FINTECH TALKS LIVEJULY EDITION

TRUST, TRANSACTION MONITORING AND AML FOR SWIFT MESSAGING

presented by

OPENING REMARKS

CRAIG BEDDIS

PRESENTATION

KEITH FURST

OFACFINES

Source: https://risk.thomsonreuters.com/en/resources/infographic/fines-banks-breached-us-sanctions.html

2012 $1.9 BILLION

2013 $100 MILLION

2014 $8.9 BILLION

2015 $1.45 BILLION

MODELRISK MANAGEMENT

Source: http://www.occ.treas.gov/news-issuances/bulletins/2011/bulletin-2011-12a.pdf

Governance

Model Validation

Model Development, Implementation & Use

COMPLIANCE

DEVELOPERS

THIS GUY

WAKE UP CALL!

THEPANAMAPAPERS

214,488

200+11.5m

1229

ENTITIESINVOLVED

DOCUMENTSLEAKED

COUNTRIESINVOLVED

FORBES LISTEDBILLIONAIRES

COUNTRYLEADERSSource: International

Consortium of Investigative Journalists

MT 202UNDERSCRUTINY

SWIFT doesn’t prevent its use

Improper use prevents screening

Misuse is expensive and manual

Regulators are increasing scrutiny on misuse

MT 202MISUSEEXAMPLE

ANNUALCERTIFICATION

Source: http://www.dfs.ny.gov/legal/regulations/proposed/rp504t.pdf

The Department of Financial Services (the “Department”) has recently been involved in a number of investigations into compliance by Regulated Institutions, as defined below, with applicable Bank Secrecy Act/Anti-Money Laundering laws and regulations1 (“BSA/AML”) and Office of Foreign Assets Control (“OFAC”)2 requirements implementing federal economic and trade sanctions.

As a result of these investigations, the Department has become aware of the shortcomings in the transaction monitoring and filtering programs of these institutions and that a lack of robust governance, oversight, and accountability at senior levels of these institutions has contributed to these shortcomings. The Department believes that other financial institutions may also have shortcomings in their transaction monitoring programs for monitoring transactions for suspicious activities, and watch list filtering programs, for “real-time” interdiction or stopping of transactions on the basis of watch lists, including OFAC or other sanctions lists, politically exposed persons lists, and internal watch lists.

CAN BANKSRE-RISK RATHER THAN DE-RISK?

Country Risk

Amount

:20:55555555-5555:23B:CRED:32A:000555USD5443,99:33B:USD5443,99:50K: ORIGINATING CUSTOMERNAPLES IT:52A:BCITITMM500:53A:BCITUS33:54A:IRVTUS3N:57D: BNP PARIBAS S.A.GRENOBLE FRANCE:59F:/555555555555555555551/BENEFICIARY CUSTOMER2/ADDRESS LINE 13/BE/BRUSSELS:70:/RFB/INVOICE 5555555:71A:SHA:72:/ABCD/narrative//more narrative/EFGH/narrative

BLOCK 3

RE-RISKINGCRITERIA

Customer banking outside of their jurisdiction

Micro-jurisdictional risk

Risk rating methodology and visualization

CUSTOMERBANKINGOUTSIDEOF THEIRJURISDICTION

RUSSIA BANKINGTHROUGH LATVIA

MICROJURISDICTIONALRISK

MOLENBEEKBELGIUM

EVENTDRIVENRISK

EVENTDRIVENRISK

DID YOU SPOT THEDIFFERNCE?

INSUMMARY

Do you have/know your Unicorns?

In a real-time world why calibrate annually?

Is your AML technology helping you re-risk vs. de-risk?

LET’S EAT