Compliance Analytics

March, 2014

Introduction

Compliance portfolio

Compliance Services - Introduction 2

Payments

data quality

assessment

FATF rec 16

Compliance Analytics

Sanctions list service

Sanctions KYC AML

Processing

services

Traffic

analysis

Standards

Data

repository

KYC registry on

SWIFT

membership

AML testing &

tuning Screening Testing Traffic restriction

(RMA)

Compliance Services - Introduction 3

Help Banks identify possible anomalies in their

transaction activities by

• Providing an overview of the overall context

through SWIFT total activities

• Providing a comprehensive view of a bank’s

transaction activities, across all subsidiaries,

with all their correspondents

• Helping banks analyse their transactions by

benchmarking vs SWIFT totals, vs peers

• Providing risk analysis tools/visuals and

alerting mechanisms to help detect potential

anomalies

Objective

Compliance Analytics – Leveraging SWIFT

traffic data for risk monitoring

RISK

MONITORING

• Macro views

(geography, value,

currencies, volume)

• Aggregated views of

bank’s total activities

• Benchmark vs

SWIFT totals

• Feed AML and

Sanctions risk

assessments

• Prepare country

visits

• Alerts in case

unexpected

behaviour or

activity outside of

acceptable

thresholds (e.g.

dormants, outliers,

spikes)

• Drill down to

identify reasons of

alerts

• SWIFT as a

neutral 3rd party

source

• Internal and

external

reporting

• Assurance -

reconcile volumes

and values

• Challenge

compliance with

own policies and

controls - provide

proof

• Challenge

settings of

monitoring

systems.

Value proposition

Identify and target

highest risks

Challenge own controls

Anticipate threats and

trends Report

Institution

SWIFT

4 Compliance Services - Introduction

High level Outliers

Reporting Alerting

Bank A Bank B Bank C Bank D Bank E Bank F Bank G Bank H Bank I Bank J

Current Growth 25% -30% 14% 20% 70% -23% 60% 18% -6% -33%

Interval min -40% -40% -10% -45% -66% -46% -45% -80% -30% -100%

Interval max 30% 35% 10% 50% 73% 55% 52% 95% 33% 75%

Mean -5% 1% 1% 4% 4% 4% 3% 22% 3% -20%

-100%

-50%

0%

50%

100%

-100%

-50%

0%

50%

100%

The offering combines a service and a tool

Branches

Correspondents

Countries

Corridors

Services

• Tailor the offering

• Setting of alerts based

on customer’s needs

Tool

• Targets analysts

• Overall reporting

• Possibility to drill down

• Outliers / alerts based on

statistics and user

defined thresholds

Drill down

RISK

• Institution

specific

• Other risk

definitions

April 2014

Compliance Services - Introduction 5

6

Leveraging country of origin and beneficiary

country to provide additional insights

CA UK

CH

YE

Compliance Services - Introduction

MT103: field 52A

MT202: field 52A MT103: field 57A

MT202: field 58A

BIC code

BIC code

Example SWIFT Compliance BI data for DEMO Bank:

Country drill-down (Mauritania)

Data Sources All figures based on Inbound payments (MT103 &

MT202cov) from correspondents in Mauritania – Full Year

2013

1. Geographical distribution of Demo Bank

branches/affiliates, based on value of inbound traffic.

Payments with 4 Demo bank affiliates in 4 countries

2. Top20 Ultimate beneficiary countries (field 57a),

based on value of inbound traffic: Top 20 out of 100

countries overall

3. Sanctioned country as ultimate beneficiary, based

on value of inbound traffic. Example has one

payment sent by Bank X in Mauritania, via Demo

Bank, with Cuba as ultimate beneficiary country

Value distribution

2. Ultimate beneficiary countries – Top 20 3. Do any flows end up in a country with sanctions?

1. How many DEMO Bank affiliates does Mauritania interact with?

4 branches in 4

countries

Beneficiary country drill

down: Individual sanctions

are applied to Cuba,

however there is a $217

USD transaction

Compliance Services - Introduction 7

Compliance Services - Introduction

Currency distribution of payments from CORRATWW

(based on value of inbound traffic)

DEMO Bank correspondents in Austria

(based on value of inbound traffic)

Top10 Austrian corridors and DEMO Bank activity share

(based on value of inbound traffic)

Top20 DEMO affiliates receiving payments from CORRATWW

(based on value of inbound traffic)

Correspondent Analysis – Correspondent CORRATWW Inbound payments (MT103 & MT202cov) – Full Year 2013

129

Poland 130

Slovenia 163 54 (33%)

Hungary 329 26 (8%)

Italy 442

Slovakia 699

France 805 258 (32%)

Bulgaria 842 8 (1%)

Germany 1,101 220 (20%)

Austria 1,972 552 (28%)

Other countries (43)

14 (2%)

66 (15%)

12 (9%)

86 19 (22%)

United Kingdom 15 (12%)

in billion USD

DEMO Bank

Total SWIFT

CORRAT2L

Other correspondents in AT (41) 111

123

CORAATWW 14

CORBAT22 17

22

COROAT2L 42

CORBATWW 63

COROATWW

CORGATWG 136

CORNATWW 157

CORRATWW 175

CORUATWW 384

in billion USD

8

1. What are the top Austrian

corridors and correspondents?

DEMO Bank is a major player in

Austria with 51 correspondents

2. How many DEMO Bank affiliates

does CORRATWW interact with?

Payments with 50 DEMO Bank

affiliates

3. Currency split of CORRATWW

payments activity with DEMO Bank

in 2013?

88% of payments are in EUR

Compliance Services - Introduction 9

Correspondent Analysis – Correspondent CORRATWW Inbound payments (MT103 & MT202cov) – Full Year 2013

1. What are the higher risk

originating countries?

2. Which DEMO Bank affiliates

are involved in these flows?

3. What are the ultimate

beneficiary countries?

Compliance Services - Introduction 10

20%

22%

15%

13%

5%

4%

5%

7%

100%

0 - 500 500-2500 2500-10k 10k-50k 50k-100k 100k-1mln >1mln

15% 11% 7%

Subsidiary 2 40% 25% 10% 3%

Indonesia 21% 26%

2%

Turkey 16% 23% 18% 9% 8%

Subsidiary 1 15% 25% 20% 10% 5%

Value range (USD)

Compare distribution of transactions by value

range of subsidiaries vs country averages

DUMMY

Look at distribution and evolution of value buckets:

• By subsidiary

• By correspondent

• By country

• By corridor

Compliance Services - Introduction 11

Mar Feb

> 1mln

100k - 1mln

50k - 100k

Sep

10k - 50k

2500 - 10k

500 - 2500

< 500

Oct Nov Dec Jan Apr May Jun Jul Aug

Identify anomalies in distribution by value

range on a monthly basis

DUMMY

Compliance Services - Introduction 12

DEMOXXAA 860 34% 52%

DEMOXXEE 630 40% 44%

DEMOXXDD 590 41% 58%

DEMOXXCC 630 48% 29%

DEMOXXBB 670 30% 48%

14%

22%

24%

2%

16% 500 22% 64%

510 51% 39%

550 25% 47%

600 15% 52%

830 42% 46% 12%

33%

27%

10%

14%

Active relationships

Unused relationships (no traffic since creation)

Dormant (no traffic for last 12 months)

Inbound Outbound

Analyse your unused and dormant RMA

relationships

DUMMY

• Overview by branch

• Identify correspondents up to BIC level

• Ease clean-up

New RMA correspondent relations

Compliance Services - Introduction 13

125

110105100

8876

90838085

7565

May Apr Jan Mar Feb Dec Nov Oct Sep Aug Jul Jun

Newly created inbound RMA relations in 2013

In FATF countries with deficient

AML controls

Inbound relations created in 2012 for which no traffic in 2013

With traffic 60%

Without traffic 40%

EMEA 55% AP

30%

AME

15%

Overall Breakdown by region for

without traffic

Number of new relations

by month

0 3 4 7 3 0 5 1 10 3 0 12

DUMMY

Compliance Services - Introduction 14

Average

Growth previous month

Confidence interval

Correspondent A Correspondent B Correspondent C Correspondent D Correspondent E Correspondent F Correspondent G Correspondent H Correspondent I Correspondent J

Current Growth 25% -30% 14% 20% 70% -23% 60% 18% -6% -33%

Interval min -40% -40% -10% -45% -66% -46% -45% -80% -30% -100%

Interval max 30% 35% 10% 50% 73% 55% 52% 95% 33% 75%

Average -5% -3% 0% 2% 4% 4% 3% 8% 3% -13%

-100%

-50%

0%

50%

100%

-100%

-50%

0%

50%

100%

Identify correspondents with exceptional

growth based on statistical analysis

DUMMY