Unisys suite aims to detect criminal patterns

A new family of products and services from Unisys is designed to make it possible for financial institutions to detect more complex kinds of fraud and spot identity theft and money laundering schemes earlier.

On Tuesday the company unveiled the Unisys Active Risk Monitoring System (ARMS), a suite of software that it claims improves the ability of banks and other organizations to spot the patterns of seemingly unrelated events that add up to criminal activity.

Unisys is relying on technology from Actimize Ltd. of New York to provide the underlying analytics technology for the new system.

Actimize has developed technology that enables organizations to do complex data mining and analysis on stored information and transaction data without needing to copy data to a separate data warehouse, according to Eli Katz, practice director in Unisys’ Global Financial Services group.

Actimize’s technology can monitor an enterprise’s transactions in real time, identifying elements that may affect models of suspicious behavior while flagging transactions according to predefined criteria, according to Actimize.

For each transaction that is analyzed, the system is capable of tweaking its underlying statistics and checking those transactions against the rules used to identify suspicious activity. After it is analyzed, the transaction is discarded, Katz said.

The Actimize software runs on the Microsoft Windows NT or Windows 2000 platform and can be deployed on standard server hardware with either four or eight processors, Katz said.

The Actimize technology makes ARMS a more powerful and flexible risk monitoring system than those that rely on large data warehouses, according to Katz.

In contrast to those systems, Unisys ARMS ties together live transaction activity with information stored in a wide range of separate enterprise data stores such as CRM systems, enabling organizations to spot patterns of suspicious activities within 1/1000 of a second of their occurrence.

As an example, Katz described a scenario in which a criminal approaches an automated teller machine kiosk with 30 stolen or fraudulent ATM cards, using each in succession to withdraw $500.

Although none of those transactions, taken alone, would be adequate to raise a flag, Unisys ARMS is able to detect a change in the rate of transactions within a given window of time, or spot the increased number of cards that have never been used at that ATM before.

Alternatively, the system could correlate the activities of a number of money launderers who make small deposits into different accounts only to transfer money into one or more consolidated accounts, flagging the entire group as a threat, Katz said.

Suspicious events can trigger either a visual notification sent to an administrator’s screen or an action such as shutting down an ATM or group of ATMs, he said.

On top of Actimize’s technology, Unisys is contributing its expertise in the financial services industry, developing the logic and underlying statistical profiles that are the guts of the new system, Katz said.

The Blue Bell, Penn., company also brings a strong consulting and systems integration organization to the table. Unisys consultants can help customers decide how best to deploy the ARMS technology and link the new system to their data stores, he said.

The new technology will give Unisys a foothold in a hot area of the financial services market, according to Penny Gillespie, an analyst at Forrester Research Inc.

While banks and other depository institutions have long been under regulatory pressure to spot financial fraud, the recent USA PATRIOT Act has expanded the number and type of companies that must do monitoring, while simultaneously raising the stakes for companies that do not comply with the Act.

“The USA PATRIOT Act is all about terrorism,” Gillespie said. “It’s one thing to not properly be engaged in preventing drug money laundering, but it’s a totally different thing to not be engaged in protecting your country.”

That, coupled with the growing problem of identity theft, has prompted a wide range of companies across the financial services sector to invest in risk monitoring technology, she said.

The deal with Actimize is beneficial for both companies. Unisys benefits from the smaller company’s technology, while Actimize gets a valuable introduction to leading financial services companies that are typically wary of newcomers, she said.

Unisys could not provide a customer reference for the ARMS product.

The system typically costs about $1 million to implement, including the price of the Actimize software and services to develop statistical models to fit the customer’s needs, Katz said.