Five ways OSINT helps financial institutions to fight money laundering
Here are five key ways OSINT tools can help financial firms develop advanced strategies to fight money laundering criminals.
1. Reveal complex networks and ownership structures
Money launderers often use layered networks of offshore entities and shell companies to mask the true ultimate beneficial owner (UBO) of a company. Without technology, the manual process of trying to understand ownership and identify UBOs can be very time-consuming and inefficient – insights can even be missed altogether.
By drawing from public data sources available online, such as corporate registries and property ownership records, OSINT tools can provide investigators with a map of intricate corporate and criminal networks, helping them unmask UBOs. This means investigators can work more efficiently to uncover connections between people and companies that they otherwise might not have spotted. In turn, if firms can identify UBOs more accurately, they can gain a better understanding of risk exposure and improve their ability to meet regulatory requirements.
2. Enhance KYC and due diligence
Know your customer (KYC) and enhanced due diligence (EDD) are in place to prevent financial institutions from (often unknowingly) facilitating criminal activity, such as engaging with people or businesses involved in money laundering. Failing to complete these checks adequately can lead to banks receiving hefty fines and the reputational damage that comes with them.
Traditionally, the sheer volume and time sensitivity of KYC and EDD cases has meant the proper use of OSINT has often been limited. With AI, however, we can now automate a certain amount of the process to make OSINT-enhanced KYC and EDD a real possibility.
An AI agent, for example, could perform the “standard” steps in EDD checks, such as identifying company affiliations and performing an adverse media check (aka “negative news screening”). A human analyst could then review and enhance the results as necessary.
3. Spot new laundering typologies
External intelligence can help analysts to monitor developments, so that newer forms of money laundering create fewer compliance headaches for firms.
Some of the latest trends include money muling, where criminals harness channels like social media to recruit individuals to launder money through their bank accounts, and trade-based laundering, which allows bad actors to move funds across borders by exploiting international complexity.
OSINT helps identify these emerging patterns, enabling earlier intervention and minimizing enforcement risks.
4. Improve SAR quality and support law enforcement collaboration
When it comes to completing suspicious activity reports (SARs), many financial institutions rely on internal data, spending millions on transaction monitoring, for instance. While these investments are unquestionably necessary, external intelligence like OSINT is often neglected – despite it often being key to identifying bad actors and gaining a full picture of financial crime risk. Where it is used, FIs generally turn to limited, manual search methods like Google search. This can be due to lack of awareness of OSINT’s value or lack of skills and resources.
This results in patchy SARs lacking crucial information. When SARs are submitted to financial intelligence units, these agencies must try and fill in the gaps before passing them on again to law enforcement. It’s a reactive and fragmented system. OSINT, on the other hand, uncovers richer intelligence for more detailed SARs and helps institutions work proactively with law enforcement to disrupt financial crime.
5. Accelerate investigations with structured, automated analysis
If teams do not have OSINT platforms and the human skills to help them collect and sort information, then they are limited in their depth and speed of analysis.
OSINT platforms can gather and contextualize public data from across the surface, deep and dark web and then display it to investigators in a clear, structured manner. This reduces investigation times, boosts efficiency and investigative throughput, and allows firms to engage in business opportunities that might otherwise have been lost.
Taking on the fight
A reliance on internal databases and traditional AML processes is putting firms on the back foot in maintaining compliance and tackling money laundering. In July, Barclays was the recipient of a £42 million fine for failing to gather sufficient information and manage money laundering risks adequately.
OSINT tools can provide financial institutions with the external intelligence needed to transform their AML investigations and meet regulatory requirements in an efficient and timely manner.