Effective AML Compliance

Transcription

1 Effective AML Compliance AML Compliance and Technology Rohan Langley CAMS, Regional Solution Specialist

2 SAS AML Solution Agenda Background: AML Regulatory Changes Best Practices: Expectations from AML Technology Focus: Machine Learning & Artificial intelligence Key Considerations in Evaluating an AML Platform

3 Background AML Regulatory Changes

4 AML Regulatory Changes Banks and Regulators are under pressure U.S. Regulators ? Rules Based Client Rating & Model Validation Analytics Based CDD and KYC Ad-hoc Discovery Ongoing Review & Tuning AI, RPA, Crypto Other Regulators Western Europe Asia Pacific TBML UBO

5 AML Regulatory Changes Rapid changes, new concerns Risk Based Approach, UBO Crypto Currencies OCC Model Risk Management Tax Compliance TBML NY DFS 504

6 AML Regulatory Changes Increased focus on compliance, globalisation Financial Crime Intelligence Units AML/Screening Optimization FATCA /CRS Compliance 40 FATF Recommendations (2012 Revised) Compliance Trends UK Bribery Act and FCPA EU 4th AML Directive: PEP Enhancements, UBO, CDD/EDD Regulator Trends: Increased Scrutiny, Data Governance, White Box, Scenario Tuning, STR Analysis, Model Risk Management

7 Global Best Practices Expectations from AML Technology

8 Global Best Practices Top 10 Compliance Framework Know Your Customer Review and Refine, MRM Document and Verify Adopt a Risk Based Approach Implement a Culture of Compliance Choose Appropriate Technology External Validation Compliance and Business Regulatory Reporting Flexibility in the Program

9 Global Best Practices Key takeaways compliance Tick in the Box Start at the Top Model Risk Management Risk Based Approach Systems Transparent and Flexible Know Your Data

10 What is going on in the AML market? Increase in false positive rates of traditional AML systems are becoming inefficient and expensive Pressure to use Machine learning techniques to identify abnormal behavior Need to address monitoring of faster payment transactions through realtime analytics and decision models Expectations that firms have the holistic picture of the activity at time of decision

11 What is going on in the AML market? Heavier attention on sanctions and high risk customer screening mechanisms and testing Requirements to collect and leverage beneficial ownership of legal entity customers to better understand your risk Emphasis on know your customer, and understanding the nature and purpose of their accounts Analysts/investigators use majority of time collecting data and information for review vs. investigating

12 Machine Learning & Artificial Intelligence SAS Approach

13 increasingly, regulators recognise that rules alone are not an effective manner of detection and are pressuring banks to include more sophisticated analytics. Aite Group.

14 Our Approach Machine Learning Artificial Intelligence Automation of information extraction (patterns both known / unknown) from data, expressing it in a comprehensible form so that it can be applied to new and unseen data within a system and learn from the outcomes of the system. The science of training computers to perform tasks that typically require human intervention to complete. Computer learns how to do those processes more efficiently.

15 Key Considerations in Evaluating an AML Platform

16 Compliance The AML Puzzle KYC / CDD / EDD AML (Transaction Monitoring & Customer Screening) Sanctions screening Correspondent Banking FATCA / CRS AML Analytics Trade based AML UBO

17 Spotlight on AML, CDD and Sanctions Challenge New Regulations 4 th EU directive, OCC 2011/12 Tactical solutions may seem like a quick fix but are non upgradable TCO cost reductions What you need Your AML and CDD systems need to be able to quickly comply with rapidly changing regulations Analytics & Alerting Expose the data so that it can be analysed and explored visually Make sure it is all white box meaning both the data model as well as the way scenarios work. Regulatory Reporting & MI/BI Framework to support regulatory reporting. AML out of the box reports. Flexibility to create new reports. Case Management & Workflow Be sure you have a fully audittrailed Case Management environment Ask for Workflow and configurable user interface Ask for a role-based approach to alert triage and case investigation. Look For Complete end to end solution White box solution Data Lineage and Flexibility Out of the box library of scenarios and risk factors Statistic Scoring of Alerts Integration of AML and CDD

18 Spotlight on AML Analytics Challenge Overwhelming volume of alerts with significant staffing costs High false positive rate View of zero value from incumbent solutions What you need Ability to optimise existing AML alerting systems to target a reduction in workload and increased efficiency. Assess Data Data exploration and discovery of emerging risks Data quality & usage Data transformation Optimise Develop and author scenarios, segmentation, and/or post alert scoring models Add new data sources to existing models Test Hypothesis testing and simulation Champion challenger Above/below the line testing Monitor Operationalize scenarios Ongoing monitoring of effectiveness Identify ineffective scenarios & prioritize Look for Co-existence with existing solutions White box solution Reduced False Positives Higher quality & relevancy of alerts generated / worked More efficient team which can focus on the high risk genuine alerts

19 Q&A

20 Thank You sas.com