Collective Intelligence - Financial Crime Solution in the Philippines

MANILA, PHILIPPINES - Despite the government’s increased efforts to prevent money laundering, the Philippines still remains on the Financial Action Task Force (FATF) gray list. Citing technical compliance deficiencies with its anti-money laundering, terrorist financing, and proliferation of financing programs, the FATF also shared that it needs to improve overall financial intelligence.

In the second installment of the webinar series called Compliant Conversations, Tookitaki AML experts and legal pundits talked about how fintech companies can comply with the Anti-Money Laundering Act (AMLA) in the Philippines. As digitisation continues to escalate in the financial sector, the webinar shed light on the potential impact of collective intelligence on the industry. 

“From years of experience, the most effective and efficient way to detect money laundering is to compare customer transactions and study irregularities in established patterns,” shared Enrique V. Dela Cruz, Jr., Senior Partner and compliance attorney at DivinaLaw. “If these transactions were actually consolidated into a shared database that can be accessed by financial institutions, it could actually equip the public and private sector to monitor fraudulent transactions better.” 

While consolidating and comparing customer transactions could be beneficial to tackling financial crime in the country, this could also be a challenge as most financial institutions do not have complete customer and depositor records. In fact, there are still local banks that are manually monitoring transactions and are still in the process of digitizing records as pushed by the Bangko Sentral ng Pilipinas (BSP) and Anti-Money Laundering Council (AMLC).

This is the advantage that fintech companies have over traditional financial institutions. With technology already integrated with its business model, fintech companies can seamlessly adapt new innovations encouraged by the government, beginning with automated transaction monitoring. 

Akshara Karanjekar, an AML expert at Tookitaki, added that “An effective automated transaction monitoring system should enable fintech companies to detect and assess whether a customer’s transaction poses suspicion considering their respective backgrounds and profiles. It should also facilitate holistic reviews of customer transactions over a short period in order to monitor and identify any unusual or suspicious streams.”

However, as newer forms of payment arise, fintech companies also need to understand that fraudulent transactions are getting harder to detect. While automated transaction monitoring is integral to improving financial intelligence, being able to compare these transactions against a database of fraudulent activities is crucial to actually spotting money laundering.

“With fraudulent activities increasingly driven by the pickup of digitisation, more companies are looking for emerging AML solutions that are agile and scalable”, shared Abhishek Chatterjee, Founder & CEO ofTookitaki. “Fintech companies have the agility to lead the use of digitally transformed AML compliance programs that will promote financial intelligence in the country.”

Tookitaki pioneered The AFC Ecosystem,  a first-of-its-kind community-driven initiative that helps remove the information vacuum created by siloed operations. he Anti-Financial Crime (AFC) Ecosystem includes our network of experts and provides a platform for the experts to create a knowledge-base to share financial crime scenarios. This collective intelligence is the ability of a large group of AFC experts to pool their knowledge, data, and skills in order to tackle complex problems related to financial crime and pursue innovative ideas.

The AFC ecosystem is a game changer since it helps remove the information vacuum created by siloed operations. It also provides a platform where financial crime scenarios are shared across an ecosystem through a privacy-protected framework. Underpinning is a valued partnership program that is mutually beneficial for all stakeholders engaged in reducing the laundering of illicit proceeds of crime.

Financial crime can’t be fought in silos. In order to effectively tackle crime, there should be a collaborative effort within the industry. The AFC Ecosystem enables financial institutions, risk advisers, legal firms, consultancies, and AFC experts to share their domain knowledge related to financial crime for the benefit of society,” added Chatterjee.