Combating Financial Crime with Technology

1
Combating Financial Crime with Technology

• Nyron L. Davidson
• Cerberean Consulting Group

2

• The world of financial services regulation is
  changing rapidly, and so is the increasing cost
  of business for every financial services
  provider.
• The financial and administrative burden of
  regulatory compliance is increasing daily and can
  be devastating.

3

• Financial Crime is a global occurrence. Example
• Money Laundering
• Fraud

4

• Criminals look worldwide for vulnerable
  jurisdictions and businesses through which to
  launder the proceeds of crime. Financial
  institutions have become major targets of money
  laundering operations because of the variety of
  services and investment products offered that can
  be used to conceal the source of money.

5
Why the increased attention?

• Money Laundering poses significant reputational
  risk to financial services entities, as well as
  the risk of criminal prosecution if these
  entities become involved in laundering the
  proceeds of crime.

6
The Laundering of Funds

• Depends on the creativity of the launderer.
• Always involves financial institutions.

7
Reason for preventing Money Laundering

• Legal Risks
• Criminal prosecution and punishment
• Large fines
• High legal cost
• Regulatory sanctions
• Operational Risks
• Reputational damage

8
Expectations

• Countries to take steps in combating financial
  crime (i.e. money laundering)
• Criminalise it
• Take measure to identify laundered proceeds in
  financial institutions and elsewhere, with a view
  to their confiscation
• Pass laws and establish systems
• Establishment of FIUs
• Financial institutions to disclose suspicious
  transactions to the competent authority

9

• The key to the prevention and detection of money
  laundering and combating the financing of
  terrorism is an effective compliance program.

10
Challenges

• Very Costly
• Time Consuming
• Data Issues
• Globalisation
• Suggested Solution(s)
• Use of Technology

11

• The application of technology to the compliance
  process may very well be the only means to meet
  their compliance obligations effectively.
• Technology is fast becoming a viable solution in
  almost every aspect of compliance. In many cases
  the application of technology results in a
  greater degree of compliance.

12
Benefits of Technology

• Improve performance
• Enhance profitability
• Accelerate growth
• Build competitive advantage

13
Types of Software Packages

• There are a variety of software tools available
  to manage the process, whether the institution
  does its own or outsources it.

14
AML Technology Products Services

• Modern conceptual and technological
• means, commercially available products
• designed to detect financial crimes.
• Commonly used Technologies
• Rules based Software
• Artificial Intelligence (AI) Software
• Public Record Search Engines (GOOGLE)

15
AML Technology Products Services

• Rules based Software
• Uses predictive profiles developed from customer
  identification, EDD information historical
  profiles build overtime. Such software can be
  customized over time, and rules can be added or
  deleted.
• Artificial Intelligence (AI) Software
• Most complex technology solution using neural
  network and intelligent technology. Built on
  specific business rule and can identify
  transaction patterns between accounts, compare
  transaction activity and assess and score
  transactions for suspicious activity.

16
AML Technology Products Services

• Public Records Search Engines (GOOGLE)
• Allows financial institutions to perform research
  on their customers
• Can be combined with rules-based and AI systems.

17
AML Technology Products Services

• Types of Products Services
• - Account/Transaction Monitoring
• - Customer identification and due diligence
• - KYC Documents Administration
• - Reporting
• - Training (Computer Based Training)
• - Fraud Detection and Monitoring

18
AML Technology Products Services

• COST
• Public records Several hundred thousands
• Rules-based High five figures to mid-six
• figures
• AI Technology Range up to several million
  dollars.
• Basic software packages vary by vendors

19
AML Technology Products Services

• Vendors/Services Providers
• Bankers Tool Box
• Yellow Hammer
• FORTENT Searchspace
• PATRIOT OFFICER
• ACI-ACI Proactive Risk Manager
• MANTAS, Inc
• FISERV - NetEconomy-ERASE
• Prime Associates

20
AML Technology Products Services

• Vendors/Services Providers
• American Software-Assist
• GIFTS Software
• IDOM, Inc- DOC-Tracker
• WorldCompliance
• World-check
• FACTIVA
• LexisNexis
• Identity Systems

21
END

• THANK YOU