Do you understand your own data?
This is something to consider when undertaking Due Diligence efforts. While the data your core processing software provides to or receives from other third-party services may not be fully controlled by your financial institution, the quality of this data is vital to understanding gaps in your own AML and Financial Crimes monitoring regime. Knowing the gaps in your data will assist you in determining how to address these gaps; it may be possible to cover gaps in data by looking to native systems that are merely summarized in your core database.
For example, many core processors receive data from various providers that are then summarized as statement entries, without any rich detail as to what occurred. This is seen in various ways with Card, Wire, ACH, Bill Pay, Teller and Shared Branch (credit union network) and other network transactions, and greatly depends on the core processor. This gap in understanding can be covered by your financial institution’s insistence on data maps and an institution-wide data management strategy.
Best practices for implementing an institution-wide data management strategy starts with appointing a qualified professional to become a ‘data steward’ to gain an understanding of your financial institution’s various data streams, and then outline a data management strategy to keep all systems in sync. A good concept for data management is often called data governance, but there are a variety of concepts out there for your financial institution to emulate.
By treating the task of data management as essential to the organization’s overall health, the financial institution will have a better grasp of how it interacts with various systems, the gaps in the data exchanged, and the risks involved with summarized data in the risk management process.