 years) and features such as defined financial crime user groups and user perspectives.

Financial Crime Digital Intelligence also includes two new solutions to target the growing threats of digital sanctions evasion:

  • Sanctions Location Risk uses the power of up to 10 different location signals gathered from each transaction across the global ThreatMetrix® network to immediately detect and report potential location-based sanctions risk associated with an identity in an online transaction – even when that entity may be attempting to obscure its true location with technology such as VPN or proxy.
  • Sanctions List Match allows customers to automate near-real time call for a match to a sanctions list to drive increased efficiencies and improved customer experience in digital channels.

Capture digital opportunities while controlling for new digital sanctions risks

Does your compliance strategy effectively reflect today’s sanctions risk realities and support digital commerce revenue realization? Is every touchpoint designed to be effortless and engaging for your most trusted customers? LexisNexis® Financial Crime Digital Intelligence delivers transformative efficiencies that enable compliance teams to meet the opportunities and demands of digital acceleration while effectively mitigating the potential of sanctions risks.

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