Grc University Mba 04072009 Draft

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Presentation held at the Steinbeis Business School in Berlin - June 2009

Presentation held at the Steinbeis Business School in Berlin - June 2009

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  • 1. Agenda  How can open source intelligence (OSINT) solutions help manage compliance risks  Available IT solutions to support the intelligence effort  The role of external content for effective intelligence and risk analysis  The role of processes and people INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 2. Definitions Information: Inform itself comes (via French) from the Latin verb informare, give form , form an idea of. It is an understood message and / or a sensory input, an influence, or a record (if it has a business value) Content: in media production and publishing, content is information and experiences that may provide value for an end- user/audience in specific contexts. Content may be delivered via any medium such as the internet, television, and audio CDs, as well as live events such as conferences and stage performances Technology: is a broad concept that deals with an animal species' usage and knowledge of tools and crafts, and how it affects an animal species' ability control and adapt its environment. Technology is a term with origins in the Greek"technologia", "τεχνολογία" — "techne", "τέχνη" ("craft") and "logia", "λογία" ("saying").However, a strict definition is elusive; "technology" can refer material objects of use humanity, such as machines, hardware or utensils, but can also encompass broader themes, including systems, methods of organization, and techniques Intelligence (abbreviated int. or intel.) is not information, but the product of evaluated information, valued for its currency and relevance rather than its detail or accuracy —in contrast with "data" which typically refers precise or particular information, or "fact," which typically refers verified information. Open Source Intelligence (OSINT) is form of intelligence collection management that involves finding, selecting, and acquiring information from publicly available sources and analyzing it to produce actionable intelligence. In the Intelligence Community (IC), the term "open" refers to overt, publicly available sources (as opposed to covert or classified sources); it is not related to open-source software. INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 3. Security Threats and Compliance Risks Compliance and Security Threats Corruption Financial fraud Embezzelment Vandalism Social and political instability Theft Sabotage Cyber crime Industrial espionage Terrorism acts Extortion Robbery Corporate Risks Legal Financial Reputational INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 4. Proliferation of risk factors  The complexity of day„s world requires a virtually unlimited access relevant information for decision making Criminal action Criminal Information Operation infringe regulary or antitrust constraints, infringe regulary or antitrust constraints, promote corruption and embezzlement, promote corruption and embezzlement, participate in fraud machinations, participate in fraud machinations, be involved in money laundering schemes, construct money laundering schemes, breach international embargoes or national breach international embargoes or national sanctions, sanctions, assist in the proliferation of strategic goods facilitate proliferation of strategic goods and and WMD, WMD, enable terrorist financing, enable terrorist financing, cause serious environmental or health disguise environmental or health damages, damages, facilitate organized crime, being a implicated in organized crime, disguise activities heavily violating human be involved in activities heavily violating rights human rights 4 INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 5. Organisational complexity: Who is involved Legal PR Manufacturing Hiring Legal corp comms Operations Human Resources Risk Marketing Public Affairs XXXXXXX CI Operations Competition Group Risk Product Legal CSR Compliance CI Marketing INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 6. Information surrounding corporates Business Specialised Information Providers Providers HR Crisis Contractors Unit Corporate Security Fleet localisation OSINT Maps & and platform Pictures management Books Press Agencies Access Internal control reports © Claudio Foglini for Scalaris AG Internet INTELLIGENT I DOCUMENT I PROCESSING IDP
  • 7. A new information paradigm INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 8. How can open source intelligence (OSINT) solutions help manage compliance risks How can open source intelligence (OSINT) solutions help manage compliance risks INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 9. Information requirement Publicly available sources other sources/methods/disciplins „Internet“ Private Information Provider Plattforms of NGO Printmeda TV-/Radio TECHINT MASINT SIGINT Video-blogs IMINT OSIF HUMINT Wickis Blogs Requirement of information INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 10. OSINT information requirement Commercial Online Books & Telephone Journals Surveys Maps & OSINT Complex Commercial Human & IT Imagery Universe Services Conferences & Gray Dissertations Literature Internet INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 11. The risk of corporate „autism“ Auto-referential Emergence of business intelligence, CRM, collaboration tools has multiplied the internal information available, and the emphasis on it High risk exposure Many organisations rely very heavly on intangible information, held by employees (the wealth manager who knows his customer inside-out, etc.) Difficult access to information Internal information (customer names, partner companies, suppliers) is not matched with the external information available (biographies, company profiles, news) Open external Regulator„s requirements and risk management policies ask for an intelligent information exploitation of the external information available Intangible information assets can be improved with access external information Risk conscious IT is now capable of „connecting-the-dots“ Content aggregation is now a mature market, offering a global coverage, with structured data delivery and integration capabilities INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 12. The risk of not knowing Legal & compliance risk Cost of remedial actions «Top Management attention » cost Cost for rebuilding your brand INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 13. Open Source Intelligence (OSINT) is becoming the main information supplier for external investigation previous approach: OSINT: OSINT ≥80% Open source Intelligence to fill gaps in HUMINT internal/classified knowledge Today approach: internal/classified HUMINT knowledge to fill gaps in Open source Intelligence OSINT © Claudio Foglini for Scalaris AG 1IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 14. The back-hole: information security risk External monitoring of: •Internet Access of •Content providers classified •Consultants information: •Contractors •Employees •Industrial espionage •Cyber crime •Data on current / past investigations INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 15. Available IT solutions to support the intelligence effort Available IT solutions to support the intelligence effort INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 16. Today global proliferation of risks may rapidly cause the downfall of organizations Risks infringe regulatory or antitrust constraints, promote corruption and embezzlement, participate in fraud machinations, be involved in money laundering schemes, breach international embargoes or national sanctions, assist in the proliferation of strategic goods and WMD, enable terrorist financing, cause serious environmental or health damages, being a implicated in organized crime, be involved in activities heavily violating human rights … © Claudio Foglini for Scalaris AG 1IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 17. Swiss companies’ perception of economic crimes has increased, largely due to significant publicity surrounding high profile cases Source: PWC economic crimes survey © Claudio Foglini for Scalaris AG INTELLIGENT I DOCUMENT I PROCESSING 1IDP
  • 18. Regulation Drivers: Nothing has to be deleted, information disclosure on demand, Prevention delegated to private organisations •US: comply or be punished •EU: comply or explain © Claudio Foglini for Scalaris AG 1IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 19. Example: Anti-Money Laundering technologies • Filtering • Customer • Watch Lists behaviour • Payments analysis • Transaction analysis A priori A posteriori • Risk profiling (Theoretical (Emprirical models) analysis) Support to Prescription decision oriented making • Binary options: • Intelligence Y/N available for analysis and decision INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 20. Scalaris Intelligence Operations Agent Network Agent Network HUMINT HUMINT Scalaris Intelligence operation control OSINT FORENSIC Scalaris IAS Infrastructure Scalaris DMS Infrastructure INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 21. Global information flood is the main challenge for corporate governance, risk management and reputation management OSINT Corporate Informatio 500‘000 Messages a Open available Sources day from 30‘000 news Papers, radio, tv Files 70 % 30 % E-Mail Official Sources: „Internet“: •Print- Media  Blogs •TV-/Radio  Video- •Professional blogs Providers  Wickis Paper OSINT based „Googles“ Scanning Systems HUMINT Computer Corporate Images Intelligence © Claudio Foglini for Scalaris AG 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 22. Obtain all needed unfiltered information in an hidden way This is where we are searching This is what many providers offer © Claudio Foglini for Scalaris AG 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 23. Corporate Intelligence is an integrated framework of information logistic and technology to face proactive and reactive evolving situations Proactive Corporate Intelligence Litigation -Lawsuit and Matter Management -Collaborative and Auditable Environment -Integration with forensic and prevention © Claudio Foglini for Scalaris AG Reactive 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 24. Case Study: Profit v. Risk (fiction) PREVENTION  Rinat Achmetow, Ukraine want invest 500 Mio Euro into ethanol production to the Usinas Itamarati S.A., Mato Grosso, Brazil  Sanction risk on the 2 parties?  Financial risk on the 2 parties?  Reputation risk on the 2 parties? © Claudio Foglini for Scalaris AG 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 25. Example: Customer Screening Standardization and Automation © Claudio Foglini for Scalaris AG 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 26. Global media collection and analysis to support investigations, risk and reputation analysis in a undetectable way © Claudio Foglini for Scalaris AG 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 27. Case Study – 2 year later (fiction) FORENSIC  Rinat Achmetow is sanctioned  Ukraine anti-orange revolution  Usinas Itamarati S.A is suspected of slavery…  Mr. Olacyr de Moraes and Mrs. Ana Moraes arrested  Bank is under legal investigation  Interpol get the data: Razia  Paper documents and hard disks were copied by the court of justice  The Legal and Compliant department organize the defense: proofs are filter out from the huge amount of data…. © Claudio Foglini for Scalaris AG INTELLIGENT I DOCUMENT I PROCESSING 2IDP
  • 28. Forensic – e-Discovery Actions • Prepare A • Plan B • Execute and identify C • Secure and store D • Analyze and present E © Claudio Foglini for Scalaris AG 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 29. Forensic is More than technology  Forensics is more than technology and the process of systematic inspection of systems  It is done in a fashion that adheres to the standards of evidence that are admissible in a court of law  It requires specialized expertise and tools beoynd data collection and preservation techniques  The data is acquired from paper documents and computer media, which is analyzed to render an opinion if it has been used for criminal, civil or unauthorized activities  Forensic experts:  Identify sources of documentary or digital evidence  Preserve the evidence  Analyze the evidence  Present the findings © Claudio Foglini for Scalaris AG 2IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 30. Forensic complications © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 31. Forensic Actors © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 32. Paper-based documents used in forensics  Records  Folders & Files  Bank and cash receipts  Invoices  Checks  Contracts  Postal mail  ... Maximal Speed: 2 Folders / h © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 33. IT systems for paper documents  Collect, restore, scan, process, review, produce, report ...  Secure collection, logistics, storage, retrieval  Automatic post processing of documents  Advanced recognition systems  Large volume document processing (tens of thousands per hour)  Compile varied documents in electronic files for specific cases  Manage cases throughout their entire “life cycle”  Audit proof © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 34. Securing the computer data Popoular forensic Format Encase (.E01) © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 35. Electronic documents for forensics  Emails  Text / Word documents  Spreadsheets  Drawings  Images (e.g. of scanned documents)  Photographs  Other types of files... Maximal Speed: 50GB / h © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 36. Supports creative process of claim finding  Find the needle: The case and the evidence(s)  Access data that ever seemed to be lost  Reveal the dominant communication paths and themes in email communication  Recreate critical events: Establish timeline for any events that gave raise to investigation or the suit  Show graphically communication lines between internal and external people  Search for key people, words and phrases  Create graphs, charts and tabular reports to support conclusions presented to corporate executives, opposing parties or judges © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 37. E-mail Forensic is a special domain Enterprise-wide archiving, search, analytics and visualizations See patterns and trends Auto-generated topic clusters Leading technologies 1. Symantec © Claudio Foglini for Scalaris AG 2. Zantaz INTELLIGENT I DOCUMENT I PROCESSING 3IDP
  • 38. High data volume search is not just search Enterprise Search is not just a search bar and results, but a complex and sophisticated accessing platform for unstructured data. Insource / Outsource (SaaS) Information Chain Management (ICM) paradigm as design doctrine of any Enterprise Search Best Practice roadmap. In its complexity ICM compares with the value chain in the oil industry: Relevant information sources are systematically researched, tapped (exploration) and refined into usable information (refinery) and efficiently distributed (exploitation). © Claudio Foglini for Scalaris AG 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 39. Professional search technologies market landscape Autonomy acquired Verity in 2006 Fast acquired Convera in 2007 Microsoft will acquire Fast in 2008 The size of the bubbles High descries the market share Strateg y Low Low High Feature © Claudio Foglini for Scalaris AG s 3IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 40. Conclusion  37% of Swiss companies reported economic crimes in 2007, but only 8% believed they would be subject to economic crimes.  A corporate intelligence strategy aligned with today„s legal and compliance regulations is fundamental to preserve vital interests.  Significant costs and risks are associated with the use and consuming of a continuously growing amount of information.  As risks are changing and evolving, the corporate intelligence strategy should be based upon a best- practice framework of information logistics and technology that responds to these risks appropriately. © Claudio Foglini for Scalaris AG 4IDP INTELLIGENT I DOCUMENT I PROCESSING
  • 41. Corporate Intelligence is an integrated framework of information and technology Proactive Corporate Intelligence Litigation -Lawsuit and Matter Management -Collaborative and Auditable Environment -Integration with forensic and prevention © Claudio Foglini for Scalaris AG Reactive INTELLIGENT I DOCUMENT I PROCESSING IDP
  • 42. Industry Need Departments Typical risk General Specific characteristics characteristics Compliance Access must-have AML sources (World-Check, Dow Jones) Banking Know Your Legal Legal risk Customer related fraud Customer On-boarding and financial Anti Money crimes Access premium Laundering Advanced Automatic name intelligence information matching Reputational International risk affairs Name matching Anonymous Search performance with advanced linguistic and cultural capabilities Know Your Top Internal fraud Unlimited scalability (for Data on-boarding Employees manageme screening up several nt High risk Legal risk millions records per day, Global information industries Partners names and/or coverage Security Reputational transactions) Contractors risk Internal data integration HR Flexibility in rollout (from Operational lap top big parallel server Experience with military risk intelligence farms) Automatic maintenance for traceability of Law Crime activities Global coverage enforcement Know Your OSINT units Terrorism Anonymous search Criminal records coverage Attorneys Open Sources INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP Research Conflicts Experience with military
  • 43. Reactive approach Litigation eDiscovery Forensic eDiscovery  Data collection  Information management  Analysis  Early Case Assesment  Review INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 44. Global information flood is the main challenge OSINT Corporate Information 500‘000 Messages a Open available Sources day from 30‘000 news Papers, radio, tv Files 70 % 30 % E-Mail Official Sources: „Internet“: •Print- Media  Blogs •TV-/Radio  Video- •Professional blogs Providers  Wikis Paper OSINT based „Googles“ Scanning Systems HUMINT Hard Disks Corporate Intelligence INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 45. High data volume search is not just search Enterprise Search is not just a search bar and results, but a complex and sophisticated accessing platform for unstructured data. Information Chain Management (ICM) paradigm as design doctrine of any Enterprise Search Best Practice roadmap. In its complexity ICM compares with the value chain in the oil industry: Relevant information sources are systematically researched, tapped (exploration) and refined in usable information (refinery) and efficiently distributed (exploitation). INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 46. Professional search technologies market landscape Autonomy acquired Verity in 2006 Fast acquired Convera in 2007 Microsoft acquired Fast in 2008 High Strategy The size of the bubbles indicates the market share Low High Features INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 47. Sofware tools and algorithms: name matching 91.17 ARTHUR HUBBARD HUBBARD BRIAN ARTHUR 90.47 WILLIAM STAUBINGER STAUBITZER WILLIAM 84.55 EMMANUEL OBBI BEN-OBAJE EMMANUEL OCHOLI 80.73 EMMANUEL OBBI MADUKA EMMANUEL OBI 93.29 GERHARD ZERMANN HERMANN GERHARD 90.28 SAMUEL ANDREAS OBBI ANDREAS SAMUEL 89.93 WILFRED PENNA PENA WILFREDO 84.71 WILFRED PENNA PENA CABUS WILFREDO 83.84 WILFRED PENNA PENA PENA WILFREDO GEOVANNI 87.89 KARL DAMPIERRE DAMPIER KARL 97.32 MOHAMMAD NURY NURRI MOHAMMAD 96.97 MOHAMMAD NURY MOHAMMAD NUR 85.06 LEO WALKER WALKER LEN 85.06 LEO WALKER WALKER LEE 85.10 VERONIKA SOUZA GONCALVES DE SOUZA VERONICA MARIA 81.50 VERONIKA SOUZA SANTOS SOUSA DA SILVA VERONICA 81.50 VERONIKA SOUZA SILVA DE SOUSA LAURENI VERONICA 87.07 FREDDY PEREIRA IBANEZ PEREIRA FREDDY JERONIMO 95.89 PETER SANTO SANDHU PETER 90.61 PETER SANTO SANTOS PETER 96.29 MOHAMMAD HAMDI MOHAMMAD HAMDI SADIQ AL-AHDAL MUHAMMAD 96.27 MOHAMMAD HAMDI AL TAHHAN MOHAMMAD HAMDI 96.27 MOHAMMAD HAMDI AL-TAHHAN MOHAMMAD HAMDI 95.77 MOHAMMAD HAMDI AL-AHDAL MOHAMMAD HAMDI SADIQ INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 48. Name matching: simple concept – complex application Exact Fuzzy Complete name comparison Subset Fuzzy subset Fused substring Exact Damerau-Levenshtein Phonetic Phonetic Normalization simplified Fuzzyness Synonyms Person / Entity Name NGram Word sorting Fuzzy date handling Stopword filtering Birthdate Missing date handling Autonomy APCM (tf-idf) Scoring Word Scoring Decorrelation Factor Fuzzy Country name normalization Residence Missing data handling ISO-8859-1 -> ASCII Charset Normalization / Transliteration Cyrillic -> ASCII (GOST 7.79 System B) Person Search ISO 3166-1 Symmetric CIA World Factbook Country name normalization Worldcheck Nationality Exact Dow Jones Watchlist Normalized Missing data handling Sorted Complete name Filtered Subset Fuzzy Subset Name Fused Substring Cumulative Scoring System Exact Words Synonym Similar Ngrams Birthdate Nationality INTELLIGENT Residence I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 49. The role of external content for effective intelligence and risk analysis We spent the last 50 years focusing on the T part of IT, now we should spend another 50 thinking about the I part. INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 50. New rules and the “pressure to know”... Consequences Higher compliance costs Margin and efficiency reductions Rules FATF: recomendations and blacklists High reputational and legal risks US-PATRIOT Act High attention on corporate crime by public opinion KYC, KYCC and transaction monitoring Sanction risks EU Anti-Money Laundering Directives Intangible reputational risks National money laundering ordinances Higher financial complexity = higher risk of Anti-corruption initiatives financial fraud Higher automation = less customer intimacy Criminals learn fast INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 51. Distribution of compliance incidents Frequency Cost of gathering / missing critical information Severity Medium Cases/ Significant Cases/ Small Minor Cases/Incidents Incidents Incidents Number/Type of required information INTELLIGENT I DOCUMENT IAG © Scalaris PROCESSING © Claudio Foglini for Scalaris AG IDP I 51 I
  • 52. Emergence of a risk based governance & compliance Customer Sanction information lists Global PEP data Media Rule based Transaction Risk based Tresholds compliance data Compliance Company Hard copy data Statistical Criminal models records INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 53. Information proliferation Internal Information Proliferation External information proliferation Identification Improvement of content gathering technologie Classification Paper content becomes digital Suspicious events Archive information will be more available analysts Financial situation Lower value of free content, often considered less trustful Monitoring & Archiving Exponential growth of content production and publishing INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 54. Reasons for not finding the right information Insufficient coverage Insufficient investment in Update content frequency provision Language / Spelling Technical failure variations Exclusive availability of sources INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 55. The garbage in / garbage out principle: Quality always matters Open web Deep web (5-10 % of available Information) (90- 95% of available Information) Google like search engines Fee-based providers Value-added providers Quantity Quality Quality Diversity Timeliness Timeliness Indipendence Accuracy Accuracy Selected information Regular update High value Full-text indexing Standard format Automated alerts Workflow Integration Confidentiality (thorough anonymisation techniques) Very low Precision & Recall Limited update Cost No full text indexing Limited Search & Archive Need of multiple providers Volatility Cost No confidentiality Low confidentiality INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 56. Principles around content selection Fee and value added news aggregators: companies that offer for a fee, general news content that is business –related and electronically-delivered International Indexing Content Integration Local Content Personalisation Local Language Market Reliability Integrity (full text) Service Consistency Dependability Consultancy Local Account Customer Service Mgmt. INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 57. Principles around content selection Providers Evaluation criterias should Source Evaluation criteria should include: include: Coverage Quality Archive historical depth Authority Languages Relevance Local sources availability Trust Exclusive sources Timeliness Content structure (taxonomy) Technical Delivery capability IT capabilities (indexing, abstracts, translation services, inforrmation relationships) + cost of accessing the content + cost of access + cost of elaboration & analysis + cost of elaboration & analysis INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 58. Overview of content providers Business information Dow Jones Factiva, Lexis Nexis, Dialog Specialised content World-Check Company DowJones information WatchList Dun&Bradstreet, SIPRI Experian, Thomson, Bureau Van Diik EIU Janes Lloyds Scientific/technical/medical information Elsevier, Springer, Thomson, Wiley INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 59. Content providers market overview INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 60. Overlapping is not a crime Dow Jones - Global media - Company data - Publicly Exposed Persons Lexis Nexis Critical information - Sanction lists - Global media requirement - Criminal records - KYC data Internal - Company data Provider 1 information Internal Provider 2 information Dialog World-Check - Global Media - Sanction list - Criminal records - Politically Exposed Persons INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 61. Global and Local coverage National Sources Regional Sources Local Sources INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 62. Perception (isn„t) reality INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 63. Advantages of an intelligent information strategy Research time reduction Reduction of critical information gap Legal, Compliance & Reputational cost reduction Better distinction beetween perception and reality INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 64. The role of processes and people The role of processes and people INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 65. Man, Process and Machine INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 66. Know Your Customers, Employees, Suppliers, Partners & Contractors: Know Your Customer– Process Example - Prevention 2nd Level 3rd Level 1st Level Investigation Investigation Investigation IDENTIFICATION MEDIA ANALYSIS DUE DILIGENCE Data Sanction & False Positive Data Global & Local Media Normali PEP List Identification & Crime Due Diligence collection Analysis sation Matching Exclusion - Cost / Employee + - Reputational / Legal / Operational Risk / Employee + - Human Based Analysis Required / Employee + + Machine Based Analysis Required / Employee - - External Information Required / Employee + Copyright Claudio Foglini INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 67. Know Your Customers, Employees, Suppliers, Partners & Contractors: Know Your Employee – Process Example - Forensic 2nd Level 3rd Level 1st Level Investigation Investigation Investigation IDENTIFICATION DATA ANALYSIS DUE DILIGENCE Filter Rules Matching E-mail, Internal Suspect Data Data Reposiries, Crime Due (Keywords, Namers, Identification & collection Normalisation Hard disk Diligence Company names ) Exclusion Analysis - Cost / Employee + - Reputational / Legal / Operational Risk / Employee + - Human Based Analysis Required / Employee + + Machine Based Analysis Required / Employee - - Information Required / Employee + INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG Copyright Claudio Foglini IDP
  • 68. Scalaris Intelligence Automation Solutions: our capabilities Technology Consulting Open Source Intelligence Aumation OSINT and Due Diligence for Corporate, Financial and Military Secure and anonymous Industries Proprietary name matching algorithms Next Generation KYC processes and tools Autonomy IDOL - based Multi-lingual search engine Expertise with global financial institutions and law Scalable enforcement agencies False positive reduction Content On-demand crime and customer due diligence Best available content collections Research design Specialized content Research Execution Internal content integration International network Information brokering AySEC Services Ltd. www.crimeduediligence.net INTELLIGENT I DOCUMENT I PROCESSING 69 © Claudio Foglini for Scalaris AG IDP
  • 69. Company check № Object .automatic .pro .master .premium .lux Registration information 1.01 1.02 1.03 Crime Due Diligence : Company Check Company’s Name Document of juridical list Registration details + + + + + + + + + + + + 1.04 Company hisry from creation moment + + + + + 1.05 Company structure and organization + 1.06 Last changes in constituent documents + + + + 1.07 Major field of activity + + + + + 1.08 Decoding of economic activity + + + + 1.09 Licenses on kinds of activity (in case of existence) + + + 1.10 Affiliated organizations + + + 1.11 Existence of subsidiaries and representative companies + + + Location 2.01 Revelation of real location of counteragent + + 2.02 Work with company contact telephones + + + + 2.03 Company web-site research (date of creation, owner, etc.) + + + + p management 3.01 Direcr identification + + + + 3.02 p management (CEO, deputies, Board of direcrs, etc.) + + + 3.03 p Management Profiles (s. Person check) + Company financial performance 4.01 Extract of balance items + + + 4.02 Information about authorized capital sck + + + + 4.03 Revelation of major debrs and credir + 4.04 Short decoding of company assets + + + 4.05 Direction of product movements + + + 4.06 Company sender/ recipient + + + 4.07 Commodity name + + + 4.08 Commodities quantity + + + 4.09 Manufacturer + + + Relations with business partners 5.01 Revelation and search of clients, suppliers + + + 5.02 Terms of collaboration with clients, suppliers + + + 5.03 Sums of last shipments and their purpose + + + 5.04 Debts suppliers, clients + + + 5.06 Unfulfilled obligations + + + 5.07 Recommendations + + Benchmarking 6.01 Market research and market share of checked company + 6.02 Activity results / Future plans + 6.03 Company strategy + 6.04 Research of company business processes + 6.05 Services and major advantages + 6.06 Competirs distinction + 6.07 Interviewing + Negative 7.01 Pronounced company and management negative information + + + + 7.02 Courts, arbitration proceeding, sanctions, penalties + + + + + 7.03 Management connections with organized criminal groups, criminal, administrative responsibility + + + 7.04 Presence in WorldCheck or PFA Factiva records + + + + + Mass media 8.01 Mass media review (Thomson-Reuter or LexisNexis) + + + + + 8.02 Mass media digest (cluster analysis) + + + + 8.03 Mass media analysis + INTELLIGENT I DOCUMENT I PROCESSING 9.01 © Claudio Foglini for Scalaris AG Scheme of affiliated persons interaction Schemes + + IDP + 9.02 Scheme of company organizational structure (position, name, telephone) +
  • 70. Person check № 1.01 Crime Due Diligence : Company Check Time and place of birth Rate «Persona» .automatic identification + .pro + .master + .premium + .lux + 1.02 Residence and nationality + + + + + Registration/Real estate 2.01 Information about previous residences + + + + 2.02 Real estate possession + + + + 2.03 Description of buildings and apartment according location + + + Phone numbers 3.01 Phones numbers on registration addresses (regions individually) + + + + 3.02 Phones numbers on work addresses + + + + 3.04 Other contact phones + Family status/ relatives 4.01 Family status + + + + 4.02 Relatives connections revelations + + + 4.03 Relatives participation in business (shares in authorized capital sck) + + Person Profile 5.01 Job places revelation + + + + + 5.02 Employer short description + + + 5.03 Work period + + + 5.04 Position + + + + 5.06 Psychological portrait + Business 6.01 Share in authorized capital sck of company + + + + 6.02 Co-founders + + 6.03 Co-founders short description + Negative 7.01 Criminal, administrative responsibility + + + + + 7.02 Federal police search + + + 7.03 Connections with organized criminal groups + + + + + 7.04 Mentions in notes of arrested persons + + + 7.05 Participation in suits + + Mass media 7.06 Short mass media review + + + + + 7.07 Mass media digest (cluster analysis) + + + + INTELLIGENT I DOCUMENT I PROCESSING 7.08 Mass media analysis © Claudio Foglini for Scalaris AG Schemes IDP +
  • 71. Person check № 1.01 Crime Due Diligence : Person Check Time and place of birth Rate «Persona» .automatic identification + .pro + .master + .premium + .lux + 1.02 Residence and nationality + + + + + Registration/Real estate 2.01 Information about previous residences + + + + 2.02 Real estate possession + + + + 2.03 Description of buildings and apartment according location + + + Phone numbers 3.01 Phones numbers on registration addresses (regions individually) + + + + 3.02 Phones numbers on work addresses + + + + 3.04 Other contact phones + Family status/ relatives 4.01 Family status + + + + 4.02 Relatives connections revelations + + + 4.03 Relatives participation in business (shares in authorized capital sck) + + Person Profile 5.01 Job places revelation + + + + + 5.02 Employer short description + + + 5.03 Work period + + + 5.04 Position + + + + 5.06 Psychological portrait + Business 6.01 Share in authorized capital sck of company + + + + 6.02 Co-founders + + 6.03 Co-founders short description + Negative 7.01 Criminal, administrative responsibility + + + + + 7.02 Federal police search + + + 7.03 Connections with organized criminal groups + + + + + 7.04 Mentions in notes of arrested persons + + + 7.05 Participation in suits + + Mass media 7.06 Short mass media review + + + + + 7.07 Mass media digest (cluster analysis) + + + + INTELLIGENT I DOCUMENT I PROCESSING 7.08 Mass media analysis © Claudio Foglini for Scalaris AG Schemes IDP +
  • 72. Conclusion Precautionary principle should be applied, by orienting the choice wards the best possible information coverage Content redundancies should be tolerated concentrate on the information gaps that hide high risk areas IT infrastructures / applications can take responsability for full exploitation and dissemination of critical information Complex search engines can perform federated searches and analyse / connect virtually all type of content External information always has two sides It can be a source to reduce risk It can become the source of your problems Humans always outperform machines Technology and content help informed decision making INTELLIGENT I DOCUMENT I PROCESSING © Claudio Foglini for Scalaris AG IDP
  • 73. CASE STUDY: Defending Corporate Integrity  Case Study: the lorry-deal  Discussion  Global Proliferation of Risks  Crime Due Diligence as a shield against Economic Crime  Sources of information  Information & intelligence management process  Different perception of reality INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 74. Case Study: The lorry-deal; initial postion Initial position: General conditions, facts & figures  Client & end user: „Kondistan Mining“, state-controlled mining company in the state of Kondistan  Kondistan: emerging market with huge potential (basic metals, oil), known for its rude business climate; TI-Index 100  Contractor: world-wide operating truck producer „SCALERA“ from Scandinavia with a subsidiary „SCALERA-K“ in Kondistan and a second branch „SCALERA-I“ in Iberia  Need of the client: 100 used heavy lorries for mining purposes  Offer: 100 used lorries in mediocre shape, parked in the warehouses of „SCALERA-I“. Price-offer grand total: EUR 4,5 Mio. INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 75. Case Study: The lorry-deal, business requirements Negotiations & requirements:  Postion of the Client: „Kondistan Mining“ is generally interested in the deal, but demands the lorries repaired and deployable  Position of the Contractor: „SCALERA K“ offers import & handling of 100 used lorries from Iberia, included restoration for EUR 6 Mio.  Acceptance of „Kondistan Mining“ is connected with conditions: 1. Purchase of the lorries by „Interimport – Kondistan“ for EUR 4,5 Mio. 2. Import, handling and repair in Kondistan by „Interimport“ 3. Repurchase of the modernized lorries by „SCALERA K“ for EUR 5,5 Mio. 4. Sale of the lorries to the leasing company „Interleasing“ for EUR 6 Mio 5. Financing by „Interleasing“ and finally leasing to „Kondistan Mining“ INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 76. Case Study: Overview 100 used 4,5 Mio. lorries InterImp ort 100 repaired lorries SCALERA- Iberia SCALERA- 6 Mio. Kondist Kondistan Interleasin an g Mining INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 77. Case Study: A win-win situation or…?  Benefit of „SCALERA K“:  No enervating negotiations with customs, reducing the risk of corruption. Compliance department is happy!  No problems with technical authorities regarding the homologation and registration of the lorries, reducing the risk of corruption  No operating expenses for repair & modernisation of the goods  Acceptable margin as reseller  Substantial reduction of the stock of used vehicles at „SCALERA- I“ („SCALERA defines itself not as used car-dealer!)  A happy client and end-user opens the for additional deals! INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 78. Case Study: …only the benefit of one party?  Benefit of „Kondistan Mining“.  Import of used vehicles has a favourable customs clearance (by volume), by way of comparison customs of new vehicles are assessed as unique specimen  Substantial tax reduction is possible, if the vehicles are repaired in Kondistan and by Kondistanis (VAT-pre tax deduction)  Financing through a leasing company, associated with a national bank, is “budget friendly” and probably favourable for the amortisation  „Interimport“ offers additional “interesting business opportunities“  The best solution under cost benefit analysis was found and by this, the national interest has been fully respected ! INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 79. Case Study: Happy Realisation?  The business is finalised in 2007, and all seemed to be happy…  Suddenly, in 2008 national media accuse the politician Most, who is also director of „Kondistan Mining“, of nepotism and corruption.  Note: In Kondistan the media are controlled by the government.  After these articles the offices of „SCALERA K“ are searched by the financial police and documents regarding the deal are sequestrated.  Top management (CEO, CFO and Head of Sales) are banned from leaving Kondistan, passports are confiscated.  A criminal procedure involving fraud, embezzlement, corruption and fiscal offences is initiated by the public prosecutor INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 80. Case Study: What happened really?  „InterImport“ was a „shell company“ and was after the deal immediately „inactivated“.  The board of directors of „InterImport“ was manned by dummies, the founder of the company is a notorious and politically well connected lawyer.  The responsible customs officer obviously was bribed.  The 100 imported lorries were not repaired & modernised (but accepted by the end-user)!  Tax authorities were duped, because the realised VAT-pre tax deduction was not justified.  The gained margin of EUR 1 Mio. has disappeared without any traces. INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 81. Case Study: Who are the suspects?  Presumption: Director Most and his entourage have deviated the money for their personal purposes.  The insinuation regarding nepotism and corruption of the media are this time probably correct.  Additional suspicion: Head of sales of SCALERA-K, a Kondistani, could have also pocketed some hush-money.  Deplorable fact: Top management of „SCALERA K“ is not guilty, but naive. To produce evidence, that the Scandinavians were not evil, but only stupid, is not easy.  Perspective/perception of the prosecution: Main culprit is top management of SCALERA-K, it was the driving force behind the corruption, fraud and embezzlement.. INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 82. Case Study: Possible Consequences  The public prosecutor will proceed his investigation and corroborate an indictment (prison sentence and expulsion).  Customs will initiate an administrative process to impose punitive tariff duty.  Tax authorities will initiate new tax proceedings and impose a hefty penalty tax.  Repercussions in Scandinavia, because bribery of foreign officials is additionally chargeable also „at home“.  If SCALERA is registered at the NYSE, FCPA-charges are conceivable in the US.  Huge reputation damage. INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 83. Case Study: Discussion  Note: SCALERA has a Compliance department as well as a „code of conduct“ and an anti-bribery handbook. The Scandinavian staff is well trained! An anti-corruption awareness program and a whistle blower- line is implemented.  Why didn‟t it work?  What has gone wrong?  What could be done better?  What possibilities, means and tools are additionally available?  Discussion INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 84. Global Proliferation of Risks Today global proliferation of risks may rapidly cause the downfall of organizations. Risks to infringe regulatory or antitrust constraints, to promote corruption and embezzlement, to participate in fraud machinations, to be involved in money laundering schemes, to breach international embargoes or national sanctions, to assist in the proliferation of strategic goods and WMD, to enable terrorist financing, to cause serious environmental or health damages, to being a implicated in organized crime, to be involved in activities heavily violating human rights … INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG
  • 85. Crime Due Diligence: Overview  Analysis of Individuals or Entities:  identity, business-interests, involvement, connections, relationships  Function, position, organization  Analysis of Documents (attributed to the individual or entity):  Intended purpose  falsifications, logos, keywords  Analysis of Structures: „Modus operandi“  Deal-story: Question of plausibility regarding the presented story  Support element: Time pressure, religious dimension (e.g. Religion Fraud)  Additional warning signs: unusual channel of distribution etc. See also D. Fischer : Crime Due Diligence, Zürich 2005 INTELLIGENT I DOCUMENT I PROCESSING IDP CASE STUDY © Claudio Foglini for Scalaris AG