Thursday, March 27, 2008


TECHNOLOGY REVIEW If there is a lesson from former New York governor Eliot Spitzer's scandal-driven fall (aside from the most obvious one), it is this: banks are paying attention to even the smallest of your transactions. . . In Spitzer's case, according to newspaper reports, it was three wire transfers amounting to just $5,000 apiece that set alarm bells ringing. It helped that he was a prominent political figure. But even the most mundane activities of ordinary citizens are given the same initial scrutiny.

"All the big banks have these software systems," says Pete Balint, a cofounder of the Dominion Advisory Group, which helps banks develop strategies for combating money laundering and fraud. "Depending on their volume, they might have thousands of alerts a month."

Most of the systems follow fairly simple rules, looking for anomalies that trigger heightened scrutiny. Software company Metavante says that its software, for example, contains more than 70 "best-practice" rules, covering a wide variety of transaction types ranging from cash deposits to insurance purchases. . .

The simplest way to identify the unexpected is by contrast to the routine. A person who deposits just two paychecks a month for two years might be flagged if he suddenly deposits six large checks in two weeks, for example. . .

The most sophisticated software packages can sort people or accounts into several categories at once: a single customer might be compared to other schoolteachers; to people who bank mostly at a single regional branch; and to people who have stable, pension-based monthly incomes, for example.

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