Norkom Technologies (Boston) launched Norkom Watch List Smart Update, a new analytic process that drives down false positive rates in the detection of financial crime. The company claims the product can lead to cost and time savings for financial institutions without increasing the risks of missing an important match. Norkom tested its process against more than 200 actual regulatory lists and a range of global sanctions and Politically Exposed Persons (PEP) lists, spanning a six year period from 2004 to 2009. It found that with Smart Update, financial institutions can reduce match and alert volumes consistently by between 20 percent to 40 percent without risking any reduction in match quality. This amounts to a 50 percent to 90 percent reduction in daily update processing; a 20 percent to 40 percent decrease in daily investigation effort; and a 20 percent to 40 percent reduction in daily false positives with no additional false negatives.
Norkom Smart Update is designed to monitor all changes in information provided in a watch list update, 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 minimizing the threat that a high-risk individual could be removed from the screening process by accident.
Watch List Smart Update works with lists in Arabic and Korean scripts and a variety of Japanese and Chinese scripts. In building the product, Norkom modeled the operation of a compliance investigation function over the last six years and identified which list change patterns drove downstream investigation and which did not. The company claims that in doing so, it has eliminated up to 40 percent of the human effort and between 50 percent to 90 percent of system processing involved in watch list management.