We talk to Dow Jones about the work it does in collating, screening and digesting a vast haul of daily news so that banks and others can keep abreast of risks, comply with rules, and safeguard their businesses and clients.
At a time when bankers and advisors must have accurate data on a prospective client’s source of wealth, the kind of information firepower that a business such as Dow Jones brings carries weight.
There are many regulatory requirements that make timely and precise data more important than ever. The US Corporate Transparency Act, for example, took force from the start of January, while the European Union, UK, Switzerland, and other jurisdictions have tightened screws on money laundering and illicit financial flows in recent years. For financial professionals seeking to keep their businesses compliant, doing the job requires data – lots of data.
Bankers must scrutinize not just companies and individuals but, for example, the securities issued by companies – often on multiple exchanges.
“There is a trend of investment screening where organizations are cognizant of national security-linked investment exposure,” Joel Lange (pictured), general manager, Dow Jones Risk & Research, told this publication in a call. His role covers two business units, Risk & Compliance, and Factiva.
The patterns of what sort of information is at play change constantly. When the Risk & Compliance business first started out at Dow Jones, it tended to focus on individuals such as politically exposed persons, and staff at Swiss banks, in the early Noughties for example. In the past decade, however, the firm has moved toward looking at the third parties that work with corporates and banks, he said. “That is all higher risk data,” Lange said.
Dow Jones works with the professional services firm Dun & Bradstreet to drill into the details of companies.
And the firm has been prepared to spend to acquire analytical resources when required. At the start of 2023, for example, Dow Jones made an equity investment in Ripjar, a data intelligence software business. That firm helps Dow Jones to distil the vast trove of news information in its Factiva service that is used by bankers to track stories about individuals.
That raised the inevitable question about how AI fits into the picture.
“Complexity [of data] is an area where there are lots of manual tasks and some of them can be automated,” Lange said. Certain aspects of due diligence reports can be streamlined via AI, he said.
This news service asked Lange how AI can be put to use.
“With the regulatory landscape in constant flux and millions of individuals and entities to screen against, a human simply cannot work fast enough to process the volume of information required to protect their company from legal, ethical and reputational risks. That’s why organizations are increasingly deploying advanced AI technologies to analyze large volumes of both structured and unstructured data to detect patterns indicative of financial crime,” he said. “This ability to extract critical insights and red flags from unstructured text is arguably one of the biggest advantages of implementing AI into a compliance program.”
“Adverse media screening can help organizations get ahead of new and emerging risks as they surface in the media. Indeed, industry bodies around the world, including the Wolfsberg Group and the Monetary Authority of Singapore, are increasingly recommending the use of negative news in the customer due diligence process,” Lange continued.
Sanctions have added to the mix, he said.
“Multiple rounds of sanctions targeting Russian entities and oligarchs since the onset of the war in Ukraine have highlighted the need for banks and corporations to not only monitor adverse media on customers and third parties, but to also act upon the results. Machine Learning (ML) and Natural Language Processing (NLP) can automate that process, enabling compliance officers to continuously screen and monitor the thousands of news articles that are published every day in multiple scripts and languages,” Lange said.
Lange has been at Dow Jones since September 2021. Before that, he was managing director, risk and compliance, at ION in the UK, and then at Dow Jones again for just over six years in various roles involving risk and sanctions compliance and, prior to this, at Accuity.
The Dow Jones business model has not only developed resources to process reams of news stories to unearth valuable information for compliance professionals, for example, but these resources are used for its own journalism outlets, such as The Wall Street Journal and The Times of London, giving it important news gathering capabilities in the first place.