Wednesday, February 11, 2009

Using Data Quality Tools to Look for Bad Guys

Most companies do not want to do business with bad guys - those on the FBI most wanted or international terrorists. Here in Boston, we’re always on the lookout for James “Whitey” Bulger, a notorious mobster who has been on the FBI most wanted list for years. But how do you really know of you’re doing business with bad guys if you don’t pay attention to data quality?
If you work for a financial organization, you may be mandated by your country's government to avoid doing business with the bad guys. The mandates have to do with the lists of terrorists offered by the European Union, Australia, Canada and the United States. For example, in the U.S., the US Treasury Department publishes a list of terrorists and narcotics traffickers. These individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and companies in the U.S. are discouraged from dealing with them by the Office of Foreign Asset Control (OFAC). In the U.K., the Bank of England maintains a separate list but with similar restrictions.
If your company fails to identify and block a bad guy (like Whitey here), there could be real world consequences such as an enforcement action against your bank or company, and negative publicity. On the other hand, many cases may be a "false positive," where the name is similar to a bad guy's name, but the rest of the information provided by the applicant does not match the SDN list. The false positives can make for poor customer relationships.
If you have to chase bad guys in your data, you need to make data quality a prerequisite. Data quality tools can help you both correctly identify foreign nationals on the SDN list and lower the number of false positives. If the data coming into your system is standardized and has all of the required information as mandated by your governance program, matching technologies and more easily and more automatically identify SDNs, and avoid those false positives.


Anonymous said...

It's 2009. Banks have been under OFAC regulations for decades and the broader Patriot Act regulations have been in place several years now. Is there something a data quality solution can provide above and beyond what companies must already have in place? And isn't retrofitting a current OFAC process too costly given the state of the financial industry/economy? C

Steve Sarsfield said...

Let's put it this way, if you're happy with your OFAC compliance, meaning: 1) you're sure you're not dealing with the bad guys, and; 2) you don't have false positives causing customer dissatisfaction, then there's no need to change what you're doing. But it's really the more powerful standardization and matching engines included with data quality tools that will help you slow down your false positives and track down the bad guys.

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