Fraud, Money Laundering, Terrorism

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Fraud, Money Laundering, Terrorism Compliance
in the Financial Services Industry

• Automated Solutions to an Integrated Problem

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Product Demonstrations

• Patriot Act Connection (PAC)
• One component of an integrated set of financial
  intelligence solutions for banks, thrifts, and
  credit unions.
• Compliance EYE
• Compliance EYE is a web-based (ASP) securities
  trade surveillance system

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The Components of the Problem FRAUD

• Reputational Risk
• Bottom Line Monetary Losses
• Lawsuits
• Prison
• Before 9/11 few agency examination issues

Fraud
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The Components of the ProblemMONEY LAUNDERING

• Reputational Risk
• Lawsuits
• Prison
• Typically little or no money loss
• Before 9/11 aimed at drug enforcement and tax
  evasion

Money Laundering
Fraud
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The Components of the ProblemTERRORISM
Terrorism

• Reputational Risk
• 9/11
• Not typical hiding illegal money laundering
• Involved very small dollar amounts

Money Laundering
Money Laundering
Fraud
Fraud
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The Components of the ProblemCOMPLIANCE
Terrorism

• Reputational Risk
• Compliance
• Fines
• Loss of charter
• Loss of GLB powers
• Multiple agency enforcement actions
• Prison

Money Laundering
Fraud
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Fraud, Money Laundering, Terrorism Compliance
An Integrated Problem
Terrorism
Money Laundering
That requires an integrated solution The CFS
opportunity
Fraud
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International in ScopeFinancial Action Task
Force (FATF) on Money Laundering

• Argentina
• Australia
• Austria
• Belgium
• Brazil
• Canada
• Denmark
• European Commission
• Finland
• France
• Germany
• Greece
• Gulf Co-operation Council
• Hong Kong, China
• Iceland
• Ireland
• Italy

• Japan
• Luxembourg
• Mexico
• Kingdom of the Netherlands
• New Zealand
• Norway
• Portugal
• Russian Federation
• Singapore
• South Africa
• Spain
• Sweden
• Switzerland
• Turkey
• United Kingdom
• United States

USA PATRIOT Act
Terrorism
Money Laundering
FATF
Fraud
The Egmont Group of Financial Intelligence Units
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BSIs Financial Intelligence SolutionsIntegrated
End-to-End
Organization And Process Design
Auditing And Reporting
Account Closed
Account Opening
Transaction Processing
Pringle (Policies)
Training
Information Resources / CHQ
CIP Checklist
Risk Assessment Matrix
ID Flag
International Data Source
AML Software
Case Management
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BSIs Financial Intelligence Solutions Overview
Identity Verification
Global hi-risk check
Risk Management User Management Billing Automated
Routing
Professional Services
Resources and Tools
BANK
BSI
Vendors
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World-Check

• A database containing the names of high-risk
  individuals and businesses (senior political
  figures, terrorists, money-launderers, etc.)
• Covers the United States and 230 other countries
• Over 400 institutions (from banks to government)
  use W-C to screen their customers for risk.
• Concise profile provides information aliases,
  alternative name spellings, relationships and
  synopsis explaining why individual or business
  has been identified as high-risk (original
  sources provided as Includes links to source
  information for verification purposes
• Virtually every sanction list, plus 100,000
  other sources, including law enforcement,
  regulatory actions, watchdog groups and
  international media

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Key Benefits

• Improves efficiency of business account
  verification
• Addresses fraud losses
• Ensures consistency between business units
• Multiple delivery options
• Easy to use
• Resources available to facilitate integration

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Compliance Tools for the Securities Market
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Source of Risk in Securities Compliance

• AML
• Fraud
• PATRIOT Act
• Trade Irregularities

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SEC Rules Require Monitoring of Trades for

• Loss in Equity
• Turnover Ratios
• Cost-Equity Ratios
• Transaction Suitability
• Portfolio Suitability
• Front-running

• Discretionary Activity
• Mutual Fund Switching
• Approval Levels
• Mutual Fund Breakpoints
• Broker Risk Profiles
• Spoofing

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CCH Wall Street Compliance EYE

• An integrated surveillance tool to monitor trade
  and trade-related data for compliance with all
  applicable regulatory requirements

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CCH Wall Street Trade Surveillance and Case
Management Growth Opportunity
Compliance Officer
CCH Wall Street
3rd Party Data
Inefficient Use of Time
Reactive, Not Proactive
Email
WSP
Regs
Other
Inconsistent Audit Terms
Manual Processes
OFAC
Increasing Workload
Compliance EYE
Mutual Fund Data
Clearing Firms