14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf
Deutsche Bank - Filtering system quality testing
1. 0
Deutsche Bank
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Confidential
Filtering System Quality Testing
– DB Experiences –
SWIFT in Compliance
Frankfurt, 17th June 2014
Arne Hartung
Group Embargo Officer Deutsche Bank Group
3. 2
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Filter technology has to strike a balance btw regulatory
required effectiveness and market-expected efficiency …
Challenges
Regulatory Expectations
Regulators internationally
advocate risk-based
approaches – however error-
tolerance has significantly
decreased
Specifically expecting
increasingly complex filtering
logics & algorithms as
good/best practice
Tight-knit oversight and
preemptive testing of filter
effectiveness
Controlled run-down
procedures (for fire-drill or
crisis mode)
Market Expectations
‘Real-time’ cash processing
in different financial hubs,
e.g.
̵ APAC: e.g. 30 sec
response in Singapore
̵ LatAM: e.g. 2 min for
online trx in Brazil
Cross time zone intraday
clearing
Bulk processing in peak
times
Re-arranging financial flows
in EU in context of SEPA
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… while technological developments allow for ever
granular fine-tuning & parameterization
Challenges
Parameters no longer ‘intellectu-
ally’ manageable – requiring
systematic testing and simulation
Improved functionalities correlate
with increasing hit rate
Different jurisdictions and
regulators put different emphasize
on different functional capabilities
New functionalities come along
with additional parameters
increasing interrelations between
functions
Strive for one-platform requires
careful parameter-setting as
impact may be significant and
unexpected
Comments
Technological Developments
illustrative
Plain filtering w/
good and bad guys
Full text scanning
Field-based
scanning
Fuzzy logic with
thresholds
Word weighting
CNS scanning
Phonetic scanning
Complex rules &
weighting
Multi-language &
character sets
(Cyrillic, CCC, …)
6. 5
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DB adopted the SWIFT/Omnicision tool STS as integral
part of it’s Sanctions QA Framework in 2013
FSQT Component
Golden Source of
Flows and Controls
Sample Testing
Filtering System
Quality Testing
Onsite
Reviews
Risk
Assessment
Sanctions QA Framework
In accordance with international standards and recommendations (e.g. Wolfsberg
Group, FCA best practice catalogue, …) a continuous Filtering System Quality Testing
(FSQT) was introduced in 2013
Following a detailed vendor selection process DB opted for the SWIFT/Omnicision tool
STS due to a number of reasons:
High degree of automation (synthetic test case creation from sanctions lists)
Seamless integration with all relevant filter solutions
Approach is supporting the mapping of details of the test result to specific
parameters
Tests are repeatable, reproducible and auditable
SWIFT is using the testing service to optimize it‘s own filtering system as well
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First onboarding and test cycle took about 6 month to be
performed – working group now rolling out the concept
FSQT Process
Decision to ‚pilot‘ test the tool
immediately with the most critical
instances of the filter application
Specific focus was on structured
(MT103) vs. unstructured
(MT199) messages
Test include parameters as well
as list completeness & good guys
Continuous filter methodology
comprises both permanent tests
as well as on-demand tests which
can be:
̵ observation tests that are
scheduled on an ad-hoc basis (e.g.
based on a management request)
̵ prediction tests to optimize the filter
performance and hit rate
Comments
Process Steps
Kick off
Observation
Definition
Configuration
Testing
Preparation
Preliminary
Findings
Observation
Testing
Define Test
Objective
Prediction
Findings
Prediction
Testing
Training
T0
Configuration
C1
Observation
C2
Prediction
Permanent
QA testing
First-time cycle ca 6 months
9. 8
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First testing phases also allow for some more general
lessons learned
Key Takeaways
Will always show room for improvement
Can test different solution options to already known areas for improvement
Always reveals some not yet known tweaks and tunes
Is not a one-time effort
Benefit will come from translation into a continuous test framework and plan
Re-testing parameter set‘s and roll-out to all connected filter applications
Is a collaborative exercise
Complexity of test cases and result interpretation requires collaborative approach by team of IT, Operation
and Compliance experts
Requires significant resources
Both test preparation and specifically the follow-up activities require substantial resources and attention
Follow-up process closely monitored by regulators and stakeholders
Gives opportunity and basis for regulator dialogue
Provides an objective and auditable basis for risk-based filter settings and decisions
Outcome attracts immediate regulatory interest and follow-up – limited room for ‘just-see-what-comes-out’