Know Your Customer legislation requires financial institutions and other regulated companies to verify who their customers and business partners are to prevent money laundering and terrorism financing. To be compliant these companies simply check customers against available watch-lists of known criminals and terrorists. However, in order to properly assess their operational, regulatory and reputational risk, companies may want to go further in their due diligence by validating a customer’s identity and profile, understanding the customer’s business activity and identifying any existing adverse information.

Specialist companies in the fields of open source intelligence, KYC and regulatory compliance provide businesses with such a service.

Mongoose’s software application gives financial institutions, law firms, professional service providers, compliance officers, law enforcement and anybody else who is concerned with know-your-customer regulations and operational risk reduction access to a database of all global sanctions and enforcement watch-lists, tens of thousands of politically exposed persons and a media library that is enhanced with over 500,000 news media reports each day.

Mongoose is a Bermuda based company that is both intelligence and technology driven, says the firm’s Chairman Alan Tennant Johnson. “We are great believers in delivering not just information, but intelligence, because if you deliver too much information to an individual they cannot make a decision.”

He says Mongoose Global Intelligence aims to help clients from a compliance and commercial point of view. “Banks don’t want their staff to spend five hours on one application.”As a result the user interface of Mongoose’s service is very easy to use, requires no training and delivers the requested information quickly.

Users can obtain information on clients or prospective business partners in up to four increasingly more in-depth search stages. These searches check the available watch-lists of international law enforcement agencies, secret services and regulators as well as politically exposed persons, provide KYC and adverse media profiles and a passport verification system.

Johnson sees an increasing need for such KYC and compliance applications. “In our opinion there is a tsunami of regulation on its way for financial institutions.” Regulators have seen in the last two to three years what happens when banks are lightly regulated, he adds. “There can be no doubt that there is a massive change in the wind, which has only just begun.”

Johnson says the big challenge for open source intelligence service providers is to obtain relevant data to prevent false positives. False positives are cases where the compliance software flags a particular name, because the available information matches a name, but upon further analysis does not match the person.

False positives are the compliance industry’s biggest problem, says Johnson, because they increase the time and expense needed to review the suspected match.

Mongoose’s service aims to remove human error from the open source intelligence gathering process to reduce the number of false positives.

“At Mongoose we believe that the fewer people are involved in the process the better, because open source intelligence is data and if you are transferring data manually from one system to the other data corruption or pollution is inevitable,” says Johnson.

Instead of human input Mongoose relies on name matching algorithms, clustering and data analysis techniques to collect, structure and index data from over 2,000 news, intelligence and information sources.

Using data connecting algorithms and pre-defined, customised filter rules, the software automatically generates detailed portfolios and profiles.

These types of sophisticated algorithms are also used by law enforcement, secret service and government agencies, says Johnson.

The system is multilingual and supports more than 80 languages using over 40 character sets. The application is accessible over the Internet, but can also be integrated into a customer’s database, explains Johnson.

Mongoose will be charging a flat annual license fee per user, rather than break down the costs according to usage. “We don’t believe that this should be complicated,” says Johnson, who notes that businesses want to know the cost of a
service upfront.