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the
digital
domain
breeds
compliance
threats 
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Compliance
management has always been a challenge for financial institutions.
In the past, compliance was largely an auditing function,
but today, technology has given compliance a new dimension.
The omnipresent digital domain has enabled new forms of communication
that demand innovative compliance monitoring technologies.
Three root causes work together to make compliance an ever-increasing
challenge:
- Ever-expanding
regulations - The responsibilities of financial institutions
seemingly increase daily with the introduction of new regulations
(e.g. Investment Advisors Act) aimed at offsetting the opportunities
for fraud and misinformation.
- Ever-expanding
output channels - The sources and amounts of unstructured
digital communications now going out of financial institutions
continue to expand exponentially. Technologies such as e-mail,
chat, voice-to-text communications, large-scale relational
databases, and Websites make it easier for non-compliant
communications to leave the institution. Non-compliant communications
put the institution and its shareholders at significant
risk of liability and reputational ruin.
- Conventional
monitoring technology - Conventional compliance monitoring
applications focus principally on transactional anomalies,
and are incapable of recognizing the difference between
compliant and non-compliant communications. Conventional
compliance monitoring technologies are not intelligent enough
for the challenges that face Compliance Officers today.
If there
were a way for a compliance monitoring application to screen
digital communications and recognize when a policy or regulation
is being violated, financial institutions could flag and reconcile
the deviation before the communication is completed, ensuring
the complicity of digital communications.
Clearly
what is needed is a next-generation technology that is intelligent
enough to read unstructured text and discern whether a digital
communication is complicit. A technology that is intelligent
enough to convert simple data into actionable information;
knowledge that can be acted on.
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thematix
counters
the threat
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Microlanguage's
next-generation, intelligent language processing technology,
Thematix™, is aimed at applications that demand highly
precise filtering of unstructured digital information. Two
components work together to create the Thematix technology:
- The
parsing engine breaks incoming information into its
constituent parts, such as words and punctuation, so they
can each be examined individually.
- The
grammarbase™ is a repository of knowledge that
gives further instructions to the parsing engine. The analyst
knowledge of what information is relevant and how to use
it is programmed into a grammarbase.
The knowledge
of what is and what is not compliant is programmed into a
grammarbase that enables Thematix to recognize the difference,
and Thematix triggers the host compliance monitoring application
to act on that information. Thematix not only elevates the
performance and effectiveness of the internal compliance monitoring
system, but makes it possible to deliver auditable results.
As a component
software technology, Thematix integrates with third party
compliance monitoring applications, giving them much higher
search acuity, while interfacing seamlessly with their document
management tools.
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the
benefits
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Thematix technology enables the Compliance Officer to focus on subject matter, not on sorting through thousands of reports and communications that may or may not contain compliance deviations. Thematix enriched compliance monitoring solutions offer several important benefits to the compliance monitoring community:
- Real-time monitoring and discrimination of complicit digital
communications
- Reduced cost of information sorting
- Reduced operator fatigue
- Conserved processing time
- Auditable results
Footnote
1 - Speech on Valuation, Trading, and Disclosure:
Three Compliance Imperatives, given at the
2001 Mutual Fund Compliance
Conference, Investment Company Institute, June 14, 2001
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