A case for Enterprise-wide Solutions for AML and Anti-Fraud

Transcription

1 A case for Enterprise-wide Soutions for AML and Anti-Fraud The financia services industry is dynamic and it is imperative for institutions to navigate this ever-changing market to grow revenue whie controing costs. Banks are ooking to better understand customer needs, provide transparent processes, and strengthen their risk management practices whie combating financia crime. This has ed to the widespread adoption of an enterprise wide approach to compiance and risk management. Financia crime is constanty evoving and the need of the hour is a soution that evoves by earning and recognizing patterns. This paper discusses the important technoogica features that an enterprise wide soution must offer and provides guidance on picking the right one.

2 A case for Enterprise-wide Soutions for AML and Anti-Fraud About the Authors Omkar Nisa, Goba Product Head TCS BαNCS Universa Patform As Goba Product Head for the Universa Banking Patform, Omkar drives innovation in the areas of Channes, Retai Banking, Compiance and Weath Management, through a we orchestrated roadmap. Vidya Ram Product Manager TCS BαNCS Compiance Vidya who is currenty the Product Manager, Compiance, TCS B αncs, has been working with TCS for past three years. She comes from a banking background with a tota working experience of nine years. She is aso an Indian Institute of Banking & Finance certified AML & KYC expert. 1

3 A case for Enterprise-wide Soutions for AML and Anti-Fraud Tabe of Contents 1. Introduction 3 2. Financia crime high on banks agenda 3 3. Curbing opportunity oss Moving AML programs from the sideines to the forefront 4 4. Integrating AML and Anti-fraud patforms for the Enterprise 4 5. Choice of an AML patform 5 6. Fexibiity more than functionaity 6 7. Experience Certainty through a Hoistic Approach 6 2

4 A case for Enterprise-wide Soutions for AML and Anti-Fraud Introduction Navigating the ever-changing/dynamic financia services industry successfuy for most institutions transates into growing revenue whie simutaneousy controing costs. From revisiting business modes to evauating how best they can improve anaytics and risk management strategies, banks today are metamorphosing into institutions encompassing a variety of businesses such as insurance, securities, investment banking, among others. Even as they consoidate and transform, the underpinning theme for banking transformation over the past year has been on redefining the vaue experience deivered to customers. With the increasing consoidation we are now witnessing in the banking industry, the approach is to reduce spending and free up investment capacity for a few vita technoogy projects. This in turn is seeing a surge in technoogica innovation in the form of cient facing, coaborative, anaytica and risk management appications. Many banks are moving towards operationay efficient, ow TCO bank in a box soutions that offer comprehensive process-driven functionaity in a ready to depoy state. Financia crime high on banks agenda Even as banks set out with renewed focus and some caution they understand that customer insights into services and processes are what wi prope them into gaining a sustainabe advantage, whie providing transparency and offering vaue. As reguators are tightening their hod, banks are ooking at opportunities to strengthen their risk management practices. Unti now, banks viewed risk at a product, portfoio or business unit eve without having a firm-wide picture of risk. In today s context, it is imperative to aign business goas with risk profies to provide an integrated, consistent view of risk across an enterprise. And, this incudes financia crime. Fraud and money aundering are the two most common crimes seen in the financia sector, resuting in financia institutions pacing financia crime and associated compiance requirements, incuding combating money aundering and fraud high on their agenda. The scope of financia crime is expanding to retai banking, onine brokerage, private banking, cards, insurance, corporate banking, and institutiona securities, among others, aided with sophisticated technoogy. The rapid growth in the number and compexity of eectronic payment transactions across the gobe, whie creating new business opportunities, has aso ushered in new fraud chaenges. Fraudsters have stepped up their use of eectronic network attacks and innovated to deveop new patterns of fraud across new eectronic payment channes. As payments systems evove into rea-time settements and money transfers, payments-reated fraud throws up a posse of chaenges. 3

5 A case for Enterprise-wide Soutions for AML and Anti-Fraud Curbing opportunity oss Moving AML programs from the sideines to the forefront How can a new-age financia institution address financia crime? As we said earier, an enterprise-wide approach to risk and compiance is fast beginning to gain a firm foothod in most organizations. From a traditionay sioed focus of monitoring frauduent behavior, many organizationay diverse firms are now creating goba AML and anti-fraud programs across a affiiates in a group. Mutipe AML soutions in an organization can inhibit its abiity to create the inks and inteigence required to combat the most sophisticated criminas. Most companies today are consoidating their AML efforts into a singe department to adopt technoogy enterprise-wide, whie aso managing goba efforts at compiance centray. Particuary in Europe, firms are creating a Group Integrity department combining AML, fraud, and, in some cases, security into one unit. More importanty, the sharp reaization that financia crime has moved from being a post-process activity to an inprocess requirement for eary detection has set in. Integrating AML and Anti-fraud patforms for the Enterprise The need of the hour is the estabishment of an integrated financia crime patform utiizing common technoogy components and data modes catering to a types of financia crimes. Such a system woud aocate capabiities for both rea-time as we as static data anaysis and act as a subset of an enterprise-wide risk management patform. An added benefit being consoidated reporting for reguatory compiance. An enterprise-wide system adopts a hoistic approach whie anayzing the risk invoved in a transaction, by gathering and using information avaiabe from other business units. Through 'adaptive profiing', enterprise-wide systems can identify both known and emerging money-aundering/fraud schemes and discover any type of behavior that appears suspicious and unusua. Such systems ook for any form of unusua behavior across a appications (such as trade management appication, oans appication, cards appication, payments appication etc) in the organization, as opposed to ooking for specific or known forms of money aundering/fraud by sifting through seected transactions. This aows financia institutions to detect even highy sophisticated schemes that eude detection. Enterprise-wide, inteigent systems aso provide a cost effective approach that greaty reduces the overa workoad, heping compiance staff focus on high-risk transactions. 4

6 A case for Enterprise-wide Soutions for AML and Anti-Fraud We beieve that an enterprise-wide AML soution wi carry the foowing important advanced technoogica functions: Interfaces that integrate with the internationa network of financia and reguatory bodies and enhance the capabiity for information processing Visuaization toos to depict reationships - advanced ink detection technoogy couped with visua depiction An enterprise-wide architecture that integrates interna core financia appications and faciitates information fow and traceabiity across mutipe appications Inteigent transaction monitoring to detect and aert suspicious activities across business units Behaviora and sef-earning capabiity through inteigent pattern recognition techniques for emerging anomaous patterns - AML technoogies have emerged with the abiity to monitor every singe transaction, discover various types of unusua behavior and aert compiance users with the activities that represent prospective risk to the organization. These inteigent systems are capabe of earning and adapting themseves to emerging money aundering patterns. Incusion of predictive anaytics technoogies to imit fase positives Abiity to process both structured and unstructured data/ information Enterprise-wide customer risk assessment mode to restrict entry of unwanted entities into the financia system Efficient reporting system for both reguatory and interna contros Enterprise-wide customer dashboard, presenting a singe-screen view of a customer s activities and exposure across the enterprise. Mutipe group contro and reporting capabiity based on management poicies Enhanced case management and workfow systems to streamine organizationa processes proactivey, making investigation processes more efficient. This incudes automated workfow management, inks to information and data reevant for carrying out investigations, and data anaytics such as trends, behavior charts and transaction tracing, robust reporting capabiities and advanced security features. A watchist fitering modue for maintaining various watch ists and scanning customer and transaction records for entities present in these ists. The modue woud perform the string search functionaity of a bank s customer s information against the various ists provided by the reguatory bodies and other third parties. Many robust soutions depoy advanced search agorithms for screening entity names, addresses, country, and other detais. This woud incude integrated account opening and KYC modues for consoidation and management of KYC information avaiabe across databases for the smooth functioning of the AML program. Integration with payment networks such as SWIFT Choice of an AML patform Finay, to faciitate the successfu depoyment of such a soution, it is imperative for organizations to work with soution partners who have a broad array of technica capabiities and impressive support services. An advanced enterprise-wide technoogy soution shoud be capabe of handing a of these functions, whie serving the enterprise in a comprehensive manner, from the technica staff to the business user to senior management. 5

7 A case for Enterprise-wide Soutions for AML and Anti-Fraud Fexibiity more than functionaity A component-based soution covering case management, risk anaytics and reporting wi make for a seamess enterprise-wide AML soution. More than the functionaity, ease of integration, fexibe technoogy architecture, domain expertise and a cuture of ongoing innovation are what wi make an AML soution robust and the organization agie. Investing in an enterprise-wide AML and anti-fraud product can be everaged to improve service eves just as two banks in an emerging market recenty did. A tier-one bank adopted enterprise-wide AML and anti-fraud software to cover its branches across corporate and persona banking, industria finance, agricutura finance, financing of trade and internationa banking. It impemented a unique singe-vendor approach across a branches and business units. Specia care was taken to ensure strict reguatory compiance with respect to Anti-Money Laundering as we as data security aws. Again, a arge consumer banking organization with operations spanning across Consumer, Investment and Isamic banking, and with a customer base of more than 5 miion, impemented an enterprise-wide AML soution. Focusing on the suspicious transactions whie not affecting the efficiency of bank s daiy operations, and with the imited resources avaiabe at the centra AML department, the AML soution integrates with core banking, treasury, trade finance and other modues. Its comprehensive workfow mode faciitates two tier investigation supporting both centraized and decentraized investigation processes. Experience Certainty through a Hoistic Approach Financia crime continuousy adapts itsef to eude detection. As new schemes and money aundering/fraud techniques become known, the need for a soution that can create new rues or estabishes methods to discover new patterns, whie aso earning and deciphering new patterns automaticay through sef-earning capabiities, is critica. The hoistic reach of enterprise-wide soutions can bend information accumuated from different units in the organization and scrutinize disparate data to create a new cass of business and customer inteigence. Integrated soutions at the enterprise eve aso have the capabiity to address reguatory compiance and reporting needs whie reducing cost. They aso ead to the re-designing of business and operationa processes which, in turn, improve the quaity of customer service, which can go a ong way in increasing profitabiity and achieving credibiity for an organization in today s uncertain word. 6

8 About TCS Financia Soutions TCS Financia Soutions is a strategic business unit of Tata Consutancy Services. Dedicated to providing business appication soutions to financia institutions gobay, TCS Financia Soutions has compied a comprehensive product portfoio under the brand name of TCS BαNCS with a goba customer base in excess of 240 institutions operating in over 80 countries. For more information visit: About Tata Consutancy Services (TCS) Tata Consutancy Services is an IT services, business soutions and outsourcing organization that deivers rea resuts to goba businesses, ensuring a eve of certainty no other firm can match. TCS offers a consuting-ed, integrated portfoio of IT and IT-enabed services deivered through its unique Goba Network Deivery TM Mode, recognized as the benchmark of exceence in software deveopment. A part of the Tata Group, India s argest industria congomerate, TCS has over 143,000 of the word's best trained IT consutants in 42 countries. The company generated consoidated revenues of US $6 biion for fisca year ended 31 March 2009 and is isted on the Nationa Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at tcs.bancs@tcs.com TCS Design Services M 1109 Subscribe to TCS White Papers TCS.com RSS: Feedburner: A content / information present here is the excusive property of Tata Consutancy Services Limited (TCS). The content / information contained here is correct at the time of pubishing. No materia from here may be copied, modified, reproduced, repubished, upoaded, transmitted, posted or distributed in any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may vioate copyright, trademark and other appicabe aws, and coud resut in crimina or civi penaties. Copyright 2009 Tata Consutancy Services Limited