NCC’s Maida: A regulator’s perspective on use of ICT in curbing financial crimes

I am delighted to discuss this topic which has become very important in our ecosystem: The Use of ICT in Curbing Financial Crimes.

Financial crimes refer to criminal activities that involve transactions, abuse, misuse, deception, or manipulation of financial systems for personal gain. They include a wide range of offenses such as Insider abuse, Money Laundering, Terrorism Financing, Proliferation Financing, embezzlement, Fraud (E-fraud, Banking, securities, corporate, Intellectual Property) etc. These crimes do not only have a huge economic and social impact but can also be linked to violent crimes that lead to loss of lives. These crimes threaten the integrity, trustworthiness, stability, security, safety, and future of an entity (Country, enterprise, individual).

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With the increasing adoption of digital technologies, the emergence of new technologies, and the often-transnational nature of these crimes, the scope of financial crimes has broadened and created further concerns.

1.  The Role of ICT in Curbing Financial Crimes

Robust information and communication technology (ICT) systems are critical for preventing/investigating financial crimes or mitigating the risks associated with virtual assets in financial markets. These systems facilitate compliance with established standards or regulations, they also provide a platform that allows the monitoring, tracing, and analyzing of digital transactions in real-time. ICT systems support secure data storage and encryption technologies, which are critical for safeguarding sensitive financial data.

Technological advancements have significantly aided crime prevention and law enforcement agency performance. Large datasets have been analyzed using advanced data analytics, artificial intelligence, and machine learning algorithms to look for trends that indicate criminal activity. Based on historical data and real-time intelligence, predictive police programs have arisen to foresee and prevent crimes. Digital forensics techniques have also proven useful in criminal investigations.

Historically, a variety of legacy technologies have been used to combat crime; however, in more recent times, novel computer softwares and hardwares are being utilized to monitor individual transactions and communications for suspicious activity. For instance, anti-money laundering (AML) software uses algorithms to detect anomalous patterns in financial transactions that could suggest money laundering or other illegal activity. Law enforcement agencies are increasingly employing communication monitoring softwares to follow and analyze digital communications, such as emails, social media interactions, and instant messaging, in order to discover potential threats or illegal behaviour. These technologies improve the ability to detect and prevent illegal digital activity.

Nigeria’s telecoms sector has grown significantly, resulting in massive amounts of data being generated on a daily basis. The advent of advanced data analytics and artificial intelligence (AI) provides a gateway to identify suspicious digital patterns indicative of crime. Through partnerships with financial institutions data can be filtered to identify these suspicious patterns and nip them in the bud. These technologies provide real-time transaction monitoring, allowing for a proactive approach to crime prevention.

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2.  Specific Applications of ICT in Curbing Financial Crimes

To combat financial crimes, innovative solutions such as blockchain, instant payments, artificial intelligence, machine learning, data analytics, regulatory technology solutions, and automated procedures are being deployed. The use of technological tools has made it significantly easier to deal with financial crime while building a long term strategy for combating it.

• Computer Security Incident Response Team (CSIRT): is a group of experts, (of which the Nigerian Communications Commission (NCC) is part of) that handles security incidents that can affect the operations of organisations.
• Digital forensics is a branch of forensic science that focuses on identifying, acquiring, processing, analysing, and reporting on data stored electronically. Electronic evidence is related to criminal activities and can be admitted in the process of prosecuting offenders in law courts.
• Verification of Biometrics: The incorporation of biometric authentication into financial transactions represents a big step forward in fraud prevention. The NCC makes certain that telecom carriers follow strict biometric registration rules, which improves the accuracy and security of customer data and in turn financial transactions.
• Palantir Technologies Solution: Law enforcement agencies and financial institutions have used Palantir’s data analytics platform to examine massive volumes of data for patterns indicative of financial crimes. It permits the integration of many data sources, allowing for more thorough investigations.
• Chainalysis Solution Case Study^[1]: Chainalysis specializes in blockchain analysis and provides tools for tracking cryptocurrency transactions. This platform supports law enforcement in tracing illicit blockchain activity such as money laundering, ransomware payments, and illegal transactions.

Concerning the significance of data security and privacy in the use of ICT for crime prevention, strong encryption and access controls ensure the security of critical information. Strict respect for data privacy standards, such as the GDPR (General Data Privacy Regulation) in the European Union and the (NDPA) Nigerian Data Protection Act, aids in the preservation of trust in the use of ICT solutions for crime prevention.

3. Potential concerns linked with the use of Information and Communication Technology to combat financial crime:

• Threats to Cybersecurity: As ICT systems get more complex, so do cybercriminal activities. Criminal actors take advantage of the inherent and emerging flaws identified in the ICT systems exploiting these flaws and causing harm.
• False Positives and Algorithmic Bias: Relying too much on automated systems for crime detection might result in false positives, in which innocent people or transactions are identified as suspects. Based on the data on which they are taught, algorithms may exhibit biases, potentially leading to biased conclusions.
• Human Capacity issue: Compliance officers continuously need to be kept abreast of emerging technologies and innovations, and develop requisite competences required to use these solutions.
• Regulatory Compliance: Navigating the complicated world of data protection and privacy rules as well as financial regulation compliance, can be difficult. It is critical to ensure that ICT solutions adhere to legal regulations.
• Technological Obsolescence: As technology advances, ICT solutions must be constantly updated and adapted in order to tackle evolving financial crimes.
• Funding issue: Due to the evolving nature of technologies, investing in ICT solutions can become a challenge especially where there is paucity of funds. Adequate funding is required to ensure that the latest solutions are deployed, up to date and remain relevant.

4. Other Areas of consideration: While ICT has transformed the fight against financial crime, there are still difficulties that must be addressed collaboratively:

• Inclusion and the Digital Divide

Access to ICT services is not equal for all parts of the population. The NCC is actively working to close the digital gap by pushing projects aimed at providing inexpensive and accessible ICT services to underprivileged communities. This inclusion is critical in ensuring that all citizens have the tools they need to conduct financial transactions safely.

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• Harmonization of Regulations

Collaboration among multiple regulatory authorities is critical for developing a united approach to addressing financial crime. The NCC actively collaborates with other regulatory authorities to share best practices, thereby guaranteeing a coordinated effort to protect Nigeria’s financial sector.

• Continuous Improvement and Adaptation

Criminals adapt quickly to new technologies and strategies. To keep ahead of developing dangers, the NCC understands the importance of ongoing innovation in ICT solutions. The Commission invests hugely in both Research and Development and in training its manpower on emerging innovations in the tech space. The NCC is also cultivating beneficial relationships with technology companies in this regard.

• Collaboration and International Cooperation

Financial Crimes often occur across territorial borders. Criminals take advantage of loopholes in rules and enforcement systems across jurisdictions. Collaboration between countries is thus critical for tracking down and apprehending these criminals. Some strategies for international collaboration and cooperation include:

• Sharing Intelligence and Expertise: Each country has its own set of insights, intelligence, data and skills when it comes to tackling various types of financial crime. By pooling these resources, we can gain a better grasp of emerging criminal techniques and methods.
• Leveraging Resources: Combating financial crimes requires enormous financial, technological, and human resources. Collaboration allows for the sharing of resources, making participating nations reduce the burdens of the huge associated cost while maintaining effective and efficient results.
• International conferences and gatherings where important players gather to debate and share best practices in preventing financial crime are crucial as well. The purpose of these fora are to provide a platform for worldwide law enforcement agencies, cybersecurity specialists, and financial institutions to discuss insights and tactics for countering cyber-enabled financial crimes.

5. Conclusion

ICT plays a critical role in combating financial crimes by enabling real-time surveillance, regulatory compliance, and secure data processing. It provides advanced analytics, AI, and machine learning to law enforcement organizations for better crime detection. Furthermore, hard technologies such as CCTV cameras and security systems supplement physical security measures.

However, as technology advances, new avenues for illegal conduct emerges. Cybercrime, deepfakes, and the exploitation of IoT devices all represent substantial concerns. It is critical to strike a balance between using ICT to prevent crime and protecting data privacy. Collaboration and international cooperation are required to effectively tackle financial crime. Financial crimes frequently cross borders, necessitating a collaborative effort by States to track down and capture culprits. Conferences/lectures such as the Realnews Magazines Lecture Series allow worldwide stakeholders to share knowledge and best practices.

Continued investment in ICT solutions, as well as a multidisciplinary and multi-stakeholder strategy, combining technology specialists, legal professionals, and legislators, are critical in keeping up with emerging criminal methods. Public education and understanding of internet safety are also important in limiting the risks linked with the spread of criminality via technology.

Dr. Aminu Maida, Executive Vice Chairman/CEO, Nigerian Communications Commission (NCC),  made this presentation at the 11^th Anniversary Lecture Series of RealNews Magazine in Lagos.

References

1. 17th Annual European AML & FC Conference 2023 | AMLP Forum. (n.d.). https://www.amlpforum.com/european-aml-financial-crime-conference/
2. Conferences on “financial crimes” 2023, 2024, 2025 | Conference Locate (Clocate). (n.d.). https://www.clocate.com/conferences-on+financial-crimes/eHMtMTc=/
3. Consequences of money laundering and financial crime | Office of Justice Programs. (n.d.). https://www.ojp.gov/ncjrs/virtual-library/abstracts/consequences-money-laundering-and-financial-crime
4. Dow Jones. (2023a, March 30). What is the Threat of Financial Crime? | Dow Jones. Dow Jones Professional. https://www.dowjones.com/professional/risk/glossary/financial-crime/threats/
5. Exadel Financial Services Team. (2023a, August 15). 5 Technologies for Financial Crime Prevention | ExADEL. Exadel. https://exadel.com/news/financial-crime-prevention/
6. (2023, September 19). International Conference On Financial Crime And Terrorism Financing 2023 | Feedzai. https://feedzai.com/event/international-conference-on-financial-crime-and-terrorism-financing-2023/
7. Financial Crime Summit. (n.
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10. (2023a, October 19). The impact of Financial crimes | Money laundering | KYC Hub. KYC Hub. https://www.kychub.com/blog/the-impact-of-financial-crimes/
11. Patel, S. (2021, June 29). Top Technology Trends in Combating Financial Crime. Eastnets. https://www.eastnets.com/newsroom/top-technology-trends-in-combating-financial-crime
12. (2022, August 5). Usefulness of selected technology in financial crime prevention worldwide 2019. https://www.statista.com/statistics/1091173/technology-help-financial-crime-prevention-global/
13. Writer, G. (2023, July 14). ICT key in curbing virtual assets abuse. Monitor. https://www.monitor.co.ug/uganda/oped/commentary/ict-key-in-curbing-virtual-assets-abuse-4303296

[1] https://www.chainalysis.com/