Financial Criminals Beware: Privitar and Collaborators are on the Job

By Charlie Cabot - August 06, 2019

Financial crime moves trillions of dollars a year and helps finance crimes like slavery and terrorism. Last week, Privitar and its collaborators proposed a new solution that applies privacy technology to chip away at the problem.

Privitar collaborated with Westpac, Citi, DataRobot, Oracle Labs, Bureau van Dijk, the Financial Conduct Authority (FCA) and Companies House as “Team Citadel” to win the FCA’s Anti-Money Laundering & Financial Crime Techsprint.  

The week-long techsprint had 10 teams, over 100 participants, and hundreds more executives, regulators, VCs, and academics attending the final presentations.  

The judges awarded Team Citadel’s solution first place because of its market readiness, sense of urgency, and sense of timeliness. The solution enabled a network of banks and Companies House to reconcile discrepancies while preserving privacy via de-identification. Privitar served as the team’s expert in privacy technology and focused on the de-identification system, which used homomorphic encryption to help de-identify consistently in a distributed architecture. 

With the solution, banks and Companies House can solve a pressing practical issue. Companies House maintains a list of companies in the UK and who the Ultimate Beneficial Owners (UBOs) are of each company. This data, due to being self-reported by companies, can contain errors. Each bank also keeps data on UBOs of companies that open business accounts with the bank, but this data may also be inaccurate, out of date, or may not match with Companies House. 

In January 2020, a new regulation will come into effect that requires banks to report on these UBO discrepancies with Companies House. This will lead to a mass of new discrepancy reports to Companies House, and also may cause hard-to-resolve inconsistencies: what if two banks are telling Companies House to update their information differently?

Team Citadel created a solution that automatically, and in a privacy-preserving way, identifies the discrepancies among banks, and handles the process of resolving discrepancies and reaching the best (most accurate) UBO registry possible. 

Not only does this ease the burden of complying with the new regulation, it also helps fight financial crime. UBO registries are key to fight shell companies and identify money laundering networks. Financial crime is a serious issue, with an estimated £1.6 trillion laundered annually and less than 1% of that frozen and seized. A more accurate UBO registry would help improve that number. 

We valued the opportunity to collaborate across industries to fight this problem. Westpac, Citi, DataRobot, Oracle Labs, Bureau van Dijk, Companies House and the FCA all came with different perspectives and that diversity of thought drove us toward a winning solution.

The success of our solution represents a larger trend: new capabilities enabled by privacy technologies. New privacy technology allows data sharing in ways that previously weren’t possible, and these possibilities allow us to make progress on important issues like financial crime that meaningfully affect society.

Charlie Cabot is Research Lead at Privitar