Arachnys simplifying increasingly complex regulatory tasks

Arachnys fills a void left open by other compliance vendors, president Ed Sander said. A provider of Robotic Process Automation (RPA) for KYC, AML and EDD (enhanced due diligence), the Arachnys D3 platform can turn these important tasks into competitive advantages through the use of smart workflows, intelligent auditing and automated reporting to deliver efficiency at every stage in a process.

Simplifying complex processes becomes more important in an environment where regulators are requesting more from companies, Mr. Sander said. EDD procedures during the onboarding process must be extremely strict.

Credit CEO David Buxton’s past experience with contributing to Arachnys’ unique position in the space, Mr. Sander said. A former investigator who advised banks, law firms, and multinationals on corruption and other risks, Mr. Buxton was good at finding information to help a company decide, for example, if they should partner with another firm. The information he uncovered was useful, but as it accumulates over time, how do you organize it?

“He found it was hard to use and reuse that information,” Mr. Sander explained. “If it was forgotten it would be hard to find but could be needed again.”

The cloud provides the answer. In it is housed an online library of relevant information and assets that could be tagged for easy retrieval should investigative teams need it in the future. More and more companies are using such technology, Mr. Sander said.

That support level is crucial in a global economy where internationally operating financial institutions have to meet the unique regulatory requirements of every country in which they operate, Mr. Sander said. Their growing number of investigators are spread across the globe and they need to be able to close case quickly and effectively.

Ed Sander

“It helps to be able to share information that is relevant for specific types of investigations,” Mr. Sander said.

Want to see clear evidence of the effect increasing regulation is having on financial institutions? Many large institutions have seen their compliance investigation teams increase ten-fold in recent years, he added.

This increased regulatory attention has caused some financial institutions to exit different geographies and entire service sectors as they weigh the profitability against increased compliance costs. That contributed to a global decline in the number of correspondent banking relationships, which are down 38 per cent from 2017.

Enter intermediaries, whose service deliveries are on the rise, Mr. Sander said. Fintech platforms are making it easier (and cheaper) to send smaller payment amounts. That is fine when the fish are small, but once the upstarts head to bigger territory, the incumbents will feel threatened.

Those legacy players must also contend with outdated compliance solutions. That has created an opportunity for providers of lightweight, cloud-focused KYC and onboarding services.

RPA brings a strong search engine capability to KYC, AML and EDD, Mr. Sander said. Bots search relevant accounts for relevant content, which could reach hundreds of pieces in more complex cases.

“RPA mimics search patterns and adds virtual analyst teams that automate information search and retrieval,” he explained. “As more investigations are processed the system learns which information sources are used and how they are tagged and categorized for use in specific criminal investigations.”

Before such technology, whenever a skilled investigator left a company they took valuable information and experience with them. Now that information can be retained.

Arachnys also forms key partnerships with companies that can help increase the effectiveness of its service delivery, Mr. Sander said, citing Quantexa as an example. Quantexa’s domain expertise helps clients take “laser-focused rifle shots” by allowing them to quickly and accurately determine important relationships between millions of different entities.

“Quantexa helps financial institutions determine which 10,000 out of one million records may be important,” Mr. Sander said.

Combine that with Arachnys’ ability to maintain and quickly retrieve important information and you check many important boxes, he added.

“Some providers give you a black box. Others offer a cloud-based, machine learning algorithm.

“The new guard like Arachnys and Quantexa believe you stop financial crime not by looking at whats already happened, but by helping financial institutions look for networks of bad actors before they’ve done anything.”