Reveleus Basel II Solution

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Closed Loop. Clear Vision.
Role of IT in AML / KYC Arun Pingaley Head
Functional Solutions and Experts Group, Reveleus
an i-flex business AML / KYC Seminar Indian
Institute of Bankers Hotel Taj Westend,
Bangalore October 5, 2006
Sept 28, 2006
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Brief Introduction Background
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i-flex acquires Mantas
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Reveleus Clients / Analyst Coverage
Top Tier Risk Clients
Analyst Coverage
Partners
Other Customers
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Reveleus in Risk ComplianceReveleus Basel II
Solution emerges as the market leader
January 06
June 06
December 05
August 05

• Reveleus was named as a leader in Gartners Magic
  Quadrant
• Tower Group named Reveleus the crown jewel of
  i-flex and ranked Reveleus Basel II highest
• Celent group considers Reveleus as the North
  American Market Leader in Basel space

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AML / KYC a solution providers viewpoint
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Three major categories of requirements

• OFAC Compliance
• US Treasurys Office of Foreign Assets Control
• Bank Secrecy Act
• KYC / EDD
• Know your customer
• Enhanced Due Diligence

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OFAC Compliance

• Requirements
• Very US specific, OFAC publishes a black list of
  Individuals, Companies, etc. for whom banking
  transactions should not be allowed by US Banks
• This black list is referred to as the SDN
  Database where SDN stands for Specially
  Designated Nationals
• Further, individual banks and governments (for
  foreign banks operating in the US) too maintain a
  separate black list of their own
• All banking transactions need to lookup the SDN
  Database

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OFAC Compliance

• Solution Components
• SDN Database
• Compilation and storage of the database
• A filter for looking up this database
• Regular updates to the SDN Database
• Real-Time Monitoring of all banking transactions
  Exception Reporting
• Technical Requirements
• Data Model Data Loading
• Split Second Database Lookups
• Near Zero false matches
• Real Time Alerting

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Bank Secrecy Act of 1970

• Purpose
• Deter laundering
• Create an investigative "paper trail" for large
  currency transactions
• Improve detection and investigation of criminal,
  tax, and regulatory violations
• Requirements
• CTRs (Currency Transaction Reports),
• SAR (Suspicious Activity Report)
• CK (Check Kiting)

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Bank Secrecy Act of 1970

• Solution Components
• Data Warehouse
• Optimal storage of all transactional data
• Rules Engine
• BI / Reporting Tools
• CTR / SAR generation
• Artificial Intelligence based reporting (Pattern
  Identification)
• Business Rules based reporting (Pattern
  Detection)
• Case Handling
• Work Flow Management
• Security
• Document Handling
• Operational Controls
• For Check Kiting control unsecured overdrafts
  and write-offs
• Check Kiting - refers to use the lag time between
  check cashing and check clearing to generate
  illegal revenue

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BSA Solution Details

• Operational Data Stores
• Transactional Data
• Rules Engine for Detection
• Rule Patterns
• Profiling
• Outlier Detection
• Text Mining
• Sequence Matching
• Link Analysis
• Networks of Individuals
• BI / Reporting Tools
• Workflow Tools (BPEL Engines Business Process)
• Alerting Engines

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KYC / EDD

• Background
• The US Patriot Act, requires, banks to Know Your
  Customer (KYC), before opening accounts for
  them.
• EDD refers to Enhanced Due Diligence Rules, refer
  to policies that help an institution to detect
  and deter fraudulent transactions
• Requirements
• 3 minimum checks at the time of account opening
• OFAC
• Credit Bureau
• Fraudulent Database

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KYC / EDD Solution Components

• Solution Details
• List Lookups
• Pattern Matching, Text Mining, Link Analysis,
  Profiling
• Integration with Account Opening Software
• Workflow Capabilities

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High Level Solution Architecture
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Closed Loop. Clear Vision.
Role of IT in AML / KYC Arun Pingaley Head
Functional Solutions and Experts Group, Reveleus
an i-flex business AML / KYC Seminar Indian
Institute of Bankers Hotel Taj Westend,
Bangalore October 5, 2006
Sept 28, 2006