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Data Driven Tech to Fight Financial Crime


Financial crime, such as money laundering and fraud, is a major issue for businesses and government agencies worldwide. An estimated $800 billion, or 5% of the global GDP, is laundered each year. Crimes, ranging from money laundering to fraud to embezzlement, can frequently go untraced without the aid of forensic accountants working diligently to pour through financial data to uncover wrongdoings. Forensic accountants now use data driven tech to fight financial crime.


In recent years, technology has played an increasingly important role in the fight against criminal financial activity, with data-driven approaches becoming a key tool for identifying and preventing wrongdoing.


Types of Data Driven Technology

One of the newest data-driven techniques for fighting financial crime is the use of machine learning (ML) algorithms. These algorithms can analyze large amounts of data and identify patterns that may indicate illegal activity. For example, an ML algorithm can be trained to detect unusual patterns of transactions, such as large transfers of money to known money launderers or shell companies. This can help financial institutions and government agencies identify and prevent money laundering before it occurs.


Another data-driven technology that is being used to fight financial crime is network analysis. Network analysis looks for patterns in financial activities that might be indicative of suspicious activity, such as frequent transfers between accounts, common addresses, and phone numbers. For instance, network analysis can be used to identify clusters of accounts that are often used to launder funds. It can also be used to detect when multiple accounts are being used by the same person to evade regulatory or legal scrutiny. By analyzing these patterns, law enforcement and financial institutions can identify connections between individuals and organizations that may be involved in criminal activities.


It's common for investigators to focus on bank account transactions from bank statements or data extractions, but there is wealth of knowledge and signal that investigators gather from an accounting system as well. Since most business owners utilize bank feeds that connect the bank account to the accounting system, the investigator can look at not only the cash transactions coming into the accounting system, but how the user categorized it, and if they made changes to the transaction after its original posting.


The data inside the accounting system can be a goldmine to investigators, and one data-driven technique to analyze it is using data visualization. By visualizing large amounts of data, investigators can quickly identify patterns and trends that may indicate illegal activity. For example, a data visualization tool, including the data visualizations found in the Strongbox output, can be used to identify irregular spikes or dips in cash flow or a business’s financial position. This can help investigators quickly identify and prioritize leads for further investigation.


Why Data Driven Technology

Data driven technology is becoming an increasingly important tool in the fight against financial crime. From machine learning algorithms and network analysis to data visualization, these technologies are helping financial institutions, government agencies, and law enforcement agencies to identify and prevent illegal activity more effectively. As a result, forensic accountants need to be aware of both what technologies are being used and how to incorporate them into their investigations.


Additionally, data driven technology is becoming increasingly important for forensic accountants because it helps to analyze large amounts of financial data more efficiently and effectively. This can help to identify potential cases of fraud or financial crime more quickly, and with greater accuracy, than traditional methods.


Rather than rely on data sampling, complete transaction-level and summary financials can be used in real-time, uncovering patterns and relationships that might not be immediately obvious from running individual reports. By using the full financials, forensic accountants are able to track where money is coming from and going to in much greater detail, allowing them to identify suspicious activity much more easily. This can help forensic accountants to identify potential cases of fraud or financial crime faster and with increased accuracy.


In addition, data driven technology can also help forensic accountants to automate routine tasks, such as data extraction, freeing up time for more complex and value-added tasks. Instead of relying on native accounting system reports being sent back and forth by a reluctant business, forensic accountants can use Strongbox to extract all the financial information in one click. This technology can help reduce the time it takes to complete a forensic audit, as well as improve accuracy and reduce costs. It also allows forensic accountants to focus more on analysis and interpretation instead of data extraction. And with consistent output templates, Strongbox users save time on data manipulation as well.


Save Your Practice Hours with Strongbox

Technology will never replace the need for talented forensic investigators. However, being able to advise your clients on the tools that can help prevent fraud and utilizing time-saving tools that enable more thorough investigations will significantly increase the value your team can provide your clients. Strongbox is one such tool.


Entrusted by the majority of the Top 25 firms, Strongbox integrates with the most used accounting systems and ERPs, from QuickBooks Online to Netsuite. With SOC 2 and GDPR compliance, customer data is kept safe and secure from beginning to end.


Contact our team today to find out how your firm can save hours in the data extraction and formatting process of your forensic accounting engagements.

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