Module 2-Ethical Issues in Data and Analytics
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Running head: Ethical Issues in Data and Analytics
Ethical Issues in Data and Analytics
Jacqueline Campbell
Southern New Hampshire University
MBA-504: Applied Business Statistics Dr. Brenda Frazier
October 26, 2021
2
Ethical Issues in Data and Analytics
Ethical Issues in Data & Analytics in Banking Compliance
In the banking industry, data is essential to all operations, from tracking customer accounts to determining interest rates and specific to the area of banking I work in, ensuring compliance with banking laws. Working in financial crimes compliance for banking, data is utilized in a variety of aspects. Customer data and customer transaction data is analyzed to determine if the activity is indicative of money laundering or a predicate offense; identification of suspicious activity and reporting it the proper authorities is a legal requirement under the Bank
Secrecy Act (BSA) and USA Patriot Act. Further, the customer data is used to determine if a customer is considered high-risk, or if the customer has other high-risk attributes such as being located in a high-risk jurisdiction or operating in a high-risk industry. This data further drives risk reporting on the risk profile of the bank’s customer base to leadership, informing management decisions.
While data is a powerful tool to drive decisions, data ethics may drive challenges to a bank. Data ethics encompasses the moral obligations of gathering, protecting, and using personally identifiable information and how it affects individuals (Cote, 2021). The data customers provide to a bank and how it is used for compliance requirements may present ethical issues. Customers entrust sensitive data to banks, and protecting that data is a key responsibility of the bank and a requirement under consumer privacy laws. When customer data and transactions are analyzed by a bank for potential financial crime activity, a potential ethical issue may arise if the analyst working for the bank improperly alerts the customer to the investigation of their transaction activity which may hinder the investigation. This could be caused by improper training of the analyst or failure to properly complete an employee background check.
3
Ethical Issues in Data and Analytics
Another ethical issue may occur if the analyst employed by the bank is not properly vetted and has ties to an organization operating in illicit activity that is attempting to launder money through
a bank; in this scenario, the analyst can write off the account activity as “normal” instead of “suspicious” which would result in the money laundering to be allowed to continue and the proper authorities not be notified of the illicit customer transactions.
Potential Ethical Issues of the Superstore vs. Banking Compliance
In the scenario of the Superstore, ethical issues that may arise with data, specifically customer data, are the misuse of customer personal data and misuse of customers payment data (i.e. debit or credit card information). There are similar ethical issues with customer data in banking, however, the ethical issues specific to the banking compliance are primarily different than that of the Superstore.
Customer data misuse that may arise from the Superstore is an ethical issue as the data may be used to create or sign up for accounts without the customer’s consent. While this is a similar ethical concern in banking in general, this is generally not a concern with financial crimes
compliance in banking. Misuse of the customer data to sign up for accounts is not an ethical concern in the financial crimes compliance area, as employees in these roles do not have access to open customer accounts, as compliance and account opening employees have separate user access to banking systems. As the Superstore does not conduct investigations into customer activity in accordance with banking compliance laws, there is no concern of an ethical issue that a customer may be tipped off to an investigation. Another form of customer data misuse the Superstore faces as an ethical concern, is that customer payment data may be stolen by an associate and fraudulently used. While this was not an ethical issue identified in the initial review of ethical issues with data and analysis in the
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