The document appears to be a presentation given by Mohammad Ibrahim Fheili on evolving technologies and their implications for compliance. Some key points from the presentation include: - Compliance processes have been transformed into data-rich decision making processes that rely heavily on collecting and updating client profiles, which can be overwhelming without technology and automation. - Technology alone cannot improve compliance if the underlying compliance processes are inadequate, but it can help process data more efficiently. - Digital transformation and automation can optimize KYC and CDD processes by enabling parallel processing, mobile access, and integrating previously siloed compliance sub-processes. - However, over-reliance on technology also increases exposure to IT failures, so

1. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
The 8th Annual
Forum
HEADS OF AML/CFT UNITS AT ARAB BANKS AND FINANCIAL INSTITUTIONS
October 4th & 5th of 2018
Movenpick Hotel

2. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Session: Evolving Technologies &
Their Implications On The World Of
Compliance.
Presentation: The World Of
Compliance and Process
Automation
By Mohammad Ibrahim Fheili
Risk & Capacity Specialist /AGM – JTB Bank

3. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Too Much, Too Quickly, Too
Technical, Too Demanding, . . .
The Classic
Areas of Anti
Money
Laundering
Parachuted
into The
World of Anti
Money
Laundering

4. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75

5. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Compliance Evolved
. . . or Simply
Changed?!
We can't change the direction of the wind,
but We can adjust our sails to always
reach our destination.

6. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Have We
Decided
Where’re We
Going? What
Is Our
Destination?
Value
Creatio
n
Simply
Clean
Up!

7. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Reactiv
e
Evolvin
g
Proactiv
e
Pas
t
Fut
ure
From legal program
manager …
From “No You Can’t”
…
From Transactions and
Processes …
From Cleaning up …
From an Expense …
… to Senior-Level
Advisor
… to “yes We Can”,
here’s how we can
… to analytics and
behavior
… to keeping clean
… to an Asset
How Compliance Has Evolved
Intelligen
t

8. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
The Compliance
Landscape Has Been
Changing!
. . . Beyond Recognition!
Compliance Officers Have Been
Simply Coping With This Change
. . . ‘Reactive’

9. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Communication At The Point Of
Interface With The Clients Has Not
Been Conducive To Productivity!
• The Communication Between Employees Involved
In The “Service Cycle” and Others Involved In The
“Compliance Cycle” at the Branch can be
potentially ‘Destructive’!
• The Regulator Has Been Giving More Power To
The Compliance Function Rendering The
“Compliance Cycle” Arrogant, and The “Service
Cycle” resistant!
• Unit/Bank Performance is Contingent Upon The
Success Of Both; The Service & Compliance

10. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Compliance Cycle
Service Cycle
On Going Follow
up & Service
 Handling Complaints
 Cross-Selling
 Updating Customer Profile
(CIP),
 Etc….
Customer Risk Scoring
Customer Due Diligence Risk
Transaction Monitoring Systems
Cash Aggregation and Reporting
Systems,
Etc…..
“Compliance
Cycle” must be
tainted with the
‘Service Culture’.
AND “Service
Cycle” must be
contaminated
with the
‘Compliance
Culture’.
BUT the two
Cycles MUST BE
separated, but the
On Going Monitoring
& Compliance

11. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Automation Exaggerated:
If You Can’t Do It In Physical
Environment, Who Said You
Can Do It In Virtual
Environment!
Pursuing Technology for Technology’s Sake is Disruptive!

12. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Collect Data
Before
Engagement,
and Continue to
do so beyond
the date of
recognition
Collecting Data
haphazardly is
NOT
PRODUCTIVE
in the era of
Heavy
Compliance
Risks Taking
(Intentional &
Unintentional)
Known to The
Financial Institution .
. . With continuous
efforts to Identify
more
Non-Identifiable Risk
Non-IdentifiableRisk
Financial Institution’s Risk/Data
Population
What is Normally Used in
Risk Identification:
• CIP
• KYC
• DD
• EDD
• Complete and Up-To-
Date Client File,
• Client Visits.
• Proper Follow Up
• Comprehensive &
Consistent Data about
the Market
• Etc.
Identified &
Identifiable
Risks
• Expected Losses are
normally controlled
or met using Gross
Income,
• While Unexpected
Losses require
Capital.
Collecting, Storing, and Processing Data is a
Conscious Decision … NOT A RANDOM EVENT . . .
Breeding The Right Data-Culture is Key To Success.

13. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Why Technology? G.I-G.O. Remains as
True as it has ever been!
• Compliance has been transformed into Data-Rich Decision-Making
Processes and sub-processes.
• The Pressure to continuously collect and update clients’ Profile is
overwhelming and cannot be performed simply by relying on traditional
means!
• Technology and Automation can do little to help if Compliance Processes,
as they exist in Physical environment, are not adequate.
• The Correctness of the Process has little to do with technology; Technology
only does the processing faster with greater efficiency.
• Since the dawn of time we, bankers, collect data:
• To Describe what happened (understand the population!) – Descriptive
Analytics
• To Explain Why it Happened (go to the root-cause of the problem if &
when it happens) – Diagnostic Analytics
• To Anticipate what will happen (Inherently probabilistic) – Predictive
Analytics
• To provide recommendation on what to do to be adequately compliant
– Prescriptive Analytics

14. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Degree of Engagement in Due Diligence & AML Compliance
ResourcesDeployed
DD
EDD
RBA
Moving in this direction is a clear indication that there is a decision
on the part of the Bank to continue on serving the client.
Due
Diligence
Enhanced Due
Diligence
Risk-Based Approach to AML
Compliance
Enhancing Compliance Capabilities …
AMLCost
SkillsNeeds
Know-How
AMLAnalytics
The MAIN
OBJECTIVE of
Enhanced AML
Compliance Steps is to
Improve your
Knowledge of the
Client so you can serve
him/her better.
So the decision to
“Accept & Serve” the
Client will be a
Calculated Risk
Choice!
The Use of Technology
will be necessary!
However, increase
reliance on IT increases
exposure to IT failures
(i,.e., Risk).
Does the Bank have a
Compliance is not an end in itself; it is a means to
better serve Clients.

15. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
The Overwhelming Amount Of
Data That Is Available And
Required To Do The Job Of
Compliance Properly Can’t Be
Handled Traditionally!
Optimize With Digital
Transformation . . .

16. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
The Promise of Digital and
Automation
• The financial services industry is awakening to the value of
automation and digitization in organizations’ KYC and CDD
processes and the promise of reduced costs and enhanced
customer experience. Regulators across jurisdictions are
increasingly willing to support banks’ efforts to embrace
digitization and automation.
• Some digital initiatives in which banks are currently investing
include:
Self-service digital channels for CDD,
Maintenance of client documents in a centrally managed
repository,
Stringent role-specific access control mechanisms, and
A rules engine with embedded logic to assess whether
regulatory changes will impact clients.

17. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Digitization Can Optimize . . .
Digitization can optimize the CDD and AML/KYC
processes in the following ways:
• Parallel processing of “new-to-bank” client
onboarding, aided by a rules-based workflow engine
and automation of manual activities. This can
substantially reduce turnaround time for account
opening.
• Mobile and web-based apps, which can assist users
with onboarding review tasks for their assigned client
cases. Apps are also available to support e-signatures
and reporting.
• Form digitization, which can substantially reduce

18. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
The most interesting aspect of digitization is process
automation. Client on-boarding involves multiple sub-
processes, such as:
• Data collection,
• KYC and AML,
• Credit assessment,
• Risk profiling,
• Account setup,
• Activation and
• Internal reference data updating.
Each sub-process is handled by a separate department.
Digitization Can Optimize . . . Continues

19. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
• It becomes more complex when a client opens various
banking relationships, such as an investment account
and a line of credit, at different points in time. In the
traditional CDD environment, different lines of
business within the bank work in isolation, leading to
duplicate client data collection. This is both
aggravating for the customer and also time-
consuming.
• Banks are now trying to automate large parts of the
process for low-risk clients. While this can result in
substantial cost savings and operational
Digitization Can Optimize . . . Continues

20. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
Client Due Diligence Challenges
The Complexities, Challenges and Difficulties inherent to client
onboarding include the following:
• Data quality: Banks face numerous challenges when collecting
required data for client due diligence (CDD). Information
received from the public domain is often inaccurate, and clients
often have privacy concerns when it comes to sharing personal
information. Bank employees are hesitant to pressure clients for
fear of antagonizing them.
• Ascertaining the ultimate beneficial owner (UBO): This is
perhaps the most daunting CDD requirement, particularly with
the increased pressures of FinCEN’s recently released Final Rule
on Beneficial Ownership and the 4MLD regulation. Currently,
the U.S. has not set regulatory restrictions for determining the
UBO, but in the European Union, banks are required to identify
individuals with 25% or more equity interest in a legal entity.
Most banks lack a well-established policy to determine the UBO

21. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
The Complexities, Challenges and Difficulties inherent to client
onboarding include the following (Continues):
• Siloed processes and lack of standardization: In the absence of
a standardized AML risk assessment template, the processes
and rules for collecting, maintaining and updating client data
differ vastly across most banking organizations. Multiple
siloed systems and user interfaces are used for client
onboarding and maintaining client data. Different lines of
business use different search tools, and document storage
methods and locations are varied.
• Ever-changing regulatory requirements: Because global banks
come under the purview of multiple regulatory bodies, their
internal systems need to be agile enough to accommodate
these varied and often contradictory requirements across
geographies.
Client Due Diligence Challenges

22. Mohammad Ibrahim Fheili / Risk & Capacity Building Specialist / eMail: mifheili@gmail.com Mobile: +961 3 33 71 75
“Over 30 years of Experience in Banking.
mifheili@gmail.com (961) 3 337175
Speaker’s
Biography
Mohammad
Ibrahim Fheili
 Risk & Capacity Building Specialist.
 Lecturer in Risk, Risk-Based Performance & Compliance
 University Lecturer: Economics, Risk, and Banking Operations
 Currently serves in the capacity of an Executive (AGM) at JTB
Bank in Lebanon.
Served as:
 Senior Manager & Chief Risk Officer at Group Fransabank
 Senior Manager at BankMed
 An Economist at the Association of Banks in Lebanon
 Mohammad received his college education (undergraduate &
graduate) at Louisiana State University (LSU), and has been
teaching Economics and Finance for over 25 continuous years at
reputable universities in the USA (LSU) and Lebanon (LAU).
 Finally, Mohammad published over 25 articles, of those many are
in refereed Journals (e.g., Journal of Money Laundering &
Control; Journal of Operational Risk; Journal of Law &
Economics; etc.) and Bulletins.”