Case study: How DBS combats financial crime
DBS is a leading financial services group headquartered in Singapore, operating across 18 markets. DBS is committed to conducting business in accordance with all applicable laws, rules, regulations and the highest ethical standards Tweet This!, investing heavily in its data analytics and systems capability to help prevent financial crime and the social harm that it brings.
This case study is based on the 2019 Sustainability Report by DBS published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Preventing financial crime activities, not least through a robust control framework, is one of many first steps in helping DBS confront multiple societal issues. In order to combat financial crime DBS took action to:
- launch an in-house intelligent case management system
- use network link analysis
- implement machine learning
- introduce a Dynamic Review Assessment process
- provide training
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With this case study you will see:
- Which are the most important impacts (material issues) DBS has identified;
- How DBS proceeded with stakeholder engagement, and
- What actions were taken by DBS to combat financial crime
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What are the material issues the company has identified?
In its 2019 Sustainability Report DBS identified a range of material issues, such as cyber security, financial inclusion, talent management and retention, responsible financing, climate change. Among these, combatting financial crime stands out as a key material issue for DBS.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups DBS engages with:
To identify and prioritise material topics DBS engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Customers | · Focus group study to evaluate interest of retail customers for sustainable products · Annual Future Leaders Programme to raise awareness of DBS’ sustainability strategy and commitment · Seminars on emerging issues including environmental sustainability, women and children in Asia, and ageing populations · Singapore Creator Awards 2019 to promote uniquely local designs and ideas to inspire” Recycle more, Waste less” · Sustainability disclosures on DBS’s websites |
| Shareholders | · Meetings with investors to understand their expectations on Sustainability Reporting and green bond financing · Ongoing conversations with major ESG rating agencies |
| Employees | · “DBS Open” – quarterly group-wide townhalls hosted by CEO Piyush Gupta · “Tell Piyush” – an online forum where employees can freely share their feedback and post questions to the CEO · Regular department townhalls and events held by senior management include discussion on sustainability-related initiatives · Annual employee engagement and sustainability awareness survey · Employee sustainability focus groups · Sustainability intranet portal · Sustainability interest groups – volunteers lead initiatives within DBS · Annual group leadership conference for senior management |
| Society
| · Meetings with social enterprises (SEs) to discuss their progress, share experiences, and understand their specific challenges · Community partners/ social service agencies were engaged to understand concerns from ground up, such as the challenges DBS’s beneficiaries – the elderly, underprivileged and disadvantaged – face and areas where DBS can effectively support them · Connecting to government bodies and associations including Singapore Centre for Social Enterprise, Community Chest as well as networks such as Asian Venture and Philanthropy Network and UN Global Compact to continue dialogue, engage and support where necessary · Strong partnerships such as academic institutions like Singapore Management University – Institute of Innovation and Entrepreneurship and Lien Centre for Social Innovation to support tackling real-world sustainability challenges · Being the “People’s Bank”, POSB plays an active role in engaging the community within DBS’s neighbourhoods and partnering with various agencies such as Community Development Councils, Infocomm Media Development Authority (IMDA) and the People’s Association to make a difference in society at large · Meeting with NGOs about their specific concerns · Participating in various industry sustainability-related forums organised by World Wide Fund for Nature (WWF) Singapore, World Business Council for Sustainable Development, Global Compact Network Singapore and GRI Regional Hub in Singapore |
| Regulators and policy makers
| · Consultations with United Nations bodies including Sustainable Digital Finance Alliance (SDFA) with Piyush as a member of the advisory board, and UN Secretary-General’s Task Force on Digital Financing of the SDGs · Meetings with governments and regulators including Monetary Authority of Singapore (MAS) · Advising public policy agencies including IMDA with CEO Piyush Gupta as a council member to the Advisory Council on the Ethical Use of Artificial Intelligence (AI) and Data · Active participation in various industry sustainability-related forums organised by the Association of Banks in Singapore and Singapore Institute of International Affairs |
What actions were taken by DBS to combat financial crime?
In its 2019 Sustainability Report DBS reports that it took the following actions for combatting financial crime:
- Launching an in-house intelligent case management system
- In 2019, DBS unveiled an in-house intelligent case management system to strengthen its transaction surveillance team in their review of suspicious activities flagged by systems or frontline employees. DBS used Robotic Process Automation technology to aggregate data from multiple sources, for its investigators to have a holistic view of customer information and transactional activities. This accelerates their ability to determine whether the unusual behaviours warrant reporting to the authorities. Post-deployment, DBS’s analysts tripled the percentage of time spent investigating genuine cases, as onerous manual processes were eliminated through back-end automation.
- Using network link analysis
- As money launderers and terrorist networks are increasingly sophisticated in the methods they use to conceal their transactions and activities, DBS built link analysis capability to visually represent connections between customers and counterparties, flow of funds, and to uncover complex and hidden networks. This new way of working enhances DBS’s detection capability from transaction and account level, to include customer and network level detection. DBS applied this to companies using typology-based data analytics and its work was featured by the Monetary Authority of Singapore (MAS) as an effective mechanism to detect and mitigate the risk of misuse of legal persons.
- Implementing machine learning
- To complement its infrastructure, DBS invested in human capabilities to leverage on the proliferation of data and to transform these reliably into signals. DBS’s data scientists developed machine learning models that can prioritise system alerts based on risk and likelihood of money laundering. As a result, DBS’s investigators can focus on reviewing genuine alerts, whilst a different set of machine learning models manage false positives. Furthermore, DBS introduced models that detect new and emerging threats based on specific typologies. These models flag out unusual activities over and above those generated by DBS’s monitoring systems.
- Introducing a Dynamic Review Assessment process
- DBS has introduced a Dynamic Review Assessment (DRA) process, which through DBS’s regular data analytics validation on its customers and facilitated with designated risk scenarios, will generate timely and risk focused trigger reviews. DRA helps DBS to concentrate its resources on identifying customer risk early in the game, whilst reducing unnecessary inconvenience faced by its largely good and law-abiding customers.
- Providing training
- DBS believes in equipping its employees with the relevant financial crime knowledge and continues to invest in mandatory training and awareness programmes. Every employee is expected to recognise, prevent and detect financial crime to the extent possible. All DBS employees must complete both AML (Anti-Money Laundering) and Code of Conduct refresher training annually, and attest to it.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 205-2 Communication and training about anti-corruption policies and procedures
2) Disclosure 205-3 Confirmed incidents of corruption and actions taken
Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.5
Disclosure 205-3 Confirmed incidents of corruption and actions taken corresponds to:
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.5
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References:
1) This case study is based on published information by DBS, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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