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Webinar: Strategies to Enhance your Screening and Transaction Monitoring Processes


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Transaction monitoring and sanctions screening are crucial processes for both traditional and non-traditional financial institutions. With changing regulations coupled with increased regulatory scrutiny being the new normal, having a streamlined and flexible approach has become more important for AML Compliance teams looking to improve cost savings and resource allocation.

In this webinar, our presenters from ICICI Bank and Transfast join CaseWare RCM to discuss
• How to assess and factor risk criteria such as regulatory, country, customer and services risks;
• Data elements to consider when determining lists selection and customer and/or transactions attributes
• Policies and procedures to determine monitoring and screening type and frequency as well as management of high risk situations
• Strategies for increasing detection of real reportable activities and reducing false positives and time for investigations

About Alessa, a CaseWare RCM product:
Alessa is a financial crime detection, prevention and management solution offered by CaseWare RCM Inc. With deployments in more than 20 countries in banking, insurance, FinTech, gaming, manufacturing, retail and more, Alessa is the only platform organizations need to identify high-risk activities and stay ahead of compliance. To learn more about how Alessa can help your organization ensure compliance, detect complex fraud schemes, and prevent waste, abuse and misuse, visit us at

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Webinar: Strategies to Enhance your Screening and Transaction Monitoring Processes

  1. 1. Strategies to Enhance your Screening and Transaction Monitoring Processes Sponsored by
  2. 2. About Presenters Joel Freckleton, CAMS Regional Sales Manager, CaseWare RCM Eric Hansen, Senior Risk Specialist, CaseWare RCM Daniel Buckingham, Director of Compliance Strategy, Governance and Technology, Transfast Mandar Vaidya, Assistant Vice President, Compliance, ICICI Bank Canada
  3. 3. Housekeeping Enter your questions here Webinar Tips • If you are experiencing issues with audio quality, switch to Chrome as your web browser • If you are still experiencing issues, send us a message and we will provide a link to the GoToWebinar support line. There is a also a link at the bottom of the chat box. • Let us know if you are experiencing any other issues.
  4. 4. Agenda 4 1. Understanding risk 2. Translating risks into transaction monitoring realities 3. Tuning capabilities
  5. 5. 5 Risk-Based Approach Challenge: Theoretically sound premise, but practical realities make this difficult to achieve and reliably demonstrate Intent: More efficient use of resources to mitigate the ML/TF risks identified. It enables a firm to focus their resources and take enhanced measures in situations where the risks are higher, apply simplified measures where the risks are lower and exempt low risk activities.
  6. 6. 6 FATF: Risk-Based Approach “Competent authorities and financial institutions, are expected to identify, assess and understand the ML/TF risks to which they are exposed and take AML/CFT measures commensurate to those risks in order to mitigate them effectively.” The Financial Action Task Force (FATF) Guidance for a Risk-based approach - 2014
  7. 7. 7 Understanding Risk: Monitoring & Detection Perspectives Challenge: Identifying the balance: • Coverage vs. targeted approaches to risk identification and mitigation. • Manual vs. automated mechanisms • Interim vs. Strategic solutions Intent: • More comprehensive view of risks, to most importantly understand the realities of risk (likelihood, impact and repercussions) to make an informed decision around your risk focus lenses. • Enables early insight into challenges and/or realities that may impact and even limit the ability to efficiently and effectively monitor and detect risk.
  8. 8. 8 Understanding Risk: Monitoring & Detection Perspectives • Enterprise & Localized assessments are critical • Inherent Risk • Customers, Product/Services, Transactions Type, Geography, etc. • Risk mapping e.g. to specific regulations/country typologies (manage risk nuances) • Perceived vs. Real • Likelihood, impact and repercussions • Upstream and Downstream realities • Transaction flows and data capture rules • Product and service parameters (limits, restrictions etc.) • KYC processes • Knowledgeable & skilled staff • Manual vs. automated
  9. 9. POLL 1: How does your Organization conduct risk assessments? 1. Enterprise (holistically) 2. By department 3. Regulator driven 4. Other
  10. 10. 10 From Targeted Risks to Monitoring/Detection Realities Challenge: • Data quality and availability to support true targeting of risk. Intent: • To understand the type and combination of monitoring controls needed and how effective these controls will be, based upon the data availability, completeness and accuracy.
  11. 11. 11 From Targeted Risks to Monitoring/Detection Realities • Risk Factors Elements • What are the specific attributes that when present (combined) would identify the risk? • When (risk tolerance) does the risk become real? • What areas within the organization (customers, products, services etc.) are affected by this risk, and are they all equal (risk tolerance)? • Map data element to the constituent parts • Where is the data? Is it electronic or physical? Can the acquisition be automated? • Data completeness and accuracy • Define monitoring & detection capabilities • Is there sufficient electronic, systematic data to support automation? • Does the data require manual acquisition and transformation before it can be used?
  12. 12. 12 Tuning Monitoring & Detection Capabilities Challenge: • To not build in such a bias that risks (even if lower) are not being monitored and detected. • Finding the balance between targeted and coverage risk mitigation and human resources to manage. Intent: • To build a more effective approach to monitoring and detection of risk that is proportional to the risks of the firm. The efforts are proportionally higher where the risks are higher.
  13. 13. 13 Tuning Monitoring & Detection Capabilities • Tuning • Using a combination of system parameters and data for optimization o Targeting of specific risks o Reduction of unproductive detection o Timeliness of detection o Coverage of detection (spectrum of risk monitoring) • Risk Based Bias • Monitoring and detection skewed towards risk o More specific detection approaches o Higher propensity to alert • More efforts are made using the compliments of parts to monitor and detect.
  14. 14. POLL 2: What type of tuning function do you currently have in place? 1. Maintained through the compliance department 2. Outsourced 3. Managed by IT 4. Other
  15. 15. Strategies to optimize Transaction Monitoring processes • Use a risk-based approach to enable a comprehensive view of risks, to better understand the realities of risk (likelihood, impact and repercussions) • Understand the type, frequency and combination of monitoring controls needed and how effective these controls will be, based upon the data availability, completeness and accuracy. • Ensure approach balances between targeted and coverage risk mitigation • Utilize periodic tuning for sustainability 15 Summary
  16. 16. Agenda 16 1. Effective watch lists screening 2. Enabling risk scoring 3. Effective communication
  17. 17. 17 Sanctions Fines
  18. 18. Customer Risk - Onboarding • Customer characteristics (name, address, date of birth, profession etc.) • Corporate entities characteristics (industry, revenue, no of employees, geographies, etc.) • Anticipated utilization and activity of account • Presence on any sanctions or watch lists including politically-exposed persons (PEP) lists 18 Customer Risk – Onboarding
  19. 19. Triggers for Screening • Daily Screening against list deltas • Screening at time of transaction (against A and B parties) • Ongoing monitoring of high-risk clients. 19 Customer Risk – Ongoing Risk Score
  20. 20. • Is part of effective financial crime compliance program • Includes • Watchlist screening • Sanctions screening, and • Screening for identifying PEPs, HIOs, and family members • Screening is typically done at time of • Establishing business relationship • Processing of transactions • Screening systems should find right balance between meeting regulatory expectation and customer experience. • In summary, should be effective and efficient 20 Screening
  21. 21. POLL 3: How would you describe the state of your current screening program? 1. Very good - other FIs could learn from us! 2. Adequate - at least it keeps the regulators happy 3. Needs improvement - could probably use some fine-tuning 4. Under construction - we are working on it!
  22. 22. • It is important to design and develop a robust screening environment • Each FI should assess its own risks • Taking a Risk-Based Approach by considering parameters such as • Product offering • Customer base • Geographic risk • For example a retail credit product where real time approvals are required – the inherent sanctions risk is low where customers are local customers with credit history, value of transaction is low then using an automated system may be considered • For Trade Finance customers, the inherent sanctions risk is high so enhanced due diligence is required, for such products a mix of automated – manual processes may be required 22 How to Meet the Challenge
  23. 23. • Screening environment is most often a complex set of processes • Customer data maybe from multiple systems • Screening lists from a reliable service provider • Requires a good matching algorithm, and • Flexibility to make quick changes • FIs should have a strong governance over the screening process 23 Good Screening Environment
  24. 24. • Use the updated version of lists • Use reliable sources • Assess the accuracy of the list • Look at geographic scope of list application • Be aware of common prefixes, secondary names, suffixes • Names in non-Latin characters • Duplicate values • 50 percent rule for entity ownership 24 Best Practices for a Good Screening Environment
  25. 25. • Not for Profit Organizations (NPO) • Designated Non-Financial Businesses and Professions • Shell Corporations • Cash Intensive Businesses • Pre-paid Card Issuers • Marijuana Related Businesses 25 Screening High-Risk Professions and Businesses
  26. 26. • Periodic Quality Assurance checks are required • Independent team within Compliance to do the checks • Check for alert generation process – completeness and accuracy • Flow of data into the screening system – data integrity • Check the number of false positives generated – metrics and reporting • Are all types of transactions integrated with the screening system • Is there a need for recalibration? • Are there misconfigured watch lists? 26 Recalibration of Screening Environment
  27. 27. 27 Use Case – ICICI Bank of Canada • Name Screening Process • Risk-Based Approach • In-house name screening matching algorithm using fuzzy logic, phonetic algorithm, deletes “noise” • Common global lists and geography specific lists ( where clients do most of the transactions) • Emphasis on regular trainings to AMLO within business functions • Use of robotics /automation for clearing certain types of alerts • Quarterly QA testing
  28. 28. Strategies to enhance screening processes • Use a Risk-Based Approach • Design an effective screening environment • Use new technologies, and • Periodically re-calibrate the eco-system 28 Summary
  29. 29. Questions?
  30. 30. Strategies to Enhance your Screening and Transaction Monitoring Processes Sponsored by