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GOST Performance Milestone Finally Makes Perpetual KYC Possible for Enterprise Businesses and Financial Institutions

Giant Oak, Inc., the only behavioral science-led machine learning company in the Know Your Customer (KYC) space, announced that in enterprise-wide production implementations, GOST exceeded performance metrics related to platform scale, speed, and accuracy. Enabled by a strategic investment and a multi-year, multi-million dollar customer contract from one of the largest financial institutions in the world, and with continued participation from lead investor Edison Partners, the Giant Oak team expanded GOST’s industry-leading capabilities to meet the growing demand of Perpetual KYC (pKYC) across customers, counterparties, correspondent relationships, and third-party relationships.

“For years, we’ve had a privacy-preserving technology that uses cutting-edge machine learning to alert on high-risk actors,” said Giant Oak founder and CEO, Gary M. Shiffman. “The challenge we accepted was identifying those risks at a massive and dependable scale for the largest enterprise institutions. As of today, we’ve met and exceeded that challenge, hitting a milestone of 1 analyst per 10 million entities screened in a continuous monitoring workflow – meaning near real-time monitoring across publicly available media and more. We are helping our clients discover bad actors at a higher accuracy rate and with less noise than the enterprise previously could using incumbent screening and watchlist solutions.”

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GOST’s most recent performance milestone was validated with over 6 months of production data on tens of millions of entities in continuous monitoring. It is the first and only reported instance of a solution leveraging unstructured web data instead of curated lists and structured databases to provide alerts in real-time on full populations, not just risk-based segments, without manual first-line review. This opens up possibilities for regulators and risk executives to transform the scope of AML operations and risk management, both by consistently discovering previously missed risks and by increasing the frequency and coverage of screening they can demand of banks and vendors. Through this enterprise test, GOST simultaneously identified and remediated a gaping vulnerability in enterprise risk management.

GOST’s expanded capability also enables financial institutions and fintech companies of any size to immediately respond to the U.S. Treasury Department’s FinCEN AML/CFT Priorities. Giant Oak planned for four trends, which guided the allocation of the most recent strategic investment:

  1. Entity Resolution:  The single largest challenge to securing the global economy – to include identifying financial crime and maintaining trust in financial institutions and FinTechs – comes from the unsolved challenge of resolving online identities. GOST now stands on the commanding heights of entity resolution across unstructured text.
  2. Supply Chain and Fintechs:  Growing collaboration between regulated banks and their increasing relationships with the fintech marketplace, introduces new complexities in compliance. GOST working at enterprise scale and speed provides confidence in coverage across the entirety of the risk landscape.
  3. ThirdParty Risks:  Financial Institutions face increasing regulatory focus and pressures on indirect relationships. U.S. Federal banking agencies are expected to increase their enforcement actions against banks who do not take adequate steps to measure risks in parties such as correspondent banking customers and customers’ beneficial owners.
  4. Contracting Budgets:  Understanding talk of economic recession might cause our customers – banks, fintechs, and government agencies – to cut budgets for non-revenue generating functions such as financial crimes compliance, GOST needed to leverage the utility-like nature of AI and Transfer learning to reduce operating costs significantly while also increasing effectiveness at identifying important risks.
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“The team delivered,” said Harsh Pandya, president of Giant Oak. “The backlog is dead; continuous monitoring and perpetual KYC are here. As of today, we have independent validation that GOST accomplishes more risk discovery – 80% more – at lower false positive rates – nearly half the alerts. That means, courtesy of GOST, our clients are finding perpetrators of violent crimes, money laundering, t********, and human trafficking that were previously and considered ‘low-risk’. There is no reason customer risk-segmentation to reduce operational workloads should give privileges and protections to bad actors. We’ve solved the paradox.” The risk-segmentation process determines the depth of initial due diligence and interval at which due diligence is refreshed on customer relationships, which can be months or years in practice.

“I’m grateful to our largest institutional customer for all that we’ve learned about earning trust and deploying this machine learning solution at scale,” continued Pandya. “We’ve learned that the compliance industry moves with great caution, and only after careful diligence. I am now sure that, regardless of size, GOST will identify previously unknown risks to financial institutions and threats to the public we all serve. GOST puts better information in the hands of those charged with public safety and security; this is the reason we do what we do,” Pandya added.

“Giant Oak’s mission is to empower those on the front lines of financial crime discovery and compliance,” said Jon Elvin, Giant Oak’s Chief Commercial Officer of Giant Oak and formerly BSA/AML and Chief Compliance Officer at one of the top ten largest U.S. banks. GOST makes these people superheroes by massively improving the effectiveness of their valuable time and minimizing the morale-killing false positives. I cannot see the future of technology, but I can now see how much better banks can do with adverse media risk discovery using GOST for onboarding and pKYC. The choice is simple; since AML and anti-fraud executives cannot avoid the growing screening burden, they can either ride the wave of increasing costs of compliance and fraud loses or adopt GOST. The news of this scale milestone in production will spread quickly. It will begin to drive decision-making confidence and trust at other institutions that it is okay to take similar journeys – and in fact, they must,” concluded Elvin.

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[To share your insights with us, please write to sghosh@martechseries.com]

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