Privacy enhancing technologies in information sharing
Privacy enhancing technologies ( PETs ) offer significant benefits to organizations by providing security solutions that save time and cost . Noncompliance with privacy regulations , such as the General Data Protection Regulation ( GDPR ), can result in heavy fines , making PETs crucial for FIs to avoid financial losses .
Data breaches not only incur financial costs but also damage the reputation of businesses . When customers feel that their data is not safe , they lose trust in companies , leading to the potential loss of clients . PETs help FIs gain and maintain the trust of their customers while optimizing their products and services and protecting data privacy .
Privacy-enhancing solutions utilize :
▪ Cryptographic algorithms
▪ Artificial intelligence ( AI ) and machine learning algorithms
▪ Data-masking techniques
Cryptographic algorithms , such as homomorphic encryption , secure multiparty computation , differential privacy and zero-knowledge proofs , ensure secure transmission , encryption and authentication of sensitive data in open banking services .
Data-masking techniques , including obfuscation , pseudonymization , data minimization and communication anonymization , protect customer-sensitive information in datasets by masking or replacing identifiable fields . This allows FIs to comply with regulations like the GDPR while storing customer data .
Machine learning and AI algorithms are employed to protect customer privacy in the financial services space . The generation of synthetic data creates statistically similar data to the original , which can be used for testing without compromising privacy . Federation learning enables decentralized training of multiple servers , reducing the volume of data stored in a centralized location and preventing the tracing of identifying values to individuals .
Implications of open banking for forensic accountants
The implementation of open banking in FIs has significant implications for forensic accountants in managing financial crime risk . The adoption of open banking creates the need for the involvement of financial crime professionals , such as forensic accountants , in the legislative backing of managing financial crime risks . They will provide significant input needed to help manage the financial crime risks that will arise due to open banking implementation .
Regulators are focused on developing legislative structures that create a conducive environment for open banking operations . The governing policies for the actions of third parties in the open banking space , stakeholder controls and risk assessment will also require the skill sets of forensic accountants . Their investigation and internal control skills will be needed to include measures in these regulations that will be beneficial in fighting financial crime . Third parties gaining access to customeridentifiable information and transaction details will need to be managed to ensure that the open banking space is effectively managed .
Cybersecurity attacks on the open banking infrastructure will create a demand for forensic accountants practicing in this area . Access to data and gathering evidence will be impacted positively by the adoption of open banking , which will make customer data readily available and eliminate the need for contacting different FIs . Open banking creates opportunities for forensic accountants to contribute significantly to the financial industry ’ s management of financial crime risks .
Cybersecurity attacks on the open banking infrastructure will create a demand for forensic accountants practicing in this area
ACAMS Today | December 2023 – February 2024 19