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POSEIDON AML
Anti-Money Laundering and Counter- Terrorist Financing System with Anti-Fraud Functionality
12/3/2015 NATECH S.A. 1
AGENDA
General - Introduction
Regulatory (Compliance) background
International Standards
Application : Poseidon AML
Q&A
12/3/2015 NATECH S.A. 2
GENERAL - INTRODUCTION
Global perspective
AML
CTF
AntiFraud
KYC
Unified (AML/ATF/Case/A-Fraud)
Modular
Real Time
12/3/2015 NATECH S.A. 3
Scoring ProfilingWatch
Lists
Cases &
Workflows
Screening
& Alerting
Reporting
& MISKYC
KEY POINTS
Live (real time) scoring
Direct matching over watch lists
Custom/designated rules
Custom/designated groups
Reporting System
Case management
Unified platform (CRM, Reporting,
Management/3rd party)
12/3/2015 NATECH S.A. 4
PoseidonEU / FATF Compliance
Ease of use
Adaptive to change
Agile
Environment/rules/landscape
Multilingual
POSEIDON AML ON BANKING
POSEIDON®AML is a certified (Bank of Greece 2013, Deloitte 2013) integrated banking solution for the prevention of money
laundering and financing of terrorist organizations. Poseidon can alternatively work as an Anti-Fraud System.
The introduction of new and stricter rules and procedures forces all the banks to set in high priority the issue of security.
12/3/2015 NATECH S.A. 5
QUOTES FOR POSEIDON
“… Money laundering is a real financial risk for the organizations, related directly to the protection of their reliability.
Natech has the requisite know-how and software in order to deal with these risks.” Deloitte 2013
“ The application has unlimited expandability abilities in order to cover the needs of regulatory conformity of credit institutions. Poseidon is a modular yet transparent system offering Screening, Scoring, Monitoring, Profiling (trader & transactions based - KYC) and Case management functionality. “ BoG, 2013 evaluation
“The system is designed to operate real time on a 24/7 basis utilizing Natech’s uniquely developed matching, scoring and prediction algorithms.” , Greek Postal Office (ELTA) , 2014
12/3/2015 NATECH S.A. 6
COMPLIANCE
Requirements
Classification
Business Activity
Customer Type
Transaction type
Customer to Institution Relationship (loyal, passing, active etc)
Risk transactional behaviour
Product risk assessment
Chanel risk assessment
Web, ATM, cash, Mobile etc
Standardisation of procedures
Poseidon AML
Automatic Classification
Multiple criteria
Predefined or custom based rules and categories
Calculated transaction behavioural patterns
Custom defined
Assessment & Evaluation
products
Accounts
Business Activity /Information
Multiple Channel real time and batch assessment
Standardisation of procedures and rules
Case management System
12/3/2015 NATECH S.A. 7
EU (FATF BASED)
3691/2008
•“Prevention and
Suppression of
Money
Laundering”
2577/2006
•“Basic financial
organization
principles”
12/3/2015 NATECH S.A. 8
KEY POINTS ON THE PROCESS
12/3/2015 NATECH S.A. 9
Due Diligence
•Intermediary
•Bank associate/staff
•Branch
Customer policy
evaluation
Enhanced Due
Diligence for High –
risk
individuals/companies
Sanction List filtering
(transactions)
Scenario scoring
rules (transactions)
Integration among
core and 3rd party IT
systems
Cash flow monitoringFraud prevention
mechanisms in placeCase Management
DIVERSIFICATIONREAL TIME ASSEMENTS
•On the fly indication/profiling
•Near 0 false indications
Ability to customize
behavior
•Immediate adaptability to new or
improved rules and process
Case management System
in place
•Ability to operate in the UK or in
the EU
Hybrid Case reasoning,
Rule Based System
Ability to built on system
BATCH PROCESSING Next day evaluation
Varying results
Usually follow predefined set up Slow reaction to change /
incremental updates
3rd party systems or no systems at all FCA requires C.M.S. (hefty fined
otherwise)
Either Rule or Case based systems
12/3/2015 NATECH S.A. 10
KEY FACTS
10 Financial
Institutions run on
Poseidon AML
Most complex AML
implementation in
Greece runs on
Poseidon AML
Poseidon is the only
solution for
AML/CTF/Anti
Fraud and FATCA in
Greece
12/3/2015 NATECH S.A. 11
KEY FACTS OF A CASE STUDY
Case study of the most complex AML Implementation in Greece
~1.400 transactions / minute
•(7.000 / 5 minutes)
Over 500 Points (Branches /
agents)
Over 10.000.000 clients
EU, OFAC, Internal Black List
Integrated with different 6
payment systems
12/3/2015 NATECH S.A. 12
REGULATION– BRIEF1
Reporting of suspicious transactions
Record keeping of procedures and of cases
Internal procedure auditing
Transaction scoring and evaluation
KYC – Customer profiling
Due Diligence vs Actual Data
Evaluation and monitoring of money flow
12/3/2015 NATECH S.A. 13
REGULATION– BRIEF 2
Continuous monitoring of customers with previous suspicious transactions
Integration with Case Management System
Bookkeeping and actual auditing procedures
Customer risk classification (layered)
Transaction risk classification (layered)
Chanel risk classification (layered)
12/3/2015 NATECH S.A. 14
ENTITIES – THE BRICKS AND PILLARS
RESULTS
ENGINE
RULES GROUPS OBJECTS
DATA
LISTS PATTERNS HUMAN INPUT TRANSACTIONS
CASE
SYSTEM
PROCESSES DOCUMENTS
12/3/2015 NATECH S.A. 15
ENTITIES
Groups
Objects with common characteristics (can be defined) Employed customers
Customers with income over 15K $
People living in specific areas
Political exposed people
Men/Women/Children
People lacking justification documents
Objects
Meanings Deposit
Payment
Insurance
Unusual transaction amount
Transaction amount
Relationship among different clients
Has a spouse / relationship
Employed/Unemployed
Chanel
12/3/2015 NATECH S.A. 16
GROUPS• Custom defined
groups with common characteristics
• Risk assessment per group
• Ability to define level of suspiciousness • Eg customers with low
declared income and deposits over 200.000$
• Eg customers with low income and transactions mounting over 100.000$
• Customers with missing information
• Declaration of common business activities
• Assignment on (watch lists)12/3/2015 NATECH S.A. 17
OBJECTS
Characteristics based on which
the system classifies entities
and assigns risk factors
Basic risk assignment object
in Poseidon AML (definition
of entities)
Example
•Entity is customer
•Entity is loyal
•Product
•High risk product
•Transaction type
•Chanel type
Are parts of the group
Classify entities
12/3/2015 NATECH S.A. 18
RULES
Scoring
algorithms
•Predefined
•Custom based
Declare the “risk”
level of each
group
Applied in
•Groups
•Objects
•Transactions
•Procedures
12/3/2015 NATECH S.A. 19
TECHNICAL
Data
SQL Server / Oracle 11g RDMBS
Heuristic Matching
Hybrid (Case-feedback) quality matching
Hybrid Case Based Reasoning (Rules and case based))
General
XML messaging
N-tier architecture (multi)
Active Directory Authorization
Ability to integration with MS Exchange for case management
Multi level authentication and authorization capabilities
Built on Natech DRP12/3/2015 NATECH S.A. 20
PARTICLES
12/3/2015 NATECH S.A. 21
Scoring ProfilingWatch
Lists
Cases &
Workflows
Screening
& Alerting
Reporting
& MISKYC
INTEGRATION AML – CRM –3RD PARTY SYSTEM
3rd Party
(origination
system)
Watch Lists ScoringRisk
EvaluationCRM
12/3/2015 NATECH S.A. 22
KEY POINTS ON THE PROCESS
12/3/2015 NATECH S.A. 24
Due Diligence
•Intermediary
•Bank associate/staff
•Branch
Customer policy
evaluation
Enhanced Due
Diligence for High –
risk
individuals/companies
Sanction List filteringScenario scoring
rules
Integration among
core and 3rd party IT
systems
Cash flow monitoringFraud prevention
mechanisms in placeCase Management
ACTUAL TRANSACTIONSFLOW
12/3/2015 NATECH S.A. 25
TranscationTransaction
Auditing
•Watch Lists
•Rules
•Statistical
evidence
Scoring Profiling
•Group
•Sector
•Client
•Transaction
KYCEvaluat
ion
Alert
Scree
nCase
DESIGN CHARACTERISTICS
12/3/2015 NATECH S.A. 26
Poseidon AML utilizes
Natech’s Core Banking
Authentication system which
supports multiple
authentication protocols,
encryption mechanisms and
heuristic algorithms to ensure
data and content rights are
managed accordingly.
Security and Integrity
POSEIDON® uses a heuristic
lexical analysis based on
custom developed Lucene
Alrogithms to match
customers belonging to
(Watch lists). Minimizing false
positives and false negatives,
Poseidon is a world leader
Matching
A hybrid of a case
management system and a
Rule based system empower
Poseidon making it one of the
fastest and most reliable
solutions fighting Money
laundering and Terrorist
Financing Actions. Combining
historical statistical evidence
together with the information
flown from every integrated
system, the system scores
each and every transaction,
the customers (both parties
if exist), the originator, the
groups the customers belong
to but also the risk factor of
the transaction type. The
scoring system also
incorporates information
from the watch lists and
evaluates all factors deriving
from the custom rules set.
Multiple regression
algorithms allow multiple
decision thresholds to be
evaluated and acted upon.
Scoring
POSEIDON ® AML supports
the centralization of
configuration, setup and
handling of all systems
functionality. Thus, every
detail is taken care of from a
central point of view
Centralized
Administration
Over 10 financial institutions
(7 banks, 2 payment
institutions and 1
international paymenet
agency) run on Poseidon AML
to curb Money Laundering
and Terrorist Financing
activities. Poseidon has been
designed to support flexible
organizations at an
international level scoring
over 10.000
transactions/minute per CPU
Adherence to
international standards
COMMUNICATION WITH CORE
Flat files
XML files
Common
(shared) Table
structure Proxy
server
Database -
Trigger based
– queue based
Excel / csv files
12/3/2015 NATECH S.A. 28
DOCUMENTS
According to FATF guidelines transactions with elevated risk characteristics should be supported by justification documents for verification and classification purposes
12/3/2015 NATECH S.A. 53
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