Financial services providers have numerous rules and regulations that they must follow in order to keep sensitive client information safe while working to eliminate fraudulent activity. However, when these industry guidelines are not followed, or an official audit shows wrongdoing on the part of the financial service organization, it can result in a non-prosecution agreement (NPA) or deferred prosecution agreement (DPA).

According to Anne Chapman and Kathleen Brody of the National Association of Criminal Defense Lawyers, DPAs have increased significantly in the financial services industry in recent years. While critics have called NPAs and DPAs "an easy way out" for companies, noted Chapman and Brody, these agreements can have real and costly consequences for financial service providers.

As a result, financial service organizations are seeking better ways to help avoid these and other industry penalties. Big data analytics can help banks, credit unions and others in the industry work to prevent the kinds of activity that can result in an NPA or DPA.

Penalties on the rise

These agreements typically take place between an individual or organization facing civil or criminal investigation and a government agency like the Department of Justice or the Securities and Exchange Commission. In exchange for not prosecuting the financial service provider immediately – or at all in the case of an NPA – the organization agrees to pay a fine, renounce any statute of limitations, provide any details relevant to the case and cooperate with government entities. NPAs and DPAs also usually include compliance commitments like regular audits and monitoring to ensure any illegal or inappropriate activity does not continue.

As data privacy and efforts to eliminate fraud become more critical, these agreements are growing more common.

"With the increasing public and regulatory scrutiny of the financial industry since the most recent financial crisis, DPAs and NPAs involving financial institutions have also risen sharply," Chapman and Brody wrote.

Even well-established financial service providers have had to enter into NPAs or DPAs – one of the most recent cases involves a NPA and nearly $100 million fine against Banamex USA, a subsidiary of Citigroup. 

Avoiding penalties with big data analytics

"Big data analytics can help prevent activities resulting in an NPA or DPA."

A big issue with non-compliance and fraud in financial services is the fact that organizations have considerable data in several different platforms, enabling these problematic activities to fly under the radar. Having a robust data analytics platform in place can help address this directly, enabling banks and financial service providers to aggregate all of their important data in a single place. This increases visibility and makes critical data available for analysis, providing real-time insights about potential illegal, fraudulent or non-compliant activity.

Analysts can leverage aggregated data and advanced tools to ensure that the organization remains in step with all industry compliance guidelines, while also enabling the business to react quickly to potential fraud. Boosting visibility into the organization's available data while working to eliminate the kinds of activity that lead to official prosecution can allow financial service providers to avoid being in a position that can result in an NPA or DPA.

However, this type of analysis requires expertise alongside specialized tools, and must be carried out carefully in order to fully support financial service organizations' needs. To find out how data as a service can benefit your organization, contact Unifi today.