Cyber Laundering and the AML Directives

CYBER-LAUNDERING
AND AML COMPLIANE
Prof. Hernan Huwyler, MBA CPA
IT and Compliance Risk Manager

REQUIREMENTS
Introduction to cyber
money laudering and tips
for compliance
4
| MODULES
1
3
RISKS
Assessment of new AML
compliance risks
REPORTING
Detection and management
of suspicious transactions
2
CONTROLS
Practical controls to
comply with the 5th EU
directive on AML
5
TECHNOLOGY
The assessment and
implementation of new
solutions for cyber
laudenring

Module 1
COMPLIANCE
REQUIREMENTS IN
PRACTICE

Identify scope changes
The development of Internet applications created new
methods to move illicit funds...
• rapidly,
• internationally,
• discreetly,
• with low transaction costs and
• safely
... with a mere click of a mouse
Cyber-laundering = Speed * Distance * Anonymity

The deep web ensures anonymity by preventing
content indexing
The Internet allows hiding illicit fund origins and avoids
physically moving banknotes at the time of placement
Regulations and enforcement agencies are behind new
developments
Banks are not fully covering new cyber-laundering
developments to update alarms of suspicious
operations

Internet facilitates the all money laundering stages
Placement > Introduction of illegal money in institutions
• No face-to-face contact and weak identity verifications
• Deposits in unregulated institutions and payment
intermediaries
• Anonymous operations (eg. eCash, virtual currencies)
• IPs hiding and privacy limitations by the GDPR
• It is often an unnecessary stage because money illicit is
already in virtual form (eg. ransomware payments)
• Easy to create virtual "mules"

Stratification > Disguise illegal origins
• Easiness to move funds via eBanking and unregulated
intermediaries
• Low costs to acquire virtual assets
• Speed to move funds while centralizing multiple online
users
• Easiness to change jurisdictions
• Numerous unregulated sectors (e.g. online casinos)

Integration > Re-entry of funds as legitimate
• Easiness to create fake eCommerce businesses
• Inability to demonstrate the effective provision of virtual
services
• Difficulties in valuating virtual assets
• Use of accounts in foreign eBanks

Study case
3D game based on a virtual world created in 2003,
allowing users to
• negotiate virtual properties valued in "Linder dollars”
that can be converted into real money via PayPal
• exchange virtual items (property, jewels, and
clothes) and services (gambling, sexual, and
banking) without enforcing intellectual property and
regulations
Required identity, tax and address validations for
virtual payments since 2019

Study case
Let's discuss
• Money laundering risks
• Terrorism financing risks
• Illegal activity risks
• Risks related to the protection
of minors
• Impossibility to freeze assets of
subjects on OFAC listings and
sanctioned by the European
community

Amount in crypto coins from illicit sources
Fraud ponzi from
PlusToken coin
purse
Fraud ponzi from
Bitconnect
investments
COVID

New applications allow illicit funds to be immediately
moved. even between countries and unregulated
institutions and intermediaries, via
• eCommerce sales of bogus services and invoices
(commonly combining real and fraudulent services),
• bitcoins transfers,
• eBanking applications with low controls,
• custody account and trust transfers by advisors,
• gift card transfers,
• smart and prepaid cards transfers (eg. Santander
Smart that accumulate the balance on the chip without
the need to authorize movements),

• online payment applications (eg. PayPal, Zelle, and
Wise ),
• transfers via mobile phones platforms (e.g. Aple Pay
and Samsung Pay),
• online auctions and websites,
• bogus donations,
• fake loans with offshore companies,
• bets in virtual casinos and sports platforms and
• play to earn game applications

Illustrative example
A public official obtains a bribe of 10,000 euros in cash, then he
• creates a user with a false identity on eBay,
• simulates offering a "collectible photo“under "buy Item now“at
10 euros without shipping and purchase costs
• creates his real user on eBay
• immediately pretends to buy the "collectible photo" from the
false user
• then he resells "collectible photo" at 10,010 euros to the fake
user without completing any payment
The illicit fund has been justified to the public official as a gain from
reselling a "collectible photo" in eBay.

Common crimes facilitated by Internet
• Drug trafficking
• Tax evasion and fraud
• Financing of terrorism
• Corruption
• Computer crime (eg. fraud
and ransomware)
• Credit card fraud via
identity theft
• Fraud via phishing
• Pyramid scams (e.g. Ponzi
and investment fraud)
• Child pornography
• Extortion

Common crimes facilitated by Internet
If I had used internet to hide
my funds, I would have
ended up drinking
margaritas in the Caribbean

5 AMLD scope changes
• Credit and financial entities such as payment services,
currency exchange, investment and insurance companies
• Legal, tax, financial, accounting advisers, notaries and
auditors, real estate agents
• Gambling providers, jewelers and dealers of gold,
diamonds and other high-value goods
• Companies that hold or transfer virtual assets
• Merchants that deal with art works
• Platforms and bitcoins wallets
comply with laundering prevention measures such as client
due diligence and reporting of suspicious operations

In the practice, the fifth AML directive involves updating
Anti-money laundering governance
• the operational risk assessments (especially on virtual
assets and cybercrime)
• the list of high-risk countries
• the staff training programs
• the report protocol to the Executive Service of the
Commission for the Prevention of Money Laundering and
Monetary Offenses (SEPBLAC)

In the practice, the fifth directive involves updating
Due diligence
• The policies and controls for customer identification and
acceptance and continuous monitoring against their profile
> decide to act to accept clients remotely during COVID
• The requirement of high-quality scanning of identification
documents
• the matching against sanction lists
• the protocol for requesting documentation of origin of funds

In the practice, the fifth directive involves updating
Systems operations
• blocking connections from IPs anonymous VPNs and TOR
• two-step validation of clients using mobile devices
• the customer access log to capture IPs with a 5 year
retention period
• the log of IPs of virtual wallets
• the limits for operations or accumulation of operations in
amount and number
• the alerts covering new risks and requirements
• the compliance audit plans

Study case
Payment service in virtual currencies
• Transfers only with name, email and date of birth
• Purchase of virtual money (“Liberty Reserve euros / dollars”)
indirectly funded by credit cards or bank wires by third party payment
companies ("exchangers”) in Russia, Malaysia and Nigeria
• Achieved 1 M clients without identity verification, especially in forex
brokers and trading companies eCommerce, 30% in the US
• 1% expenses on transfers of 300M USD per month
• Registered in Costa Rica
• Employees signed confidentiality clauses for 13 years
• A group of hackers asked for 50,000 USD from a cyber provider
security via Liberty Book

Study case
Let's discuss
• Regulations to consider
• Crimes to be investigated by
prosecutors
• Cooperation between
jurisdictions
• Extension of tunlawful
association to CIOs, CTOs and
other directors

Study case
• Closed in 2013 by the United
States justice
• Charges to its 2 founders and 7
directors for facilitating money
laundering and unlicensed
operation abroad by the US
Patriot Act
• Manhattan US Attorney Announces Charges Against
Liberty Reserve, One Of World's Largest Digital
Currency Companies, And Seven Of Its Principals And
Employees For Allegedly Running A $ 6 Billion Money
Laundering Scheme | USAO-SDNY | Department of
Justice

Module 2
TIPS FOR CYBER
LAUNDERING
CONTROLS

Controls on new payment methods and use of
virtual currencies
Understand the technology and possible cyber laundering schemes
• Identify online platforms in which identities are not fully validated
• Identify schemes from countries with weak anti-money laundering
regulations
• Identify platforms with anonymous operations (eg. allowing proxies,
anti-tracking software and VPNs)
• Identify payments without limits for transfers or amount of
operations or recharges
• Identify the platforms allowing payments without having an
associated bank account (eg. PayPal,wallets and smart cards)

Common controls against cyber laundering
Front-end controls
• Strengthen customer due diligence
• Validate the associated bank account with a 1 cent debit and credit
• Validate access in two steps, strong passwords and avoid
simultaneous logons
• Restrict operations by their geolocations
• Train to identify red flags on customer behaviors
Back-end controls
• Monitor operations for abnormal usage patterns
• Identify addresses IPs
• Mine operations and logos with better metadata
• Report of suspicious operations of >10k EUR in virtual currencies

Service providers controls
• Identify internet users and record their activity history by the internet
providers
• Keep records for judicial and criminal investigations
These controls are easily bypassed by the use of
• "hot spots” in hotels and cybercafes
• software and hardware to anonymize the addresses of IPs
• data encryption applications
• unprotected servers from legitimate users that were compromised

The cyber laundering requires updating controls and procedures
• Detect operations with risks of cyber laundering > transfers using
paypal, anonymous or opaque operations, transfers with erroneous
or missing data, intermediaries, IP of a risk country or VPN
• Segment customers with higher risks > products related to eCash,
without physical contact, linked to tax havens, without electronic
signature, and lack of customer response
• Monitor transactions with cyber laundering risks
• Analyze deviations with current legislation by country

Tool> Activity Threat Matrix criminal
Impact high
Impact under
Evasion
Corruption
Fraud
Identity theft
Financing of terrorism
Cybercrime
Human trafficking Bets
Operations per month

Tool> Activity Threat Matrix criminal
by criminal offense
Impact high
Impact under
Operations per month
Phishing
Abuse of customer
accounts
Onine banking
Conversion of cryptos
Remittances

ISOs 37301 and 37002
New ISOs In the compliance management systems and whistleblowing
allow addressing corporate criminal liability triggered by cyber laundering
• Art 31 bis of the Spanish Criminal Code extends the corporate
responsibility to money laundering (art 301)
• The Organic Law 6/2021 aggravates money laundering crime in the
exercise of business activity by credit institutions, insurers, investors,
fund managers, entities dealing with electronic money, payments
including currency virtual, money exchangers, auditors and lawyers,
casinos, art and metals traders, others entities
The ISOs integrate anti-laundering controls into a management system
to reinforce the ethics and compliance program
Certifying the ISO 37301 improves the credibility

Register virtual asset service providers
Virtual asset service providers cover crypto-currencies platforms and
wallets
Their services are related to the
• offer an exchange between virtual assets and fiat currencies,
• exchange different forms of virtual assets,
• transfer virtual assets (eg. move a virtual asset from one address or
account to another)
• offer the custody in wallet services
• provide financial services related to the offering of an issuer or the
sale of a virtual asset

To comply with the 5th directive, virtual asset service providers in Europe
must register with central banks since 2021
• When registering, they must demonstrate that
• the risks of laundering have been evaluated in all its business model and
applicable legal requirements
• the compliance policies and support procedures are effective in
addressing risks
• there are effective due diligence controls on clients
• suspicious transactions are continuously monitored
• documentation of controls is retained for 5 years
• the staff is annually trained on AML controls
• Fines of 10M EUR or 10% of sales by default of registration
Register virtual asset service providers

Module 3
ASSESSMENT OF NEW
AML COMPLIANCE
RISKS

A special commission of the FATF has identified 3 risk scenarios from
cyber-laudering
• Internet is used as a distribution channel for financial instruments,
cards, and electronic wallets.
• there is no face-to-face contact with the customer who buys a
financial instrument
• the payment method is an open network type and can be accessed in
a high number of jurisdictions
Identification of escenarios and vulnerabilities

These risk factors are increased by the following vulnerabilities
• Operations allow transactons from abroad
• Operations are carried out from jurisdictions with no or few
regulations and cpn shadow economies
• COVID19 has made effective controls harder to implement and
monitori

Risk factors and vulnerabilities in the financial system
• Increased volume of remote and Internet operations
• Lack of understanding of Internet operations and online platforms
• Unregulated sectors such as virtual currencies and minerals
• Major cybercrime and cyber criminal groups
• Pressure to accept new bank clients to compensate the crisis
• New virtual assets such as the multiplication of virtual currencies (ex
Bitcoin, Ethereum, Cardano, Binance Coin, Tether, XRP, case
Dogecoin)

How to prevent risks on transfers
The virtual payments cover
• On-line banking with effective identification of parts even by moving
• Prepaid cards from financial institutions or not with a very diversified
market and with degrees of anonymization
• Anonymous payments in virtual currencies

Risk reduction measures
• Update the new risk scenarios for anonymous payments and virtual
assets
• Adjust the due diligence and risk segmentation process
• Monitor movements from / to payment platforms
• Identify and report suspicious movements
• Train account officers on cyber laundering
• Online verification of ID with high quality photos (face, ID, and
signature)

Approaches to avoid risks
Selective
• Customer rejection
• Rejection of the corresponding bank
Of product
• Rejection of the market or of an entire
customer segment
Elements to avoid risks
Of business
• Strategy
• Prudence requirements
• Cost effectiveness
Of regulations
• 5th directive
• Uncertainty
• Penalties and legal costs

Evaluation
Assess inherent risk
• Identify factors
• Analyze impact and frequency
Evaluate the effectiveness of controls
• Apply internal audit data and self-
assessments
Calculate residual risk
Add risks versus tolerance
Planning
Scope of products
reached by cyber
bleaches
• Entities
• Units
• Countries
• Regions
Results
Action plan
• Develop a plan to
improve
insufficient
controls
• Report and
document
deviations
EWRA Enterprise-Wide Risk TOssessment

Vulnerabilities generated by virtual
currencies
Placement Stratification Integration
Anonymity of virtual
currencies
They can be used by
all bleaches and its
associates
No allow detect
mules and suspicious
movements
Allow anonymous
transfer for
purchases of various
assets, highly
accepted by
merchants
Real-time operations Allow transfer illegal
money immediately
between countries
Do not allow to stop
an operation after
detecting a suspicion
Allow funds to be
moved to financial
institutions

Discussion case Ezzocard
• Virtual and anonymous prepaid card from 5 to 1,000 dollars
• It is funded through a transfer application (Perfect Money)
denominated in dollars or bitcoins
• The identity of the payer is not revealed
• https://ezzocard.com/
• Possibility of selling the balances in virtual auctions
• Unable to obtain IP addresses from public sites

Risks in transfers
Expected flow
Bank
Commerce
Client
Traditional money
Smart or
prepaid card
Deposits
Extractions
Merchant

Risks in transfers
Fraudulent flow
Bank
Bpgus eCmmerce
Client
Illicit traditional
money
Smart or
prepaid card
Deposits
Extractions
Bleach
Launderer

Potential scenarios
• A drug dealer asks customers to pay by
recharging one or more smart cards
• A gun dealer requests payment with a high-
value smart card
• A tax evadore transfer undeclared money from
Spain to Andorra with smart cards
Risks in transfers
Potential risks

How to Manage Risks on High
Value Trades and Art Dealers
The fifth AML directive requests that art market dealers are registered in
their Central Bank if they have operations of more than 10,000 euros per
type of artwork
• Art and antique auction houses both physically and online
• Brokers, art consultants and designers
• Galleries
• Warehouses for works of art, including those near airports

How to Manage Risks on High
Value Trades and Art Dealers
The scope of artworks includes
• Paintings, drawings, carpets and photos
• Sculptures, ceramics and antiques
• Collections such as coins and stamps
• Old automobiles

How manage risks in art
The art market creates risks for money laundering due to
• Internationally easily movable and concealable items
• Volatile and high values, difficult to compare agaist fair price
• Opaque market with many private and anonymous operations
• Existence of intermediaries
• Difficult to demonstrate the uniqueness of works of art
• Unregulated sector
• Rental of works of art
• Payments to/from tax countries
• Jurisdictions with high corruption and tax evasion

How to manage art trade risks
Specific control measures are
• Identification and due diligence of buyer, seller and intermediary
• Crossing with tax returns
• Test the authenticity of the artwork
• Review of previous or reference prices
• Hold a physical sale or auction event
• Ensure the commercial objective and sense of purchase
• Validate the payment method
• Trace the origin and destination of related operations
• Verify the online sale with the transfer of property and rights
• Investigate and report suspicious transaction
• Money Laundering Policy at Trained Art Dealers

How to manage risks Commerce of art
Case study
• A digital artist, Mike Winkelmann, sold a work for € 61M
• The sale was through an auction at Christie's
• File ownership is proven by blockchain
• Collage with images created during 14 years
• Finally, it was formalized with a broadcast license
Let's discuss
• Money laundering risks
• Controls to be carried out by Christie's
to prevent the crime of facilitating money
laundering or omission of the suspicious
transaction report

Risks in operations outside the client's
profile
• Incoming funds from a platform without laundering regulations
• Very high frequency inbound transfers from multiple crypto wallets to
one account
• Linked crypto wallets that barely match customer profiles
• A single crypto wallet linked to multiple bank accounts and credit
cards> indication that a group of people are using the same wallet to
move funds
• Transactions just below notification thresholds
• Continuous, high-value transactions in a short period of time
• Quick transfer of deposits to unregulated jurisdictions

Operational integration at before opening products and their continuous
monitoring
• Limit operations in physical locations
• Request an ID card from anyone who pays with smart cards
• Simultaneous controls with subjects on sanctioned and exposed
police lists
Always document the action before each alarm
Risk integration of know your customer and
money laundering

Module 4
REPORTING OF
SUSPICIOUS
TRANSACTIONS

Summary of subjects
• credit institutions
• financial institutions
• auditors, insolvency practitioners, external accountants and tax
advisors
• notaries and other independent legal professionals
• trust or company service providers
• estate agents, including when acting as intermediaries
• other persons trading goods in cash amounting to 10,000 euros or
more
• gambling services
• exchange services between virtual and fiat currencies
• custodian wallet providers
• art dealers in galleries and auction houses

Changes in the requirements of the 5th
European Directive
• Beneficial ownership should to be transparent and accessible
• Ownership of trusts should to be accessible by request
• Property records must be integrated at country level
• Use of anonymous prepaid cards is limited at € 150 for physical stores
and € 50 for online transactions
• New list of risk countries without access to records of beneficial
owners
• Cooperation between anti-money laundering agencies across EU
countries

Discussion case > Online gaming
• Online gambling and casinos are very popular for money laundering
• Lack of experience of supervisory authorities
• Money is usually converted into virtual chips or credits at the
beginning of the game, and then, the final balance is reconverted at
the end
• A common scheme involves arranging bets between participants and
staff of the gaming company

Discussion case > Online game
Let's discuss the controls to prevent cyber laundering in online gambling
• Identity accreditation problems in customer due diligence (key to avoid
the access of minors)
• Participants from the same IPs or from countries other than the
residence of the due diligence
• Relationship of user accounts between participants
• Gains or losses very different from statistical expectation
• Frequent winner and in a short period of time
• Changes in ownership (ex. winer ticket sales or winning bets)
• Prevention of changes in logs of the internal staff of the gaming
company

How to Update Alert Decision Matrices
The risks of cyber-laudering are calculated (and segmented) by
combining 3 charasterics
• Customer characteristics > natural or legal person, nationality,
residence, identification, contact with account agent, documentation not
provided, verified or independent
• Transaction characteristics > online connection mode, IP and
geolocation, links with high-risk countries, logic with the type of account,
previous failed attempts, anonymous counterparties, in cash
• Operation characteristics > volume and frequency of operations,
traceability, transfer movements between countries or accounts, lack of
documentation

• Internal factors are also analyzed at the entity level
• Efficiency of compliance controls in audits
• Degree of integration and trust of the systems
• Anti-laundering personnel training

Example of a cyber laundering risk matrix for alerts
(simplified)
Criteria Risk factor Low High
Customer due diligence ID Known customer Y
Verified ID
Client new
Monitoring Known relationships Anonymous relationships
Transaction Geography Countries high risk
Value < € 7,000 > € 7,000
Method of pay Documentation verified,
regulated source
Cash, anonymous origin, eCash,
online, intermediaries
Operative Balances < € 8,000 > € 8,000
Frequency Low number High number, multiple sources
Service segment Physical On-line

Case discussion for your organization (15 minutes for preparation)
Criteria Risk factor Low Medium High
Customer due
diligence
ID
Monitoring
Transaction Geography
Value
Method of pay
Operative Balances
Frequency
Service segment

The protocol to escalate alarms depends on the risk level
• Request explanation and documentation of the transaction >
evidence of origin of funds, reasonableness with the product, tax
information, verification of counterparties and intermediaries
• Review and update the client's due diligence> identity
documentation, physical presence
• Check logs of accesses > addresses of IPs, failed attempts, access
from multiple accounts

Segregate operational risks in virtual currencies
• Convertible into traditional money, negotiable for real payments
• Cryptos BTC Bitcoin, ETH Ether. XRPRipple, LTC Litecoin. ADA
Cardano
• Stable coins: USDT Tether
• Coins alternative (not mined): BCH Bitcoin Cash
• LD Linden dollars (Second life)
• Not convertible into money, they only pay within their
environment or platform or sold at auctions (secondary
market)
• Games multiplayers on-line: World of Warcraft Gold.
PED Project Entropy dollars

Controls to prevent cyber laundering by financial institutions includes
monitoring of movements on
• Online payments> PayPal
• Prepaid cards
• Bitcoin ATMs
• Prodents from services from remittances > Wise, CurrencyFair,
WorldRemit

Due diligence of clients and on high-risk countries
The 5th directive requires strengthening customer due diligence in high-
risk countries as a core obligation
For clients in high-risk countries, changes in the enhanced due diligence
requires documentation to be revalidated by independent sources
• Affidavit of the origin of the funds
• Declaration of patrimony and its fiscal and accounting position
• Evidence of beneficial ownership of companies and trusts
• Controls over the reasonableness, nature and purpose of the products
• Match against lists of sanctioned and politically exposed people

Enhanced due diligence changes should require the approval by higher-
level managers and closer monitoring of transactions to eventually report
suspicious transactions
Document difficulties in obtaining the due diligence information

High-risk third countries are revalued approximately every two years
according to a methodology that covers the anti-money laundering
framework.
1. Historic countries: Afghanistan, Iraq, Vanuatu, Pakistan, Syria,
Yemen, Uganda, Trinidad and Tobago, Iran, and North Korea
2. Countries added in 2020: Bahamas, Barbados, Botswana, Cambodia,
Ghana, Jamaica, Mauricio, Mongolia, Myanmar, Nicaragua, Panama
and Zimbabwe
3. Countries removed in 2020: Bosnia-Herzegovina, Ethiopia, Guyana,
Lao People's Democratic Republic, Sri Lanka and Tunisia

Consirer greylisted
countries related to
tax havens
For Spain >
Malta, Gibraltar,
Andorra, and the
Cayman Islands

Acceptance of Politically Exposed People
The 5th directive asks member countries and international organizations
to compile a list of politically exposed persons
The lists include PEPs nationals, internationals, members of their
families and close business and personal associates
The due due diligence of an PPE involves obtaining additional and independent
information on
• the nature of the relationship and the purpose of the product to be contracted
• the origin and effective ownership of the funds and assets
Perform a closer monitoring on the ongoing operations
For the PPEs removed from the list as former presidents, controls must
be maintained for as long as there is a risk of money laundering

Discrepancies with Registry Public of Beneficial
Owners
Due to
1. the different definitions of the term "beneficial owner",
2. the lack of data updating and
3. the data and file transfer issues
discrepancies are generated in the information compiled from the
national registers to the central one
The entities bound by the register obligation must control and report
material discrepancies in the information of the beneficial owners in the
registry of persons with significant control
Non-material discrepancies such as writing errors are not reported if they
do not affect the sense

Discrepancies with Registry Public of Beneficial
Owners
Material discrepancies include the lack of a beneficial owner, a non-
beneficial owner, incorrect nature of the control, and errors in the type of
subject such as outdated addresses, date of birth, nationality or place of
registration
Discrepancies are reported without delay or wait to complete a review of
all companies in a group
May require adding a new record or change data on a existing record
Example in UK https://www.smartsurvey.co.uk/s/report-a-discrepancy/

Module 5
IMPLEMENTATION OF
NEW TECHNOLOGIES FOR
CYBER LAUNDERING

| Techological objectives for compliance
DATA QUALITY
Risk related to the lack of
quality and integrity of data
CENTRAL SOLUTION
Risks related to the selection
of poor techologies

How to evaluate the quality requirements of data
Inconsistencies in master data of clients and relationships create false
alarms and prevent suspicious reporting on transactional data
• Implement good governance and data ownership practices
• Integrate data from all solutions and data providers for due diligence
• Match operations and processes in all subsidiaries
• Audit and update customer and merchants master data
• Conduct compliance audits to review control evidence
• Set a log of data changes with preceding values
• Review the loading of data, manually or via interfaces
• Standardize the names, addresses, identification numbers fields
• Remove duplicate records
• Add data integrity validations in applications

How to evaluate capabilities of AML solutions
Solutions to ensure compliance with cyber laundering regulations are
constantly evolving in terms of technology and providers
The oommon capabilities to assess are the
• to manage due diligence investigations in the cloud
• to get a global view of data in different databases include all third
parties (data virtualization)
• to visualize data and relationships in dynamic reports (information
cubes)

• to keep data integrated and updated
• to bi-directionally communicate with clients and other third parties
• to keep logs complete and secure
• to encrypt the data "at rest”and “in transit”
• to ensure an online availability performance
• to ensure the continuity of customer operations and payments

Single source of truth
Cloud-based
Savings in consolidating
management and compliance
funtionalities
| Key capabilities
Enable to perform
investigations while working-
from-anywhere
Escalability
Modules are implemented
with an Agile approach

Solutions for money laundering prevention and compliance involve
making decisions on high investments
• Innovate carefully by focusing on technologies, solutions and
suppliers with proven success stories and productivity improvements
• Ensure good governance and data quality before planning solutions
• Consider the transfers of personal data to third countries, especially
to the United States under the GDPR
• Evaluate the support of common cases and complex cases that need
manual evaluations
• Start by assessing business cases for product and customer
segments with highest laundering risks that will have the largest
impact on improving the risk profile

Money laundering and robotics
The use of robotics in preventing money laundering requires selecting
and evaluating solutions to automate and digitize processes
• Standarize the preparation of cases for due diligence investigations
• Trigger use of bot processes after an alert has been generated
• Follow standarized controls and documentation compilation rules
• Segment operations from the standard (highly automatable) to the
complex (not automatable)
• Incorporate internal and external data (data supplier) for automation of
tasks
• Normalize data in unstructured databases
• Reconcile internal and external bases avoiding duplications

Machine Learning is the most effective technology to detect abnormal
patterns and focus investigation to address the complexity of cyber
laundering
• Reduce false positives of alarms
• Predict which alarms are investigated and then reported to prioritize
them at the time of their creation (triage)> Decide the level from
research necessary
• Update the risk profile of clients and intermediaries and immediately
adapt alarm generation patterns
• Detect changes in the behavior of customers and their movements
Cyber laundering and machine learning

• Identify relationships between clients and real owners
• Model which operations and clients must trigger alarms and risks
• Identify connections between various clients and their types of
operations
Allows the AML department to evolve from “moving papers” to become a
learning center

Machine learning rules from
• Previous investigations and reports
• The type of transaction, customer, account and countries
• Information from data providers on laundering such as
• legal cases and investigations
• relationships with real owners
• sanctioned
• mentions on the Internet and the media
• PEPs
Machine learning It begins by implementing steps from the simplest and
highest-risk cases to later grow in complexity

Case: sSolution for linking blockchain addresses
with service addresses
Ledger blockchain public Visualization app
Relationship between services like
wallets and potential illicit activities

Solutions using text and data analytics
Masive data flows within financial systems and their relational bases
require analytics to extract decision-making information
• Set a single holistic view of each client to compare against risk
thresholds (eg list all payments to different sources and accounts,
consolidate transfer receipts from various minor accounts)
• Investigate related parties
• Verify due diligence data
• Segment customer groups
• Detect changes in operations between periods
Data analytisc combines with machine learning and cloud applications

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Cyber Laundering and the AML Directives

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Cyber Laundering and the AML Directives

Editor's Notes