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For years, David Lawrence dreaded the morning newspaper. Each day the associate general counsel at The Goldman Sachs Group hoped he wouldn’t see a front-page article about a customer who had run afoul of the law. Lawrence, the bank’s top lawyer in charge of preventing money laundering, knew that identifying crooks wasn’t quick, cheap, or foolproof. But now Lawrence, a former federal prosecutor, thinks he has the solution. Regulatory DataCorp, Int’l. LLC, a fledgling New York company, has compiled a massive database containing public information on lawbreakers from around the world. Need to know if that prospective customer is on the lam in the Czech Republic, or had his professional license revoked in Hong Kong? Hand over a name, and Regulatory DataCorp promises to find out in a single search. Lawrence, along with several peers at rival banks, has pitched his “bad guy” database for more than two years. The project finally came together after 9/11 and the subsequent passage of the USA Patriot Act, the antiterrorism law that, among many other things, requires banks to screen their customers more thoroughly ["Master List of Evildoers," February]. Over the past year, 20 financial institutions (including Merrill Lynch & Co., Inc., American Express Company, and Bank of America Corporation) each ponied up $575,000 for a 3 percent ownership stake in the company. Regulatory DataCorp, which launched this summer, currently counts six employees and is busy drumming up business. But success isn’t guaranteed. It faces stiff competition from established technology companies, scrutiny from privacy advocates, and the inescapable fact that its target clients-Wall Street financial institutions-are highly competitive and don’t like to collaborate. Here’s how the system works: Banks send a list of new or existing customers to be checked against Regulatory DataCorp’s database. (The pricing model is still evolving, but could include an annual subscription fee, plus a search charge of less than $1 per name for high-volume usage, says Lawrence.) The company’s database contains information from some 26,000 news sources and 400 domestic government sources, along with the names of more than 900,000 individuals who have appeared on government watch lists or otherwise been the subject of high-profile investigations. If a bank’s customer shows up on Regulatory DataCorp’s master list, the company’s employees investigate the name. They’re able to weed out the wrong “Bob Smiths,” for example, or differentiate between “Muhamed” and “Mohammed” (a problem that became especially acute after 9/11). Any information that suggests criminal behavior by the customer is forwarded to the inquiring institution. “There’s no question that there’s a need for [one-stop database searching],” says Adam Bates, the London- based head of U.K. forensics at KPMG International. But Bates also suggests that Regulatory DataCorp’s setup may make some potential users nervous. He doubts that big Wall Street firms will be willing to release their customer names to a third party unless they have an “absolute, cast-iron guarantee” that the names won’t be disclosed to competitors or the public. Lawrence and William Catucci, Regulatory DataCorp’s CEO, offer that guarantee, and add that the company will eventually offer software that will allow customers to conduct their own, albeit limited, searches. Another question for Regulatory DataCorp-or any rival service-is whether it can outperform search engines like Google. “You could get all the information yourself if you spent all day on the Internet,” concedes Catucci. His gamble, of course, is that companies will pay for convenience. When it comes to screening customers, “nothing is fail-safe,” says Catucci. “But this gets you a hell of a lot closer to knowing you’ve done all you can.”

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