Role of Business Intelligence in Anti-Money Laundering Compliance Software Implementation

Role of Business
Intelligence in
Anti-Money
Laundering
Compliance
software
implementation
2 0 0 1 : E n a c t m e n t o f P a t r io t A c t &
im p a c t o n
M o n e y L a u n d e r in g C o m p lia n c e
USA PATRIOT Act of 2001 delegates Section 352(a) of the Patriot Act
to Financial CrimesEnforcement
Network (FinCEN) responsibility for – Amended Bank Secrecy Act to
settingrequirementsfor financial requireevery financial institution to
institutions toestablish: establish an anti-money laundering
– anti-money laundering program
compliance, and • Thedevelopment of internal
– customer identification policies, procedures, and
programs(in cooperation controls;
with federal functional regulators) • Thedesignation of a
complianceofficer;
• An ongoingemployeetraining
FinCEN Information-Sharing Rule program; and
Purpose - Encouragesinformation • An independent audit function
sharingamongfinancial institutions and to test programs.
Federal government lawenforcement
agenciestoidentify, prevent, anddeter
money launderingand terrorist activity.
Source:
http://www.nchelp.org/elibrary/Presentations/2003/2003WinterLegalAffairsMeeting/Consumer%20Privacy%20Issues.ppt
Objectives
1. Help Business in Implementing the directives of Patriot Act, namely,
Information sharing about Bank’s clients found to have suspicious
activity.
2. Investigate all the accounts of the bank’s clients and all their
transactions and check for any possibility of client’s involvement in
money laundering activity or terrorist funding possibility.
3. Investigate Clients accounts details from all the different divisions of
bank, namely, Asset Management group, Investment Banking,
Private Banking, Trading accounts.
4. To checkout best software available in the market for building
Money laundering information system.
5. Standardize business processes and IT systems to create IT
system for Money Laundering division, prior to creation of ML
system, if not already done.
6. Use the bank’s data warehouse for Improve data integrity.
7. Develop and implement change management strategy
– Transfer knowledge from team members to users
– Train users in implementation of Money Laundering software as well as produce
training materials for future users and training.
– Communicate with various groups before implementation building ML Information
system.
From Reactive to Proactive approach
Integrated Approach
Compliance Requirements
International, Regulatory, Industry, Third Party, Internal
Anti-Money Laundering Strategy

Business and organisation
Processes & Initiatives Tax etc.
Investment suitability
Training and Awareness Program

Security & technology usage Risk assessment
Management Commitment
Investment suitability Tax etc.

Know your customer (KYC) -
Account Opening
Anti -money laundering standards and procedures
Administrative and end-user

policies and procedures
KYC - Data Transaction Monitoring/ Tactical short term

AML Reporting
Access/Mining Tracking Processes solutions
Cost of Compliance
Money Laundering Data warehouse
Data Pipeline
Extract
Normalize & Transform Load Excel sheet,
Systems of Record graphs
Fortent Monitor
Data Hub
DDA
Posted &
transaction
Deposit Detail
Load to IEF Zurich
hub office
TDA Transactions
transactions
Money
Market Load to
I London
office
Wires
wire
transactions
IEF
E Excel sheet,
SWIFT
customers F graphs
FedWire Load to
IEF New York
Reference office
data rel man
CIS
accounts Excel sheet,

graphs
Concept: Fortent software training material

Major Opportunities
1. Bank freedom from Government fines and penalties by Complying
with the directives of Patriot Act.
3. Faster processes and ability to provide information to financial

analysts and investigators of the Money Laundering division enabling
bank to catch clients engaged in Money Laundering activity.
5. Enhancing Bank reputation by implementing Money Laundering

directives and thereby increasing the value in eyes of its
shareholders.
7. More accountability over the of bank’s operations raising shareholder

confidence. Thereby, enable bank to be more prepared to face any
eventualities like facing Government fines on late implementation of
Compliances or avoiding law suits by the government if any of the
bank’s client found to be guilty.
9. Easy access to exact numbers Suspicious Client and their

transactions.
11. Faster Processes means bank would give competiting banks,

financial institutions a run for their money in providing services.
Opportunities:
Easy Trends analysis
Money Laundering Users
Analysis using
Excel sheet,
Tools graphs
Zurich office
Actuate Excel sheet,
Cognos graphs
Wealth SAS
Management
New York office
Actuate
Investment
Banking
Excel sheet,
Actuate graphs
Calculation
Engine London Office
Actuate
Excel sheet,
graphs
Stamford Office
Opportunity:
Easy access of information globally
Zurich office –
Report on Clients
transactions unexplained
for amount
above $10,000.
Stamford office
London office List of clients in US said
demands Suspicious to be under suspicion radar
Activity Reports
Berlin office
Paris office– List of clients in Germany said
How to perform better to be under suspicion radar
Than Credit Suisse –
search Trends
Excel, Word New York office –
US government – List of all
Clients under suspicion
by bank’s investigators
Opportunities:
Actual number & not mere suspicion about Client & their
transaction
US ope
Eu
r
As
th
ia
n
Mo
Wealth
Management
10
Investment
47
Region
banking
30
Fixed Income
Institutional 12 Product
securities
3/1 3/2 3/3 3/4
Date
External Problems
Globalisation of
clients & data
Accountability of
Sophisticated transactions from
money Corresponding
launderers banks, investigate
volumes of data.
Privacy concern’ Reporting to

Of clients number of
agencies &
regulation
change
Inefficient
compliance
systems [1] Professor S. Seshadari, IIT Professor slides on
Datawarehousing.
Only the diagram structure taken by Professor’s slide.
The concept & content based
on my understanding of Delta case.
Internal Problems
Hire Paralegal &
IT team well
versed with Patriot
Act
Each division
AML software working on
which is best different data
processes and
system
budget?
Massive volumes
Of data & Where to hire
Data integration best IT,
Permissions Within
Technology
The bank
Day – today operations consultants
Vs Trends & Strategy issues
[1] Professor S. Seshadari, IIT Professor slides on

Datawarehousing.
Operational Problem:
Quick access to financial information in manage transactions
Which are our
lowest/highest
margin
customers ?
Who are my customers

and what products
What is the most are they buying?
effective distribution
channel?
What product Which customers

promotions have the are most likely to
biggest go
impact on revenue? to the
competition ?
What impact will

new
products/services
have on revenue
and margins?
Data Integration Problem
♦ Current systems outdated to meet industry challenges
♦ Fragmented asset view
Reporting on client's assets and related KPI not supported by the Accounting System
Systematically coherent and consistent reporting cannot be ensured
♦ Incomplete client and product view
Significant revenues are not calculated on client and product level
No allocation of revenues to clients and products
♦ Audit Trail and Control
Fragmented system set-up and various instances involved make drill-downs and controls very
difficult
♦ Very limited system flexibility
Major changes to reports cannot be implemented with reasonable efforts
♦ Technology Risk
Vendor support & relevant knowledge are no longer available
♦ Operational Risk
System stability and recoverability in case of major issues may cause delays and costs
Some of the processes are still completely manual. A parallel run is must in order to even
initiate the data integration of system.
Goals
1. Know Your Customer

2. Perform Due Diligence for Client
3. Run Suspicious Activity Reports
4. Early detection of Client’s suspicious transactions.
5. Save Bank from government fines,
6. Better flow of Information across the various divisions of banks
regarding Money Laundering clients and their transactions.
Money Laundering Searches required by the
Compliance Officer
Know Your Customer Guidelines
Customer Acceptance - Ensure that you
accept only legitimate and bona fide
customers.
Customer Identification- Ensure that you

properly identify your customers to
understand the risks they may pose.
Transactions Monitoring- Monitor

customers accounts and transactions to
prevent or detect illegal activities.
Risk Management- Implement processes to

effectively manage the risks posed by
customers trying to misuse facilities.
Source: Presentation by Sanjeev Singh

KYC: If Client Involved in
Money Laundering Activities
Drug Trafficking
Kidnapping Bribery / Corruption
Gambling
Counterfeiting and Forgery
Robbery Tax Evasion

and Fraud Serious Crime or All Crimes?
White Collar
Crimes
(including Insider
Trading and
Securities Prostitution
offences)
Organised Smuggling
Extortion Crime (arms, people, goods)
Source:
www.fintraca.gov.af/assets/
ppt/AML
Goal: Integration of Company’s data to enable
Money Laundering Analysis Across Bank’s various
Divisions for Analysis to happen
Investment Global
Fixed Income Trading and Settlement Banking – Wealth
US division Switzerland Division Europe division Management
Drill down Drill down by Trend analysis Granular

By city, country Financial By region Details by
product region City,
state, country
Fortent Monitor
Investigation
System
Detection Engine
Operational Data Store
Profiling Engine
Data Manager
Source: Fortent software training material

Data Pipeline
Extract
Fortent Monitor
Data Hub
DDA
Posted &
transaction
Deposit Detail
Load to IEF Zurich
hub office
TDA Transactions
transactions
Money
Market Load to
I London
office
Wires
wire
transactions
IEF
E Excel sheet,
SWIFT
customers F graphs
FedWire Load to
IEF New York
Reference office
data rel man
CIS

graphs

Money Laundering Searches required by the Compliance Officer
Compliance Officer CCH Wall Street 3rd Party Data
Inefficient Reactive,
Use of Time Not Proactive WSP Email Regs
Other
Manual Inconsistent
Processes Audit Terms
Increasing OFAC
Workload
Compliance EYE
Mutual Fund
a/c info Suitability Other firm Data
criteria data
OMS Clearing
Firms
•Source: Fraud, Money Laundering, Terrorism & Compliance in the Financial

Services Industry by WoltersKluwer - Automated Solutions to an Integrated
Problem
Goal:
Process change
Phone Internet
order order
Exchange
Market
Maker
Electronic
Communications Firm Internalizes
Network Order
[1] http://www.ibtimes.com/articles/20061006/add-nyse-electronic-trading.htm
The Simple SWOT from MIS750
STRENGTHS WEAKNESSES
1. Lack of in house expertise in Money
1. Brand Name
Laundering implementation.
2. Cash Flow
2. Lack of in house expertise in use of IT
3. Well distributed office locales
to implement Money Laundering
4. Products and services
software.
5. Trained experienced financial analyst
3. Huge size, global data & so slower
6. Part of Bank’s various Divisions,
adoption of new technology than by
already doing transactions Online
small size companies.
OPPORTUNITIES THREATS
1. Huge Online Financial services market 1. New competitors - Online Digital firms
untapped. like Charles Schwab, E-Trade, Western
2. Commanding presence in US, Union.
European markets where Online 2. Fines from the regulators.
services market booming. 3. New changing regulations around the
3. Greater reach to clients implies world and fines for Bank in event of non
multiplier effect if successful compliance to these new laws.
4. Offer more variety of services to attract 4. Loss of Image in case Bank found guilty
more clients. of Money Laundering.
The Simple SWOT from MIS750
STRENGTHS WEAKNESSES
4. Existing Human Resource, Divisions,
high cost Brick structure within bank, how
to utiilize their services compared to Click
structure of small Online companies &
consequently their low operating cost.
OPPORTUNITIES THREATS
5. Lack of methods to know and verify
Customer details from what they say and
6. Buying / Tie up with Online Financial what they actually do.
services 6. Huge amount of daily data to be checked
Company and learn from their low cost right from Client’s details, to Transactions,
Click culture, Online handling of Processes to email correspondence between the
like Fox TV who successfully launched My Client and the Bank.
Space on Internet though traditional TV 7. Cataloging data from around the world,
Media company. from all their Clients & from all the Client’s
transactions and then storing all these
details at Bank’s location.
8. Cataloging all the above details and yet
comply with the Swiss Privacy Laws of Non
Disclosure of Client’s details and
maintaining Client’s Privacy.
Weakness:
Data Integration & Size of Bank
Problems:
Data Disintegration Across Sources
Wealth Investment Brokerage Credit card

Management Banking
Same data Different data Data found here Different keys

different name Same name nowhere else same data
Threats:
Multiple Compliances, Regulators and changing Laws
& Compliances pose new Risks for Banks
USA
PATRIOT Act
• Bank Risk : Terrorism
• Reputation Risk
• Compliance & Regulatory Money Laundering
risk OFAC
– Fines
– Multiple agency
Bank
enforcement actions Secrecy
Act
• Prison
• Operational risk for Bank
- Loss of charter
Fraud
– Loss of GLB powers
• Litigation Risk for Bank •Source:
Fraud, Money Laundering, Terrorism & Compliance in the
Financial Services Industry by WoltersKluwer - Automated
Solutions to an Integrated Problem
Threats:
Newspaper reports
• August 2007:
• American Express fined USD $55 million,
• Making it largest forfeiture to date & Civil
money penalty $10 million
• January 2007
• Bank of America, Charlotte, NC
• Penalty: USD $3 million civil money
Source: http://www.amlcft.com/cases.htm#Recent_Major_Fines_and_Penalties
Weaknesses
Strengths 1. Lack of in house Money
Super SWOT Laundering & IT workforce
1. Brand Name
Company UBS 2. Cash Flow
2. Huge size, slower adoption of
technology than by competitors
Money 3. Well distributed office locales
4. Products and services
3. High cost of Brick structure
against the Click structure and
Laundering 5. Trained Financial workforce. high operating cost.
6. Part of Bank Transactions 4. Late mover in Online market.
Division Online.
Opportunities SO STRATEGIES WO STRATEGIES

1. Provide staff IT training in
1. Huge Online market 1. Use Huge pockets to
Money Laundering software to
untapped. deploy latest Money make them equipped to handle
2. Commanding presence in Laundering Technology. Money Laundering software
US, European 2. Use Brand name to enter operations.
3. Greater reach to clients Online Money Laundering
than competitors Banking Operations.
4. Offer more variety services
Threats ST STRATEGIES WT STRATEGIES

1. Fines from the regulators. Tie up Start up firms to join the Tie-up with IBM, Infosys to
New changing regulations Online Products & services. provide regular supply of well
around the world and fines for Tie-up and Co-Brand services with
experienced IT workers.
Bank in event of non compliance existing Online player to compete Start transformation of
to these new laws. with new born Online firm.
Enterprise into IT governed
Loss of Image in case Bank Lower cost of operations and enterprise parallelly in multiple
found guilty of Money transaction to attract customers from divisions of bank.
Laundering. competition.
Weaknesses
Strengths
Super SWOT
Company UBS
Money
Laundering
Division
Opportunities SO STRATEGIES WO STRATEGIES
1. Use Huge pockets to deploy
3. Use big distribution to get
latest Money Laundering software
more clients than & trained IT workforce from say
competition. IBM. 2.
4. Use huge infrastructure to Use brand name to offer Online
provide Add on services. services and market these.
Threats ST STRATEGIES WT STRATEGIES

Tie up Start up firms to join the Tie-up with IBM, Infosys to
2. Slow adoption of IT Online Products & services. provide regular supply of well
3. In house trained workforce Tie-up and Co-Brand services with
experienced IT workers.
existing Online player to compete Start transformation of
with new born Online firm.
Enterprise into IT governed
Lower cost of operations and enterprise parallelly in multiple
transaction to attract customers from divisions of bank.
competition.
Method 1: Customer Relationship Management
CRM used for Monitoring/Reporting
Application Enhanced
Customer ID due
from
documentation diligence
customer
When should KYC research need to

be carried out? Monitoring
Within the institution

Outside the institution
Investigation Reporting
FIU
analysis
Source: www.baft.org
presentation by Andrew Clark
Method 1: Customer Relationship Management
Contd…
Anti Money Laundering Profiles generation 1
Transaction Daily Summary Monthly Summary
Account Account Account
Txn Type Txn Type Txn Type
Day Day Month
Account Profile Peer Profile

Account Peer Group
Txn Type Txn Type
• Source: Fortent AML training guide
NOTE: Peer Groups are derived from account reference data (e.g. High Account Type and LowAccount Type)
Method 1 Contd… CRM : 2
Tracking Suspicious Behavior
by customer, by transaction
Event Thresholds SB Thresholds
Account
Profile
Events Infractions
(reason for alert)
Insufficient Account
Comparison of current
month to account profile Account Security
Account Value Blanket Infraction
Daily
Summary Account Volume
Monthly Customer Security Group by
Daily
Peer Value Sum Alerts
Summary
Summary Blanket Infraction customer
of scores
Daily Insufficient Peer
Summary
Peer Volume BLU Infraction

Comparison of current
month to peer profile
Peer
Profile

Method 2: Information Organization
Fortent Monitor
Investigation
System
Detection Engine
Operational Data Store
Profiling Engine
Data Manager

Data Pipeline
Extract
Fortent Monitor
Data Hub
DDA
Posted &
transaction
Deposit Detail
Load to IEF Zurich
hub office
TDA Transactions
transactions
Money
Market Load to
I London
office
Wires
wire
transactions
IEF
E Excel sheet,
SWIFT
customers F graphs
FedWire Load to
IEF New York
Reference office
data rel man
CIS

graphs

The Fortent End to End Solution Overview
Case Investigation
Information Transaction
Management
& Training KYC Monitoring
Workflow
& Reporting
• 2 levels of risk assessment: KYC and

Transaction Monitoring
• Plus support functions

What do we look at ?
Transaction Type WIRE
Message/Product SWIFT MT103

Type
Role Originator Intermediary 1 Intermediary 2 Beneficiary

SWIFT SWIFT SWIFT SWIFT
Country
Island Bank Peoples Bank Lion Bank Wachovia
Bank
Account $ $

Search Customer and transaction details by …
• Find Alerts
– By Alert ID
– By Account ID
– By SSN/Tax ID
– By Customer ID
– By Bank and Country
– By Party ID
• Find Bank and Country
• Find Party ID
• Find Accounts
• Find Customers

Business Strategy
As-Is To-Be
Products and Services Products and Services
Asset Management, Wealth Single UBS Executive, Client’s point of
management, Brokerage – to an contact for all kinds of accounts, Asset,
extent still manual and same client Wealth Management or Brokerage to get
has to call different divisions for overall picture. Online services.
different accounts
Customers/Clients Customers/Clients
Business Scope
For Clients coming to bank for one-to- Educated, high net worth individual well
one meet is a norm loaded with paper versed with Online services, specially
and going back with bag full of younger generation will jump on, might
financial documents. loose those who not Online. Client prefer
Telephone or web meetings, one-to-one
meeting only in special cases.
Competitors Competitors
Banks like Barclays, Credit Swisse, Banks like Barclays, Credit Swisse, Citi
Citi Group as well Online firms like E- Group are also deploying Technology, but
Trade, Charles Schwab are giving Business Intelligence might be UBS edge.
UBS tough competition. Local banks, online financial instutions
with low distribution network will loose
customers badly and may even cease to
exist.
Products & Services / Clients & Customers
– As is
Products & Services / Clients & Customers
– To Be
Business Strategy
As-Is To-Be
Big distribution network. Online Asset management,
Brand Name Brokerage, Taxes filing, Pension
Competencies
policy advise and related Online

Distinctive
Deep pockets to implement any

services become norm. Services
new technology within a short
over the phone, Call center services
time.
for minor administrative services
like logging on bank’s Web page,
opening bank account become a
norm.
Note Changes
Internal Decisions , Regulatory, Internal Decisions , Regulatory, Etc.
Governance
Etc. Patriot Act details of client

Business
Patriot Act implementation done submission to government –

both partly manual, partly implementation done Online only
Online using Excel, Business Objects,
graphs.
As – Is : Business Strategy Governance
Paper based Approach to Money Laundering
Money deposit Faxes

by Client Bank teller puts in
Account details
Customer account Bank manager Office Boy
Compiles transaction
Volume of paper work
In Investigation and
Administrative loop holes
Leads to loss of
Investigation.
Is this Client records
Processing fine in 2008?
Details received at
Bank’s Head office
Investigator Search
Account past trends
Investigator from
FBI, Bank, Head Bank Suspicious Transaction
Try to trace client’s Search for Right Client Accounts Desk
details Account & Right FAX
Office Boy
As – Is : Business Strategy
Business Strategy Governance: To Be
From Reactive to Proactive approach Integrated Approach



Account Opening


AML Reporting
Cost of Compliance
To-Be: Business Strategy
Business Infrastructure
As-Is To-Be
Separate head for Money
Administrative Key Processes
Division was headed by Laundering was brought in.

Business Analyst, Project
Manager who was much low in Person was of level of Director
Management ranking. reporting directly to Executive
Committee and working in parallel
with CIO.
Process have been designed to be all Online,

Few process were manual, few data transfer, sharing, all online with click of
a button. Bank’s declining position, bank
based on Excel sheets, few
responsibility to comply with new new
other online but there was no compliances and unhappy customers with
integration, so one division slower transaction speed as compared to
could not exchange competitors.
information with other without
use of paper.
Paper based work, typing Fast typing skills mandatory along with use
HR/Skills
skills, telephonic skills, PC of all MS Office products from Word, to Excel

skills limited to MS Word and to Power point, Outlook, Web browsing along
limited level of MS Excel. with specilised software like Database
programmes like SQL, Business Objects,
Charles River for few.
As – Is : Administrative Approach to Money Laundering
REACTIVE APPROACH
Money deposit Faxes

Account details
Leads to loss of
Investigation.
Details received at
Investigator Search
Account past trends
Investigator from
Office Boy
Current Key Processes – As Is
Private Banking
Investment
Asset
Management Banking
Institutional
investors
Brokerage
** Above Pictures taken from Google Images
Future Key Processes – To Be
Private Banking
Investment
Asset
Management Banking
Institutional
investors
Brokerage
Organisational changes
As Is To Be
Hierarchy based org Structure Services, Product line based org

Structure
Human Resources
As is To Be
IT Strategy
As-Is To-Be
Key Applications Key Applications
Technology
Prior to project After project implementation

Scope
implementation
Key Technologies Key Technologies
Prior to project After project implementation
implementation
Those areas in which the

Competency
Those areas in which the company has a distinct or

System
company has a distinct or competitive advantage over their

competitive advantage over competition after the
their competition. implementation of the project.
Note Changes
Internal Decisions , Internal Decisions , Regulatory,
Governance
Regulatory, Etc. Etc.

Include all areas that are Include all areas that are relevant
relevant before the project after the project implementation.
implementation Note Changes
As – Is : IT Strategy Paper based Approach to
Money Laundering
Money deposit Faxes

Account details
Leads to loss of
Investigation.
Details received at
Investigator Search
Account past trends
Investigator from
Office Boy
IT Strategy - As Is
IT Strategy – To Be
Infrastructural Re Design & Deployment
Data Sources ETL Software Data Stores Data Analysis Users
Tools - Actuate
UBS
Excel sheet,
Transaction Data graphs
U
US Wealth Management
B Zurich
Oracle
Data Marts office
S Actuate
Cognos
Sybase
UBS Investment banking D Wealth SAS
Management
a UBS New York Excel sheet,
t Data graphs
SAP Extract Actuate office
a Load Warehouse Investment
Wealth management Europe Informatica Banking
Excel sheet,
Europe Fixed Income account S graphs
Actuate
t Meta
SAP Data Calculation
a Engine London Office
g Actuate
Oracle
i Money
n Laundering
US Exchange trading
g
SAS Data Excel sheet,
graphs
Oracle
warehouse
Stamford
Institutional investment Office
IT Strategy: To Be
As a result of Process change implementation
Phone Internet
order order
Exchange
Market
Maker
Electronic
Communications Firm Internalizes
Network Order
IT Infrastructure
As-Is To-Be
Ar The IT Architecture prior to the The IT Architecture after the project

chi project implementation.
tec
tur
e
Ke The Key Processes prior to the The Key Processes after the project
y project. implementation.
Pr
oc
es
se
s
H/ HR duties and functions prior HR duties and functions after the
R/ to the project. project.
SK
ILL
S
Pre requisites for Integrated approach to trade processing:
centralisation of information collection process
From …
Numerous bilateral … to
information exchanges Centralised information source on
within financial institutions correspondent banks
Source: www.swift.com/index.cfm?item_id=3878
As – Is Architecture
US Wealth Management US Wealth

Management
Board meet
Europe Wealth Management Europe Wealth

Management
Board meet
Investment Banking Brokerage

Management
Board meet
To- Be Architecture
U
Oracle B
S The name of the divisions of UBS
Sybase banking
UBS Investment company are the following:
D 2. Wealth Management – US Division
a 3. Wealth Management – Europe
SAP Extract t Division
a
Wealth management Europe 4. Institutional Banking
S 5. Investment Banking
SAP
Europe Fixed Income t 6. Private Banking – High net worth
a individual account, Retirement
Oracle
g policy accounts
US Exchange trading i 7. Fixed Income Division
SAS n
8. Brokerage and Exchange trading
g
division
Oracle
Institutional investment
Data Sources ETL Software Data Stores Data Analysis Users
Tools - Actuate
UBS
Excel sheet,
Transaction Data graphs
U
B Zurich
Oracle
Data Marts office
S Actuate
Cognos
Sybase
UBS Investment banking D Wealth SAS
Management
a UBS New York Excel sheet,
t Data graphs
SAP Extract Actuate office
a Load Warehouse Investment
Wealth management Europe Informatica Banking
Excel sheet,
Europe Fixed Income account S graphs
Actuate
t Meta
SAP Data Calculation
a Engine London Office
g Actuate
Oracle
i
n
US Exchange trading
g Excel sheet,
SAS
graphs
Oracle
Stamford
Institutional investment Office
Data Pipeline
Extract
Fortent Monitor
Data Hub
DDA
Posted &
transaction
Deposit Detail
Load to IEF Zurich
hub office
TDA Transactions
transactions
Money
Market Load to
I London
office
Wires
wire
transactions
IEF
E Excel sheet,
SWIFT
customers F graphs
FedWire Load to
IEF New York
Reference office
data rel man
CIS

graphs

Alternatives
Key Process
Implementation change
Merger, Tie up
Of IT in with upcoming
handing Online Financial
Transactions companies &
Websites
Centralization Brick to Click

and Integration of Organization
Various Divisions for Internal
reporting &
Setting up HR changes
Separate
Money
Laundering [1] Professor S. Seshadari, IIT Professor slides on
Division Datawarehousing.
Merger, Partner with other Online Financial
companies
 Merger with Online Financial
companies like Charles Schaub, Google
money, Pay Pal.
Pro’s
 Learn from experience and expertise of
Online companies and use expertise for
Inhouse AML implementation.
Cons
Western Union  Tie up with Financial companies with
incompatible with values of UBS or
Or Charles Schaub where processes of merging company
or philosophy is different.
which are in Online  Difficult to synchronize the processes,
Financial services more work for Employee of both
companies,
business
Go International, grow international
1. Alter existing Organisational structure
2. Tie up Online Financial services companies
worldwide in providing Data required for
investogating Money Laundering activities.
3. Focus on emerging markets, BRICK
countries Brazil, Russia, India, China, and
South Korea. by implementing the Money
Laundering Compliances in the respective
countries ahead of competitors and get
advantage of first mover in these markets.
Pros
6. Greater global presence and possibility of
higher profits in emerging markets.
Cons
9. If company get late & is Late entrant into
the market then the above advantages might
get lost.
10. Innovation & first mover disadvantages of
entering new markets without prior market
experience.
11. Values of UBS & new partners do not
match

Transform workforce, move from
Brick to Click Organization only for Internal reporting
 Workers / Paralegals be Train / retrenched in
order to prepare company to survive in the
Internet age.
 Change process – Demand supply,

distribution, marketing, Seat reservation.
 Strengthening Technology division and Tie –

up / Acquire with Online financial websites
Pros
 Save money from Pension benefits, job cuts,
hiring younger age call centers workers
Cons
 Face employee wrath, dissatisfaction could
lead to hostile takeover by a competitor like
American Airlines.

As Is To Be

Structure
Future Key Processes – To Be
Private Banking
Investment
Asset
Management Banking
Institutional
investors
Brokerage
Recommendations
Methodology:
Incremental method is recommended in today fast changing business environment. Some might even
recommended agile approach wherein smaller increments of redesign and then feedback is
done. But, this approach is found to be more suitable for Technology firms.
In this approach as stated the Technology team redesign, conducts test of design and then feedback
and approval of the business owner. getting feedback from all concerned stakeholders, thereby
diminishing the chances of risk in case the redesign of process is not liked. And, all the
processes happens almost in parallel, one starts and soon other starts. This ensures speed of
the project work getting accomplished and with consent of all the stakeholders parties, both
Technical and the Business.
In event of a not so good design by the IT team, another redesign can be done and presented. Since,
small portion, so loss of time and money will be less compared to waterfall where whole part is
completed first before moving to the next.
HR
Apart from Methodology, Human resources is another important component of accomplishing the
project. UBS could decide to get all the project done:
• In-House 2. Whole IBM or Infosys 3. Mix of In-House, IBM,
Infosys
In-house does not suit as UBS Technology team might not have the requisite expertise, an IBM or
Infosys professional have due to working in specialized environment by IBM or Infosys.
Completely, depending upon the technology team of IBM, Infosys too is not favorable as
consulting companies do not have the exact idea what the top bosses would want or what is the
requirement as per the Financial industry and UBS values norm.
Hence, a mix of UBS Technology team and consulting companies like IBM, Infosys is recommended.
From Reactive to Proactive approach
Integrated Approach



Account Opening


AML Reporting
Cost of Compliance
Pre requisites for Integrated approach to ML
Bank: centralisation of information collection process
From … … to
Numerous bilateral Centralised information source
information exchanges on correspondent banks
Source: www.swift.com/index.cfm?item_id=3878
As Is To Be

Structure
References
1. www.cfdg.org.uk/.../events_h_050518_E3%20-%20Money%20Laundering
%20and%20Fraud%20-%20Don%20Bawtree.ppt
Presentation from Don Rawtree, Don Bawtree, Partner, BDO Stoy Hayward LLP, Emerald
House, East Street, Epsom, Surrey, KT17 1HS
2. Presentation on Briefing on ‘KYC’ Norms and ‘AML’ Measures for IBA Member Banks
by Sanjeev Singh, Additional Director, FIU-IND, Financial Intelligence Unit-India
3. www.fintraca.gov.af/assets/ppt/AML
4.http://www.nchelp.org/elibrary/Presentations/2003/2003WinterLegalAffairsMeeting/Consumer
%20Privacy%20Issues.ppt
5. www.cityinformation.org.uk/Events/presentations/2007-May-MicheleBate.ppt
6. http://www.amlcft.com/cases.htm#Recent_Major_Fines_and_Penalties
7. Presentation on Briefing on ‘KYC’ Norms and ‘AML’ Measures for IBA Member Banks
MIS 760 Team Case 73

References
• 8.
www.baft.org/content_folders/2nd%20European%20Bank-to-Bank%20Forum/andrew_clark.
ppt
9. Fortent AML training guide
• 10. www.kentlaw.edu/faculty/rwarner/classes/certificate/crime/USA%20Patriot
%20Act.ppt
11. www.baft.org/content_folders/2nd%20European%20Bank-to-Bank
%20Forum/andrew_clark.ppt
• 12. www.swift.com/index.cfm?item_id=3878
•
• 13.Some of the inputs are from reading from working at UBS so don’t have particular
slides to quote.
References & Bibliography
• Missing - References : To be added
• Sources on each slides need to be added
Ethical Statement
“Cheating during in-class tests or take-home examinations or homework is, of
course, illegal and immoral. A Graduate Academic Evaluation Board exists to
investigate academic improprieties, conduct hearings, and determine any
necessary actions. The term ‘academic impropriety’ is meant to include, but is
not limited to, cheating on homework, during in-class or take home
examinations and plagiarism.”
Consequences of academic impropriety are severe, ranging from receiving an

“F” in a course, to warning from the Dean of the Graduate School, which
becomes a part of the permanent student record, to expulsion.
Consistent with the above statements, all homework exercises, tests and exams
that are designated as individual assignments must contain the following signed
statement before they can be accepted for grading.
I, Kartik Mehta, pledge on my honor that I have not given or received any
unauthorized assistance on this assignment/examination. I ,Kartik Mehta,
further pledge that I have not copied any material from a book, article, the
Internet or any other source except where I have expressly cited the source.
MIS 760 Team Case

Role of Business Intelligence in Anti-Money Laundering Compliance Software Implementation

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Role of Business

Anti-Money Laundering Strategy

Training and Awareness Program

Investment suitability Tax etc.

Anti -money laundering standards and procedures

Administrative and end-user

KYC - Data Transaction Monitoring/ Tactical short term

accounts Excel sheet,

Concept: Fortent software training material

3. Faster processes and ability to provide information to financial

5. Enhancing Bank reputation by implementing Money Laundering

7. More accountability over the of bank’s operations raising shareholder

9. Easy access to exact numbers Suspicious Client and their

11. Faster Processes means bank would give competiting banks,

3/1 3/2 3/3 3/4

Privacy concern’ Reporting to

[1] Professor S. Seshadari, IIT Professor slides on

Who are my customers

What product Which customers

What impact will

1. Know Your Customer

Customer Identification- Ensure that you

Transactions Monitoring- Monitor

Risk Management- Implement processes to

Source: Presentation by Sanjeev Singh

Robbery Tax Evasion

Drill down Drill down by Trend analysis Granular

Source: Fortent software training material

accounts Excel sheet,

Concept: Fortent software training material

Compliance Officer CCH Wall Street 3rd Party Data

•Source: Fraud, Money Laundering, Terrorism & Compliance in the Financial

Wealth Investment Brokerage Credit card

Same data Different data Data found here Different keys

Opportunities SO STRATEGIES WO STRATEGIES

Threats ST STRATEGIES WT STRATEGIES

Threats ST STRATEGIES WT STRATEGIES

When should KYC research need to

Within the institution

Account Profile Peer Profile

• Source: Fortent AML training guide

Peer Volume BLU Infraction

Source: Fortent software training material

Source: Fortent software training material

accounts Excel sheet,

Concept: Fortent software training material

• 2 levels of risk assessment: KYC and

• Plus support functions

Transaction Type WIRE

Message/Product SWIFT MT103

Role Originator Intermediary 1 Intermediary 2 Beneficiary

Island Bank Peoples Bank Lion Bank Wachovia

Source: Fortent software training material

Source: Fortent software training material

policy advise and related Online

Deep pockets to implement any

Etc. Patriot Act details of client

Patriot Act implementation done submission to government –

Money deposit Faxes

Anti-Money Laundering Strategy

Training and Awareness Program

Investment suitability Tax etc.

Anti -money laundering standards and procedures