Anti-Money Laundering – Role of Technology
Download
1 / 14

iibf seminar on - PowerPoint PPT Presentation


  • 507 Views
  • Uploaded on

Anti-Money Laundering – Role of Technology Vasant Godse. L&T Infotech Ltd. - Powai. October 13, 2006. IIBF Seminar on ‘Anti Money Laundering & Know Your Customer’ Guwahati. Background.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'iibf seminar on ' - sandra_john


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Slide1 l.jpg

Anti-Money Laundering – Role of Technology

Vasant Godse

L&T Infotech Ltd. - Powai

October 13, 2006


Slide2 l.jpg

IIBF Seminar

on

‘Anti Money Laundering

&

Know Your Customer’

Guwahati


Background l.jpg
Background

  • The process of transforming illicit funds into legal capital. Involves Placement /Layering/Integration

  • Money laundered annually nearly 3 to 5 % of World GDP or USD 500 billion to 1.5 trillion.

  • Organized crime groups becoming more global and carrying on their activities far away from their geographic region

  • Not only economically destabilizes a country but also exposes to terrorist attacks,threatening its integrity & sovereignty

  • Result: International organizations and regulators to developing international standards and best practices to address to money laundering issues in a collaborative manner


Players detectors l.jpg

Who are involved?

Bankers

Lawyers,

Car dealers,

Real estates builders,

Accountants and

Others, who allow their businesses to be used by someone to launder the proceeds of a crime.

(23 industries covered in USA)

Who is watching?

FATF/UN

European Union Directives

Basel II

OFAC

USA Patriot act

BSA

APGML

Wolfsburg Principles on Private Banking and Correspondent Banking

All countries’ regulators

Players/Detectors


Rbi guidelines kyc l.jpg
RBI Guidelines – KYC

  • KYC guidelines to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering

  • Components

    Customer Acceptance Policy

    Customer Identification Procedures

    Monitoring of Transactions; and

    Risk management

  • Two broad approaches to controlling money laundering:

    1.  Know your customer and correspondent.

    2. Monitoring the transaction flows.

    (Correspondents yet to be covered in India)


Data information requirements l.jpg
Data Information requirements

Compliance expectations

Bank must locate, extract, warehouse and assimilate data Solution that can evaluate transactions at more details

Single view on customer activity

Data/Informational needs

  • Data Acquisition from source system, transformation and loading capabilities.

  • Data analysis engines

  • Analysis and detection capable of revealing pattern

  • Identify behavior changes

  • System in place to document all findings

  • Ad hoc research capabilities


Technology criteria l.jpg
Technology Criteria

Any solution for AML compliance has to address to the

following issues:-

  • Monitoring of individual transaction

  • Profiling of risk in respect of existing and new customers

  • Referencing the transaction with regard to the watch list

  • Marinating of records on customers, transactions, regulations and their up-dates

  • Analytics to assess and develop patterns of client behavior

  • Facilitating regulatory reporting and related requirements

  • Providing alerts and

  • Generation of audit trails


Technology offers l.jpg

KYC

Manage customer account opening, acceptance & ongoing maintenance

Risk based customer modeling

Risk class based on risk factors and scores

Links company wide customer acceptance documentation requirements

Stores, manages and queries electronic documents

Risk Assessment

Maintains & monitors details for customer

Profiling technique to evaluate customer & transaction

Creates customer behavior pattern

Tool for reviewing suspicious activity

Real time transaction enquiry tools

Automates creation and filing of suspicious activity

Comprehensive audit trail

Technology Offers


Technology offers9 l.jpg

Legal/Regulatory compliance

Electronic workflow from receipt of information to response back

Automated process to import the request for information

Flexible search algorithm

Electronic filing of responses back to inquiring parties

Comprehensive security control to ensure confidentiality

Detection of Black listed customer

Detects violations consistently across enterprise for a multitude of global sanctioning bodies

Real time, intra-day interfaces to all at-risk business system

Reduce expensive due diligence

Provide automatic sanctioned party updates

Integrates with multiple disparate business systems

Technology Offers


Technology present status l.jpg
Technology– Present Status

  • Product vendors as well as solution framework providers like L&T Infotech

  • Multiple approaches to AML implementation

  • Basic transaction filtering and exceptions based reporting systems that give 'hits' and 'alerts' based on the violation of rules.

  • Artificial intelligence based adaptive learning systems that monitor activity patterns in transactions and accounts to detect and prevent money laundering

  • Integrating these solutions with the current architectures and developing multiple interfaces to existing systems

  • More vendors and processes.

  • Additional costs in maintaining multiple packages

  • Security and database issues.


Technology trends l.jpg
Technology Trends

  • Browser-based interfaces, for enhanced usability and ease of deployment

  • Visualization tools, such as network diagrams to depict account relationships

  • Peer profiling, network analysis, risk scoring and other analytic approaches currently being emphasized by regulators

  • Enhanced case management functionality with rich workflow and investigation features

  • “Compliance dashboards,” to integrate output from multiple regional and line of business systems, including the integration of AML with anti-fraud and other compliance systems

    Source: Celent, Trends in Anti-Money Laundering 2006.


Technology trends12 l.jpg
Technology Trends

  • Additional modules to make a more comprehensive solution suite, including account opening due diligence and watch list filtering in addition to transaction monitoring

  • Integration with SWIFT and other payments networks to enable real time interdiction of wires

  • Outsourced AML services, offered by major core banking processors such as Fiserv or Metavante, as well as new shared data center initiatives focused solely on AML

  • The pursuit of scalability, to achieve greater competitiveness for business from large financial institutions

  • Introduction by high end vendors of “AML lite” versions of their products, aimed at the emerging small and midsize FI market.


Commandments for compliance l.jpg
Commandments for Compliance

  • AML Compliance is a Board level and not only Branch level issue

  • Size of the bank is immaterial

  • Locations is redundant

  • AML Compliance is NOT a local problem

  • Compliance is a business challenge not MID drill

  • Address to data needs and data consistency

  • Training and its proper documentation for regulatory review

    NO OPTION BUT TO GO IN FOR TECHNOLOGY SOLUTION



ad