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Welcome to the ACAMS Web Seminar Next Generation of Financial Crime Management Sponsored by September 12, 2013 12:00 Noon 1:00 pm ET The web seminar has not yet started. 5
Welcome to the ACAMS Web Seminar Next Generation of Financial Crime Management Sponsored by September 12, 2013 12:00 Noon 1:00 pm ET 6
Jeroen Dekker Senior Product Manager, Risk and Compliance
Payments Solutions for optimizing all aspects of the payments mix to help you create efficiency and drive growth Processing Services Solutions for managing account-based transactions reliably and securely Risk & Compliance Solutions for proactive risk prevention and mitigation Customer & Channel Management Solutions for attracting, retaining and growing customer relationships Insights & Optimization Solutions that help you transform data from information to actionable business insights
By the Numbers Consumer Reach and Scale $4.5 billion revenue $772 million free cash flow 27 consecutive years of double-digit EPS growth Nearly $4 billion returned to shareholders since 2005 120 million deposit accounts 60 million online banking users 23 million active bill payment users Global Footprint Money Movement 16,000 clients in more than 80 countries 21,000 associates worldwide More than 20 billion digital payment transactions More than $1 trillion moved annually
Where our perspective on Financial Crime comes from: FCRM software platform for AML, Sanctions, Fraud (Payments, Claims, Internal, Mortgage), Market Misconduct, FATCA & more In production for well over a decade Over 1,000 financial institutions and counting Implementations in and for 70+ countries around the world Proven in retail, private, commercial banking, insurance & more From global hub deployments to hosted version for local banks Consistent leader quadrant ratings in analyst reports Completing major investment in next-generation capabilities Clients increasingly deploying multiple solutions on same platform
Make them pick on someone else 11
Broader & deeper regulation & enforcement Regulations against fraud Tax evasion, corruption & bribery AML regulation & enforcement Sanctions activity Increasing crime risk & impact Cybercrime explosion Losses, reputation, legal Existing frauds persisting Media attention to crime Digital proliferation in access & payments Online & mobile everywhere Virtual value & new infrastructure Innovation imperative Security/integrity key to launch FCRM technology spend & consolidation Effective, efficient Strategic consolidation, convergence Inadequate systems Depth, breadth, flexibility
Ongoing need to become more effective and more efficient More effective: find the bad guys, demonstrate compliance, prevent More efficient: fewer systems, false positives, investigation cycles Convergence, consolidation, strategic platform finally happening Silo approach no longer viable (tool proliferation), effective (no holistic view) Centralized data, detection, investigation can help still separate teams Dissatisfaction with existing systems fueling replacement investment Vendor ability to implement, upgrade, adapt (success, cost, attitude) Regulatory scrutiny of homegrown tools or ineffective vendor systems Drive for more depth & breadth in the hands of the users Holistic, integrated, layered, streamlined, innovative analytics Future-proof for constant change: empower with flexibility to adapt and grow 13
AML & Sanctions Fraud Regulatory compliance & examination Use of advanced analytics, effect over policy
Detection & investigation Statistical Profiling Link Analysis / Visualization Unstructured Analysis (Discovery, search) Analysis & optimization Predictive Modeling (Nnet, Logit) Guided Segmentation (Decision Trees) Clustering (K-means)
United front against financial crime Online Community Anti-crime Forums Common reporting on trends and peer group performance Central infrastructure Subscription based scenario and regulation libraries Predictive models from pooled consortium data Emerging attack vector alerts and defense updates Shared network links, watch lists and alerts
What do all of these financial crimes have in common? Locks on the door are not enough Monitoring also required It s about finding the bad apples Revolves around customers and their (transactional) behavior Data, data, data Evolving requirements Pass future scrutiny 18
People & Process Physical & Digital Security Customer Onboarding (KYC) Authentication (Channel Access, Payments) Detection silos Monitoring, Detection & Prevention Investigation & Case Management Reporting & Resolution Control & Analytics 19
First line Front-line systems, teams and processes Branches, locations, countries, units, online Often decentralized and heterogeneous Second line Central back office (compliance) team Catch what falls through the cracks Control, oversight and management Third line Internal Audit Control the controls Help think like a regulatory examiner 20
FATCA monitoring, control & reporting CDD, Core, CRM and Payment systems New account classification Pre-existing accounts Ongoing monitoring Payments withholding Your FATCA Team Data: AML, indicia, payments, FATCA process Detection: verification & monitoring Automated checks Exception handling Approvals and audit Central oversight Case management: remediation & audit Management Reporting IRS XML Reporting
Monitoring : completing & orchestrating your layered defenses Automatically and continuously record and analyze the behavior 1 of customers and other entities 2 in order to detect, investigate and resolve anomalies 3 that can represent financial crime risk 1. Behavior: based on transactions and non-financial activities 2. Other entities: for example accounts, locations, devices, employees 3. Anomalies: unusual, high-risk, matching a suspicious pattern or entity
Flexible data & business model (and integration)? Ability to monitor any business entity within the data? Powerful statistics, math & (fuzzy) logic including true rolling periods? Real-time strategies to block, challenge and/or review anomalies? Configurable logic to drive priority, presentation, workflow? Ability to remove fraudulent or erroneous transactions from behavioral profiles? Automatically or manually trigger additional actions to protect at-risk assets? Ability to let outcomes drive/improve future detection? Configuration management for deployment and upgrades? Designed to empower skilled business users at the institution? 23
Defense in Breadth connecting the dots Financial Crimes Money Laundering Sanctions Violations Payments Fraud Tax evasion Corruption & Bribery. Customers & Products Retail Commercial Private Securities Insurance. Channels & Payments Online Wire Card Branch Check. and across countries and businesses (if applicable) 24
Large U.S. bank: planning to consolidate on single platform Anti-Money Laundering Sanctions screening Case management for card fraud Real-time ACH & Wire fraud detection Global financial institution based in Europe Consolidating global AML monitoring (40 countries) Also considering same platform for screening and fraud prevention Large UK retail bank Already using single platform for AML and some fraud types Project team set up for long-term financial crime technology strategy Currently have over 20 (fraud) tools in use across the bank 25
Large U.S. insurance company Existing brand name AML system not performing, being replaced Bank in Middle East Fed up with (upgrade) cost and performance of separate AML and Screening systems Looking to replace with single solution Bank in South America Getting an FCRM platform for AML Planning use for FATCA control & monitoring Bank in Asia Pacific Looking for fraud detection system to cover 18 different channels 26
IP geolocation Leverage data across financial crimes Online Fraud AML Sanctions FATCA Location is high-risk or unusual for the customer Location of frequent payment initiation inconsistent with client s stated business Payments initiated from IP addresses in sanctioned countries For a domestic resident, this client is sure spending a lot of time in the United States
Global insurance & wealth management firm First deployed AML & Sanctions in North America Added client / agent fraud detection Rolling out across global locations (especially Asia) Now adding FATCA control & monitoring Cause and effect of this strategy: All client, policy and transaction data under one roof Holistic view and selective sharing of intelligence Leverage investment in data, infrastructure, skills, vendor 28
Centralized investigation Alert optimization Detection A B C D E? No detection tool today, needs protection Existing tool not effective, needs replacing Existing tool addresses part of problem, needs additional layer Existing tool not efficient, needs false positive reduction Existing tool Ok, feed alerts for investigation and holistic view Future products and channels that will need protection 29
Some real examples Reducing false positives from check fraud detection Already have online access fraud detection, adding cross-channel and financial behavior monitoring New mobile payments venture, needs real-time fraud protection Central tool for AML intelligence gathering & dissemination for global operation
Benefits of a broad, deep, flexible, sophisticated technology strategy Effective More powerful detection to catch the bad apples Prevention strategies (challenge, review, act) Connecting the dots (detection, investigation) Efficient Leverage data & platform over and over again Continuous optimization to reduce false positives Streamlined investigation cycles Adaptive Empowered for operational improvements Quickly respond to new threats Address new projects with same platform 31
If you have additional questions for today s experts, or suggestions for future web seminars, please send those to: training@acams.org Thank you for joining us today! 33
SAVE THE DATE! TARGETED FULL-DAY SEMINARS FOR ALL LEVELS www2.acams.org/webinars 1) AML BSA 101: Essential Training for Compliance Professionals September 11 Chicago September 13 New York City DOWNLOAD AGENDA AT www2.acams.org/101 2) Building a Sound Framework For Enterprise Risk Management (ERM) September 30 Chicago October 2 New York City October 4 Toronto DOWNLOAD AGENDA AT www2.acams.org/risk 3) Combating Your Institution s Greatest Threat: Trade-Based Money Laundering (TBML) October 28 Chicago October 30 New York City DOWNLOAD AGENDA AT www2.acams.org/trade
Future Web Seminars SEP 16 SEP 17 SEP 18 FREE Middle East / North Africa: Complying with FATCA Level: All 8:00am to 9:00am EDT FREE Managing an Effective OFAC Compliance Program Level: All Noon to 1:00pm EDT SAR/STR Case Studies (Part I): Exposing the Red Flags of Tax Fraud Schemes Level: Basic/Intermediate Noon to 2:00pm EDT