Transforming your Fraud & Financial Crimes Detection & Prevention Capabilities through the Power of Analytics. Laura Hutton - SAS

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1 Transforming your Fraud & Financial Crimes Detection & Prevention Capabilities through the Power of Analytics Laura Hutton - SAS

2 Agenda Current trends in Fraud & Financial Crime Creating an optimal Fraud solution Protecting your customers from external threats Safeguarding your reputation from internal risks Addressing international business challenges including Trade Finance Fraud and creating a Financial Intelligence Unit The benefits of a holistic approach to fraud detection and prevention

3 Current trends in Fraud & Financial Crime

4 Fraud is a global problem Typical organisations lose 5% of revenues to fraud each year Estimated to be a global loss of more than $3.5 trillion Industries most commonly victimised: Banking & Financial Services Government and Public Administration Manufacturing Sector Source: Association of Certified Fraud Examiners

5 Tough challenges for organisations Standard Chartered to pay $340m settlement over Iran investigation RBS and HSBC among banks fined 2.6bn for forex rigging BNP Paribas to pay $9bn to settle sanctions violations Cyber thieves have cost US companies and their banks more than $15 billion in the past five years, the FDIC found in a recent study. Financial Times, 2012 HSBC to pay $1.9bn in US money laundering penalties VAT fraud costing Europe 50bn a year Carousel scam escalates out of control as governments are accused of denial Tax evasion losses are estimated at $3.1 trillion for 145 countries in the world which represent 98% of the world GDP between them. The Tax Justice Network Global trade in phantom cargoes swindles banks of 500m Organisations are faced with tough challenges to focus on reducing losses AND ensure a smooth customer journey AND take effective, timely action.

6 The landscape Today s frauds are increasingly sophisticated Higher velocity/faster Cross industry Multi-channel Advanced technologies Social with pressures on staff Current fraud systems are struggling to cope: Siloed by line of business - no sharing of data Act on event or customer Rules and predictive models alone have limitations Few proactive steps taken to combat cross channel fraud Evidence insufficient to act upon Investigation time consuming

7 Creating an optimal solution

8 Comment from the Analyst "Security and fraud risk exposure is increasing as organizations are threatened at multiple points of vulnerability. Companies are re-evaluating how they tackle security since a fragmented approach is consistently leaving organizations at greater risk of attack. A more holistic approach to security ensures all layers of protection function together. Source: Avivah Litan, VP Gartner

9 Protection across the enterprise Fraud Compliance Security

10 Make better use of your data

11 Hybrid analytics

12 Visualise empower the business user Ad-hoc, in memory reporting and exploration Visual scenario configuration Concise and efficient investigation

13 Understand the risks

14 The internal threat Data theft Theft from customers Credit abuse Expenses & Payroll Breaches of policy Trading fraud Procurement fraud Money laundering

15 The external threats

16 Who is your customer?

17 Fraud is an international business Organised Insurance Fraud Organised VAT Fraud Customs and Excise Trade Finance Fraud & AML Money Laundering Cyber Crime Anti-terrorism

18 Example: Trade Finance Fraud and AML International trade often causes uncertainty between the exporter (seller) and importer (foreign buyer) The exporter wants payment ASAP The importer wants goods ASAP, but to delay payment as long as possible, generating income to make payment to the exporter

19 Example: Trade Finance Fraud and AML

20 Requires an intelligent response Over the years banks have invested in point solutions for fraud and compliance: Act on transactions or customers in isolation Investigated in isolation with insufficient data Siloed by products & channels Fraud and AML treated as unconnected issues Siloed across geographies The criminals exploit these cracks to their advantage

21 Financial Crime Intelligence Unit The Financial Crime Intelligence Unit solution is built on the premise that you do not need to rip and replace existing systems to take a more holistic approach: The FCIU acts as a safety net underneath these existing systems:

22 Thank you