The SEB Open Innovation Challenge

The SEB Open Innovation Challenge attracted all manner of viable, creative, and interesting takes on the problem of digital fraud. Some participants were focused entirely on the customer side of the equation, providing better solutions to second hand purchasing, some focused on mitigating risk of ransomware attacks, some applied machine learning to enhance voice recognition, there was no shortage of ideas.

We at Sendex, however, elected to present a more practical solution that enables authorities to actually resolve more of the enormous volume of fraud cases of reported each year - we presented Sendex AIR.

Sendex AIR is the Sendex Authority Investigation Request service hosted on our CORDA blockchain platform. AIR enables lightning fast, top of the line secure processing and transmission of sensitive data. It is a way of smoothing over the many operational bumps of financial fraud and AML investigation. As Jan Olsson of th eSwedish police states, in the application video for the SEB Open Innovation Challenge, each year around 250 000 cases of fraud is reported to the Swedish Police Authority. and around 5% of those cases are investigated. Mind you, that is 5% that is being processed - not resolved.

The Sendex solution

The Sendex AIR, in the shortest sense, allows authorities to seamlessly request and recieve crucial transactional data from validated financial institutions. Requests made through Sendex AIR are standardized through the ISO-20022 messaging format, and alleviates much of the operational hassle of traditional sensitive data processing. Data is immutable, allowing for great traceability and auditability. No variance in content or format, ensuring request and response consistency. The platform is exposed through simple Java SDK's, enabling quick and easy integration with existing core banking systems, no blockchain competence required. For a deep dive - read all about it here.

For those versed in the magical landscape of ISO-20022, the problem is not actually using the messaging standard as it is proposed, it is actually tailoring the specific fields to fit the needs of the operations that use them. Having been around in the fraud prevention scene for quite some time, we know that fraud/AML related police investigations require, among other things, account holder information and account ledger information, often spanning several banks and individuals. Key is, of course, both a consistent request and reply format.

Administration and coordinating these massive tasks can be overwhelming, revealed by the low percentage of fraud cases undertaken each year. This is what Sendex AIR is - an implementation of a well adopted messaging standard, tailored to the needs of the Police and financial institutions, run over a highly secure network of validated financial institutions, serving one specific purpose - to provide effective and efficient tools to combat fraud.

AIR and its benefits

Apart from the many upsides of adopting There are a couple additional benefits and future possibilities to consider as well, as summarized below.

Cost Savings

Integrations at the Financial Institutions would materialize substantial cost savings and efficiency gains in both authority and financial institutions.

The automatic or semi automatic processing of authority requests would drastically reduce resources and time spent on administration, while simultaneously building a robust security layer around the sensitive data.

Recursive Transaction Tracing

Sendex envisions an authority ledger account drilldown functionality that we call Recursive Transaction Tracing (RTT for short) where an investigating officer in mere seconds can click their way through accounts and transactions over different financial institutions.

AI models can then be employed to assist agents in identifying suspicious transactions and recipients to further increase the efficiency gains and reach of the authoritys investigation.

Third Party Validation

Another possible benefit could be “Request Validation by Third Party” where, as an example, the Prosecution Authority can see meta data, but not the payload, regarding the request and use smart contracts to verify the request validity of any combination of investigation number and investigating officer before this gets sent to the financial institution.

Investigation Cross Reference

With all the investigation data gathered in a structured format any authority can easily run logic to cross reference reoccurring accounts and individuals connecting crime cases to paint a more complete investigational picture.

MLATS - Mutual Legal Assistance Treaties

Lastly and by using the same logic of Third Party Validation, but with even more “metadata validating parties”, any Mutual Legal Assistance Treaty, also known as MLAT, could be codified into smart contracts enabling cross border automated requests. This way, lengthy processes bogged down by heavy bureocracy can be dramatically shortened and optimized.

While the core of Sendex AIR is in and of itself fully applicable to todays fraud and AML landscape, the future possible expansions of AIR is indeed exciting. Especially the last one mentioned - MLATs. However, these are a whole topic in itself and is left to be explored in the future. The potential of the blockchain and codified smart contracts are sure to bring on an interesting future.