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The
company hopes the system can make it quicker and cheaper for
banks and other financial institutions to sift through the
deluge of alerts flagging possible cases of money laundering
generated by bank transaction monitoring systems.
The process of investigating alerts, which can potentially be as
many as 300,000 a month, is currently manual, making it costly
and labour intensive, Nasdaq said. Banks usually cast a wide net
to catch illicit activity so the vast majority of these alerts
ends up being false.
"Banks are worried about that wide net because of the cost,"
said Darren Innes, head of AML technology, sell-side and
buy-side solutions at Nasdaq. "We are giving them the
opportunity to reduce that cost." Banks have seen the number of
alerts surge during COVID-19 as illicit activity attempts
increased, Innes said.
While Nasdaq has long been a provider of market technology,
including trade surveillance systems, the launch marks the
exchange group's foray into the AML sector.
It comes as banks and other financial firms look to automate
many of their more expensive and complex back office processes
to reduce costs and increase efficiency.
"We have been thinking long and hard on how we want to go beyond
trade surveillance," said Valerie Bannert-Thurner, senior vice
president and head of sell-side and buy-side solutions, market
technology at Nasdaq. "It's a product launch but strategically
it's a launch beyond trade surveillance. We have great ambitions
in the space."
Nasdaq's new system, which was built with UK-based startup
Caspian, collates the data needed to conduct an AML
investigation and analyses the information using software that
replicates human decision making, the company said.
(Reporting by Anna Irrera; editing by David Evans)
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