The Value of Human Source Enquiries in Financial Crime Investigations

Author: Sylwia Wolos, Head of Product Strategy

Innovation is transforming how financial institutions approach and conduct financial crime investigations. In the era of digitised data and AI-enabled technology, are human source enquiries still needed? Can “speaking to people” ever be innovative? And what value does it bring to financial crime investigations - are human source enquiries still a cost centre or could they be a profit centre?

We take a look at what human source enquiries are and how they add value in the context of financial crime as well as recent trends.

What are human source enquiries?

Human source enquiries (HSE) are conversations conducted discreetly with very specific sources. There are three key reasons to engage HSE in the context of an investigation:

1. To augment the final result by providing new information otherwise unobtainable from other means of research.
2. To corroborate information collected via desktop research, including through internal and external datasets - both open and private - as well as in the surface, deep and dark web.
3. To contextualise information previously collected by using local and expert knowledge.

There are many similarities between human source enquiries conducted by financial crime investigators and investigative journalists working on their ‘latest scoop’. The key difference being that an investigator's work is not available to the public, but is instead a sensitive report designed for just a few readers. The audience and purpose differ, but fraud investigators and financial crime intelligence units will use similar practices to ensure that their information is factual, corroborated and contextualised.

Categorising human source enquiries

There are six main categories of sources grouped by their sensitivity and openness to engage:

All human source enquiries - even those conducted with ‘level 1’ sources - must be discreet. The aim of all source enquiries is to minimise any potential footprint and limit feedback to the target of enquiry.

An investigator will access different levels of sources, depending on the specifics of a project. For example, academics or journalists can provide general country or sector knowledge whereas industry contacts may provide information relating to internal dynamics, supplier insights or, competitor information. Authorities and elite networks are the most sensitive, and therefore difficult, to identify and cultivate.

When to use human source enquiries

Knowing when to use human source enquiries is a key instrument in a financial crime investigator’s toolkit, especially in relation to budget responsibility and return on investment. Conversations with the right sources can save an enormous amount of time, and money, by pointing you in the right direction early on, rather than leaving investigators to follow loose threads that don't lead anywhere productive.

Here are three circumstances when HSE are essential and will justify the investment:

Public records constraints

There are many instances when the information availability trail ends for a researcher and human source enquiries offer a rich alternative. For example, when legislative frameworks do not require disclosure of key information such as business ownership, or when, despite existing frameworks, a jurisdiction does not enforce requirements to disclose information.

As an illustration, recently an international bank was investigating the sources of wealth of a new customer - a high net worth individual in a prominent political position in Russia. Despite coming from a modest background, the subject had amassed significant funds in the late 1990s while starting a local-level political career. Neither the bank nor the client were able to produce records to corroborate the client's account of his wealth accumulation.

Through a trusted and well placed human source who had worked closely with the individual, the bank obtained a picture of ‘shady’ and complex deals from the 1990s that were the source of the subject's wealth. The human source explained how he made his money, and even shared copies of unpublished documents to corroborate the explanation. The investigation concluded that the subject likely obtained his wealth primarily through the embezzlement of state contracts with a state defence company.

The lack of public records in this situation was circumnavigated by accessing trusted experts at the highest level of human source complexity. Without this, the investigation would have lacked the critical information needed to manage the bank’s money laundering risk.

Other types of information are often knowingly hidden or deleted from private and public records, including political and business associations. Seasoned investigators will be aware of the growing number of professional facilitators developing creative solutions for hiding information including concealing associations through a complex web of entities and trusts, and professionally ‘cleaning up’ an individual’s online footprint. While such practices remain, human source enquiries play a key role in augmenting public record research.

Media limitations

While media searches remain a critical part of financial crime investigations, there are limitations on what gets written and published that must be considered. The challenge of the unknown-unknowns looms large - what if the investigator is missing a key piece of information because it was simply never published?

Investigators must look beyond the local press in some jurisdictions to uncover the true story. In jurisdictions that do not afford journalists and media organisations with robust protections, they can face legal and security risks that may disincentivise them from pursuing sensitive stories. In other instances a story may not be of interest to a wider audience so may not be pursued by the media. Human source enquiries, when executed correctly, can provide the missing pieces in these circumstances.  

Context and corroboration of information

Human source enquiries also have a vital role to play in understanding the context of information, as well as corroborating it. Experts and well informed sources can be the key to a successful outcome by providing the relevant context, whether that is political, cultural, historical, or commercial.

For example, a comprehensive open source investigation in Turkey revealed media references to litigation records involving the subject, in contrast with actual litigation checks, which were empty. The inconsistency was resolved when local human sources elaborated on the level of political influence over local media. They also explained the past support the subject had provided to the opposition which led to the damaging articles published in the pro-government news outlets in light of upcoming elections. The sources could also explain, and provide other examples of, how such smear campaigns had been run in the country. Given the government's control over the media, obtaining this context via human source enquiries was critical to the investigation.

Innovation in human source enquiries

On the surface, it would seem impossible to innovate in a space that involves managing numerous relationships and cultivating those relationships based on trust for an undefined future benefit. However, there are two significant new trends when using human source enquiries for financial crime investigation and corporate intelligence.

The first is the slowly emerging trend for transparency. We are moving away from smoke and mirrors private investigations to an open narrative that discusses the analysts’ techniques and methodologies as well as the real costs of human source enquiries. A modern day financial crime investigator now deploys a specific methodology - usually the intelligence cycle - and will refer to sources in a structured way. This open approach does not require human sources to be revealed however, as anonymity and protection of sources remains essential for personal security.

The second important trend in this space is increased collaboration and partnership driven by the need for process efficiencies and predictable budgets. Access to a well cultivated, truly international network of contacts requires a significant time investment if done in-house. For financial crime investigative units operating on a global scale, collaborating and accessing wider communities is especially beneficial, reducing the cost and time investments.

As long as global information gaps remain, whatever the reason, human source enquiries will continue to add significant value to financial crime investigations. With increased transparency and collaboration they no longer have to be veiled in secrecy, or be an unnecessary cost centre. By understanding when, where and how to utilise them, they are transformed from just another tool in the kit to the modern investigator’s ‘special power’ when all other information routes are seemingly closed.