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December, 2005
Automated Solutions for
Financial Crime Prevention
Presented by: Johnny Harb General Manager Haydrian MENA
Haydrian Confidential
AML Legislation and Enforcement
» National Strategy for AML & CFT
• Team Work between Government, Regulators, FIU, Police, Banks and Vendors
» Legislation
• Bank Secrecy Act –1986
• Financial Action Task Force (FATF) –1989
• US Patriot Act –2001
• EU 2nd & 3rd Money Laundering Directives – 2001- 5
» 101 Financial Intelligence Units
• FIUs Procedures and the EGMONT Group Guidelines
• Syrian and Lebanese Special Investigation Center (SIC)
Haydrian Confidential
Penalties for AML Non-Compliance
» Serious Regulatory Actions….
• Riggs Bank $25M
• AmSouth Bankcorp $50M
• Union Bank of Switzerland $100M
• Arab Bank $24M
• Bank of New York $38M
• Citibank, Japan, Branches shut down by FSA
Intensity of regulatory actions increasing.
What are Vendors doing in the AML/CFT Market?
Haydrian Confidential
Haydrian Expertise in Financial Systems
» H. Robert Heller – Formerly Chief Economist-BofA, IMF, Governor Federal Reserve Board, President-Visa International
» Tom Cleveland – Formerly SVP-BofA, Bank Founder, Federal Reserve Bank
» Martin Owen – Previous Head of the Financial Crime Policy Unit, UK Financial Services Authority
» Richard Gibbons – Formerly Chief Compliance Officer, Deutsche Bank Group, SEC Regulator, EU & FATF Advisor, IBM AML Expert
» John Parkey – Previously MicroSoft Program Manager, CEO of High Tech Companies, Recognized Technology Leader
» Dell Keehn – Formerly Investment Banker, CEO of Financial Companies
» Delmer Davis – Formerly IBM GM Financial Services-Asia & South America, CEO of Financial Technology Companies
Haydrian Confidential
Haydrian Corporation
» Global expertise in best-of-class financial solutions while leaders at:
» Headquartered in Bellevue, Washington. Offices in US, Latin America, Middle East, and Asia
» Founded to bring tailored, comprehensive compliance solutions to financial institutions
Haydrian Confidential
XM3 – Key Design Points
» Accuracy—lower false positives and false negatives, better information for management of both risk and the compliance process
» Flexibility—easily managed and extended as bank needs change
» Security—difficult to compromise the system but easy for senior management of the bank to control
» Low Cost—more efficient and productive AML monitoring and compliance with little IT support, low implementation cost, low price point
Haydrian Confidential
Management Selection
New Customers/Account Relationships (Flag and Monitor)
Business Type (Risk Rating)
Domestic and Foreign Correspondent Banks (Flag)
Bank private lists
Account History (History of Alerts)
Customers’ Net Worth – Liquid and Total – vs. Transactions
Location of Residence, Nationality
Identify High Focus Customers
Haydrian Confidential
PEER GROUP AVG
$3,000
$3,000
$6,000
$2,000
$4,000
INITIAL DECLARATION FOR ACTIVITY
$3000
$2000
$4,500
$275
$14,425
ACTUAL
WIRES IN $9,000
WIRES OUT $5,000
CASH DEPOSITS $10,000
ATM WITHDRAWALS $300
COMPOSITE BALANCE $10,700
Time Period: 30 days
Detection of Unusual Behavior
ACTUAL
INITIAL DECLARATION FOR ACTIVITY
PEER GROUP AVERAGE
HISTORICAL AVERAGE
HISTORICAL AVG
$5,000
$6,000
$7,000
$5,000
$4,000
Haydrian Confidential
Bank’s Custom White List
EU List
Central Bank List
OFAC List
Bank’s Custom Black List
Transaction/Customer Data
Scored Results
Example Usage, based on threshold specified by Financial Institution:
• Transaction Blocked
• Customer Risk Score Assigned
• Alert Generated
• Etc.
Other Lists
Watch List Management
Watch List Analysis
Haydrian Confidential
Watch List
Pattern Detection
Logical Entities
Historical Activity
Correlates All The Data Necessary for Speedy Analysis and Secure Resolutions
Haydrian Confidential
Transaction Alerts
Haydrian’s RISK MATRIX Approach
Pattern Detection
Peer Group
Account History
Known Scenarios
High Focus
Service Changes
Logical Entities
Watch List
23 41 55 42 Risk Score
Activity Across Multiple Transactions
Alert
92
KY
C
√√ √√
TRANSACTIONS
TR
AN
SA
CT
ION
12 8√√
Haydrian Confidential
Haydrian Case Manager
» Browser-Based User Friendly
» Risk-Weighted Prioritization
» Case Management Workflow
» Speeds/Simplifies investigation process
» Complete audit log available for internal and regulatory review
Automated Solutions for
Anti Money Laundering
Haydrian Corporation Confidential
XM3 Case Manager
Demonstration
Haydrian Confidential
Architecture and Data Flow
Bank’s Internal Financial Systems
Compliance TeamExecutive
Alert DistributionEmail, cell phone,
pager, fax
Data Input
Case Manager
Analytics
Data Store Rep
ort
ing
Se
rver
Web Interface
Haydrian Confidential
Two ways to deploy Haydrian solutions:
Application Service Provider
In-House Implementation
» Secure server environment
» Affordable and reliable solution
» Can easily grow as you do
» Compliance staff simply logs in
from their web browser
» No software or hardware to install
and maintain by your IT staff
» Rapid integration and deployment
Haydrian Confidential
XM3 Advantages
» Complete, comprehensive package
» On-line, browser-based Case Manager
» Customizable, selectable detection modules
» Low training, operational investment
» Local, fully-trained XM3 support
» Single all inclusive price
» Lowest total cost of ownership
Haydrian Confidential
Haydrian Locations
Corporate Headquarters400 112th Ave NE, Ste 210
Bellevue, Washington 98004 USA
Tel: +1 425 635 4242
IndonesiaWisma 46 Kota BNI
16TH Floor Suite 1605Jalan Jendral Sudirman Kav. I
Jakarta 10220 IndonesiaTel: +62 21 251 5044
Haydrian MENAStephan Building
Banks StreetBeirut Downtown
LebanonTel: +961 (0)3 334 775
Pakistan920 9th Floor
IBM Technology TowerShahrah-e-FaisalKarachi, PakistanTel:92 21 278 5373
PanamaWorld Trade Center, 1 Piso
Area CommercialCalle 53, Marbella
Apartado Postal 0832-0588 WTC, Panama – Republica de Panama
Tel: +507 270 7094
SpainPaseo de la Castellana, 95
Torre Europa, 15th Floor28046 Madrid SpainTel: +34 91 418 6913
USA - MiamiWaterford Business Park5201 Blue Lagoon Drive
8th FloorMiami, Florida
33126 USATel: +1 954 9413