Norkom Technologies has launched Watch List Smart Update, a new analytic process that drives down false positive rates in the detection of financial crime. According to the company, this results in cost and time savings for financial institutions without increasing the risks of missing an important match.

Tested against over 200 actual regulatory lists and a range of global sanctions and Politically Exposed Persons (PEP) lists, Norkom found that with Smart Update financial institutions can reduce match and alert volumes consistently by between 20–40% without risking any reduction in match quality.

This will further result in 50-90% reduction in daily update processing, 20-40% decrease in daily investigation effort, 20-40% reduction in daily false positives with no additional false negatives, the company claimed.

Norkom said that Smart Update monitors every single change in information provided in a watch list update or even potentially client data, reducing investigation effort without sacrificing match quality. It also eliminates the need for a financial institution to build large exclusion lists or ‘whitelists’, reducing investigator effort and minimising the threat that a high-risk individual could be removed from the screening process by accident.

In a recent Norkom study of global financial institutions, findings indicate that, while financial institutions are making an effort to reduce false positives, the majority report false positive rates of greater than 97%. This is in contrast to the 20% of respondents who desire a false positive ratio of 1 in 5, and a further 20% who aim for a ratio of between 1 in 5 and 1 in 10.

Edward Doyle, global head of payment solutions at Norkom, said: “We modelled the operation of a compliance investigation function over the last six years and successfully identified which list change patterns drove downstream investigation and which did not. By leveraging this information, we have created an approach which consistently removes between 20-40% of the human effort and between 50-90% of system processing involved in Watch List Management.”

Norkom Smart Update works with lists in Arabic and Korean scripts and a variety of Japanese and Chinese scripts.