compliance services solutions
TRANSCRIPT
Compliance Services
Solutions
Tony Wicks, Director, Compliance Services
James Wills, Senior Business Manager, Initiatives
Community inspired compliance services
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As an industry-owned cooperative and the global network for secure
financial communications and standards, SWIFT is uniquely placed to
help solve the financial crime compliance challenge through
collaborative efforts and innovation
Significant costs
at stake….
... Yet no competitive
advantage for banks
Financial crime is top of
the agenda for banks
All geographies / All types
of players impacted
Lots of duplication…
… for universal challenges
Development
Qualification
Exploration
Sanctions list
management
service
AML testing
& tuning
2013
100 Screening customers
Compliance Forum Dubai
Dedicated compliance unit
2014
Compliance Analytics
SWIFT acquires Omnicision
250 Screening customers
Compliance Forum in Boston
The KYC Registry
2015
300 Screening customers
Screening of all formats
KYC Registry rollout
SWIFT Profile
SWIFT 2020
Client/
Name
screening
FATF 16
information
quality
Additional
KYC
services
Analytics
for smaller
institutions
Vision: Financial Crime Compliance Utility
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2012
Sanctions Screening
Sanctions Testing
Compliance Forum Osaka
Community-inspired solution portfolio
Sanctions Testing
20 top-tier banks with 35% of SWIFT message traffic
Maximise the effectiveness
and efficiency of your
sanctions environment
Compliance Analytics
8 banks with
more than 10%
of SWIFT
message traffic
Enhanced understanding
& management of financial
crime-related risk.
Sanctions Screening
320 customers 16 central banks 100K messages per day
Hosted solution for cost-
effective compliance with
sanctions regulations.
The
KYC Registry
12 leading banks
in working group,
270 institutions
and counting..
One global source of KYC
information for
correspondent banking
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SANCTIONS TESTING
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In the unlikely event of a fire …
• Fire alarms mitigate low frequency
but high impact events
• Irrespective of the likelihood of a
fire, a building fire alarm system
must work when needed
• Testing ensures correct operation
of alarms in the unlikely event of a
building fire
• Most fire alarms are tested weekly
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In the unlikely event of a sanctions violation …
• Sanctions filters mitigate business
risk of low frequency but high
impact events
• Irrespective of the likelihood of a
sanctions violation, businesses
have a regulatory obligation to
ensure that sanctions controls work
• Sanctions Testing ensures correct
operation of the filter and allows
regulations to be met in alignment
with business risk policy
• Many sanctions filters are rarely
tested SWIFT Business Forum Canada - 14 April 2015 7
When was the last time you
tested your sanctions filter?
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Banks face a sanctions compliance challenge
In a world of unprecedented complexity and change:
• How can I be sure my screening solution protects my institution?
• How can I demonstrate to regulators that I understand my solution and
how it mitigates risks?
• How can I make my screening solution more effective – and more
efficient?
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Sanctions compliance – balancing priorities
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Effectiveness
• Provide assurance that your filter
works
• Measure system’s fuzzy
matching performance
• Assess coverage of sanctions
lists
• Align screening system to your
risk appetite
Efficiency
• Reduce false positives
through iterative testing
• Build optimisation tests into
your processes
• Understand parameter changes
• Manage and tune rules and “good-
guy” lists
Testing Meeting regulatory demands
Tuning Managing cost and resources
with
Sanctions Testing process
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Formats
Settings
Lists
Automate • Repeat • Compare • Monitor
Define
test objective
Download
test files
Process
test files
Upload
hit results
View
test results
Common issues identified through testing
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• Outdated lists
• Missing entry types
• Missing entries
• Language variants not screened correctly
• Deleted records still screened
Sanctions Lists
Quality
• List scope incorrect or not aligned with bank policy
• Inconsistent implementation across filters
• Entity and alias types screened unnecessarily
Screening
Policy
• Inconsistent screening performance across message types
• Message or file elements not screened properly
• Overreliance on specific fields (e.g. address or country)
Message
Types • Poor fuzzy matching
performance
• Line break, word order, sequences
• Poor performance against particular entries (short or long names, aliases)
• Character set matching issues
Filter
Weakness
Sanctions Testing –Independent In-house testing
Provides:
• Simple and easy on-demand testing
• Automated, scheduled or on-list change sanctions testing
– Without the need for manual intervention in test processes
• A full audit trail including automated report generation and email alerting
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Test Creation
Test scope aligned to
compliance policy and
expected outcomes
Trigger Event
Scheduled or
on-list change
test file creation
Sanctions Filter
Test file sent to
sanctions filter for
processing
Outcomes
Alerts sent to users
and report generated
Automated Analysis
Results returned and
automatically analysed
Assessments
GSC 2015 Sanctions Testing – Feb 2015 – Confidentiality: Internal 14
Standard Services
• Standard report and assessment approach
• Workshop & findings
• Considers performance of your own filters
Effectiveness
• Provides assurance that you filter is working
• Captures Risk appetite
• Understand fuzzy performance
Efficiency
• Identifies opportunities for efficiencies / cost reduction
• Quick win efficiency improvements
Peer Assessment Reports
GSC 2015 Sanctions Testing – Feb 2015 – Confidentiality: Internal 15
Available
Q2
2015
Exact Match
How does
my filter
compare?
Peer Upper Range
Peer Lower Range
Fuzzy Performance
Institution
Am I in the
safe-zone?
Comprehensive
• Standard report and assessment approach
• Multiple peer performance dimensions
Helps you understand
• Relative performance
• Policy and technical implementation
• Risk appetite
SWIFT community
• Developed by and created for the SWIFT community
• Industry best practice
• Contribution basis
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The KYC Registry
Context “The Relevance of Utilities” Boston 2014
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“What areas of financial crime prevention lend themselves to being
addressed through a utility model?”
(% of voters)
In a nutshell…
Single source of correspondent banking
KYC information
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7,000+ banks on SWIFT
Trusted third party (member-owned)
Leverage SWIFT membership
process to collect ‘basic’ data
User-provided, user-controlled
Up-to-date and validated
information (through dedicated validation
teams)
A Single Standard
Validated data
A feature-rich Platform
Unique value-add content
Community-lead engagement
The founding principles
www.betterkyc.com
The KYC Registry: Single source of directly sourced and validated KYC
data for correspondent banking Due Diligence
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The KYC Registry
Sta
nd
ard
set
of
data
Featu
re-r
ich
pla
tfo
rm
Valid
ate
d/ Q
A d
ata
Un
iqu
e c
on
ten
t10
Co
mm
un
ity-l
ead
Customer ID
Customer base
Ownership
Management
Compliance /AML
FATCA
95+ data points
30 Documents
Secure
Workflow tools
Notifications
Easy to use
Export/ Report
Comprehensive
Fact-based
Ex-industry
professionals
On average 1
check per data
point and 8 per
document
CDD data
EDD data
SWIFT
Profile for
‘KYCC’
7000+ banks
1.3M+ connections
Development banks
Working Group Big
banks
The KYC Registry – a standard set of KYC data
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Category I – Identification of the customer
• Licenses and Proof of Regulation, Certificate of Incorporation etc
• Legal name, auditor, regulator, addresses,
Category II – Ownership and management structure
• Declaration of UBO and shareholders >10%: full names and identifying data
• Board of Directors Lists: full names and identifying data
• Group structure
• MA/AA,Annual Reports, Shareholder listings, certified group and organisational charts
Category III – Type of business and client base
• Revenue breakdown by legal entity
• Operating geographies and customer verticals
Category IV – Compliance information
• Enhanced AML Questions
• AML docs: AML Controls, Wolfsberg Questionnaire, US Patriot Act, response to negative news
Category V – Tax Information
• TIN, GIIN, FATCA information & proof of registration
Join the KYC Registry
• Share your KYC data at no cost
• Pay only for the data you need
• Benefit from our 2015 launch offering
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Questions?
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SWIFT Business Forum Canada - 14 April 2015
Thank you
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