Luanda Leaks, Consultancies, and Conflicts of Interest

Reflections on Fixing a Flawed System

The revelations surrounding the conduct and likely criminal activity of Isabel dos Santos has brought to the fore familiar issues in the financial crime space. The reporting conducted by the International Consortium of Investigative Journalists (ICIJ) paints a picture we have seen before: the child of an autocrat loots their country for billions and enjoys the proceeds in the European and American markets, similar to Guinea, Kazakhstan, the Congo, or any number of other countries (New York Times, CNN, Quartz).

The case of the Luanda Leaks is simply further evidence of a systemic flaw present within the global financial network: the lack of transparency and consistency in financial crime risk evaluations. This has left financial institutions (FI) to seek external validation from consultancies in order to provide confidence to counterparties. The same consultancies who occasionally find themselves advising clients on questionable financial dealings.

The only way to change outcomes and effectively prevent financial crime is to change methods; technology offers solutions to this conflict.

Conflicted risk consultants?

That said, whether banks carry out counterparty due diligence themselves or ask a consultancies to do it, these FIs are left largely in the dark with regards to the actual on-the-ground controls of their counterparties.

What is required is technology capable of processing data systematically to identify otherwise invisible trends and patterns indicative of criminal activity, such as that allegedly carried out by dos Santos.

Using automation to overcome bias and conflicts of interest

Financial crime is a multi-metric phenomenon, and requires comprehensive data analysis for systemic identification.

Further, it must be complimented by a means of openly sharing counterparty risk scores across FIs in a standardised format.

Such technology exists

Elucidate is a financial crime risk management company enabling banks to benchmark and price FinCrime risk through risk assessment, data analysis and scoring.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store