Growth Need In Anti-Financing of Human Trafficking

from Fair.org

Syrians are migrating en masse to Europe to flee their war-torn homeland. They would like to find a place where they have a chance at life and happiness. In their effort to get to Europe, many are selling everything they own to pay for a passage by water to Greece. Sometimes that ticket is for a boat to Greece, but not necessarily to get a chance at life and happiness.

One hears stories of rape and prostitution. People are enslaved forcefully. Others are coerced into a system that has them accruing debt with high interest rates, which they pay off through labor.

These stories have money behind it all. The transactions are, of course, illegal. The storage of money is also illegal. For banks of all sizes and locations, trying to track down funds originating from these criminal activities is difficult. And this problem isn’t going away. As a matter of fact, Freedom House, an NGO that studies human rights issues, recently released a report stating that a third of the human population lives at risk of war, violence, and terror on a daily basis. That is 2.43 Billion people. Banks and Money Service Businesses facilitate and secure the transactions that make human trafficking profitable.

Here’s where technology can be of great help. On a case-basis, data analysis tools play an important role in discovering players in such industries. On a systemic-basis, a central ledger might be a solution. This is most commonly called BlockChain. The idea is to have a single place where all accounts must balance and all transactions are verified by the community as a whole. Transactions can still be anonymous, but the facilitating financial institution has a place to check unique funds – unique because each unit of currency will have an identification code. You know those numbers and letters stamped on the US Dollar Bill? Yes, that kind of uniqueness. Currently, we treat a single dollar no different from any other dollar. But with a record of that unique identification available, we can start to root-out human trafficking networks.


Marcus Maltempo is a Certified Anti-Money Laundering Specialist and a Certified Fraud Examiner with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. 

Virtual Reality to bring compliance to life

from Risk Management Magazine
from Risk Management Magazine

One day this will happen. For now it is a headline that is pie in the sky. But there are situations that will come in handy even now.

I’m thinking of compliance training. The current state of compliance training is either classroom training or an online course where there are readings, maybe some audio and or video and then there is an exam.

Virtual Reality is very good for simulations. Here’s a chance to make every trainee go through simulated situations. I can imagine a simulation course with four or five scenarios. Each of them adding complications, making the experience more real. And unlike the current training schemes, the trainee can do anything that can be done at a firm. S/he could do things that are completely unrelated and waste time during the simulation, and then fail. The trainee could decide to investigate something when s/he should have simply reported it the appropriate person first. How about facing multiple scenarios at once. That’s very real. VR can address not only the compliance issues but how the trainee could deal with the emotions that come with trying to deal with these situations. Many compliance issues arise out of pressure and not out of malice. VR can be a very good tool to address this.

The technology already exists. The Department of Defense already have VR “games” to train soldiers for stressful and complex scenarios. Financial Regulatory Compliance simulations are simpler than combat.


Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE. 

Masters, JPMorgan’s Ball and Blockchain

Blythe Masters, the former head of commodities at JPMorgan, became the CEO of Digital Asset Holdings about a year ago and she has been on a tear through Wall Street talking up a recordkeeping technology called blockchain.

Blockchain is most famously tied with the digital currency BitCoin. It isn’t actually part of the digital currency. It is commonly known as a type of public ledger, a recordkeeping system, if you will. It is conceptually simple, but technologically very advanced. The idea is to have one central accounting system for all transactions where the whole world can see. In this way, embezzling is more difficult to do. One can’t only be financially savvy, but also be technologically so. Not just a little but a lot. Because blockchain is  central ledger for transactions, there is an external reference that is common to the buyer and seller. So, when a customer tries to buy something from a seller, the currency portion of the transaction (payment), goes through the blockchain, which verifies that the currency is in the buyer’s account and no one else on the blockchain is supposed to have it.

It makes every penny into a unique penny. We have a unique number on all paper bills in the United States, but that unique number really isn’t used for common transactions. This provides that extra security.

Masters is leading the idea that blockchain technology can be brought to Wall Street. Most senior investment bankers are skeptical. Of course, they are. Most senior investment bankers don’t understand blockchain or BitCoin. And, when they do, they generally know as much as you, my reader, because you now have read my previous paragraphs. To Masters, it is a no brainer. Here’s a technological tool that reduces counterparty verification which should, in theory, reduce the number of days it should take to clear a trade, thereby reducing cost.

The risk, aside from bank management not even understanding the significance of this technology, is the risk of systemic fraud or glitch. But one thing we’ve learned over the last century as we’ve centralized many of our transactional activities is that it greatly reduces the inherent risks of transactions, but because of the way our laws allow for increased risky behavior when risk has been reduced, it will likely increase the residual risks. There are a number of examples of this. When all trading goes through fewer routes to their eventual transactions, there are fewer route that need to be monitored and therefore monitoring and surveillance can improve. But when there are losses, they are usually big because the glitches are systemic or categorical. The Flash Crash it an example of centralizing and automating trades through fewer pipes led to big and quick irrational dive of the market.

I for one is a proponent of the BlockChain. I am not the person to discuss the potential economic consequences of this, but it would be the next step in the evolution of the Depository Trust Company, the central counterparty in US capital market trading.


Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE. 

ComplyTech: GoldTier

GoldTier is a client onboarding system and compliance solution. It is now Thomson Reuters Client On-Boarding, a product within Risk Management Solutions.

GoldTier is a leading provider to financial firms of software for onboarding new clients in compliance with KYC regulatory requirements. Having reliable and up-to-date due diligence on potential clients is necessary to comply with KYC and similar regulatory requirements. The incorporation of Avox data into GoldTier’s onboarding system will provide financial institutions with streamlined access to constantly updated, quality data throughout the client management lifecycle. – Reuters

 


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


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ComplyTech: Metavante/FIS Global

Metavante is a risk and compliance solution from FIS (Fidelity National Information Services), a major Financial Service Technology company. It focuses on regulatory information and reporting. MoneyCompliance has focuses quite a bit on tools for fraud and anti-money laundering, but this is different from those tools. This is very much a monitoring tools. The software solution used to be called Prime Compliance Suite. Because FIS focuses on payment technology, the compliance solution has taken a back seat. However, companies using FIS products are likely to see quite a lot of what used to be the Compliance Solutions integrated into the products by way of Fraud Management, ID Verification and ID Authentication.

 


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


ComplyTech: Accuity Compliance Solutions

Accuity is a technology company focused on the financial services industry. MoneyCompliance reviewed the database search product it developed for American Bankers Association early this year. (Not so great when it launched.) The company has a solution for compliance needs. No information could be gathered about what institutions are using the product.

A review of its offers seems to be along two lines: provides a centralized source of public data and integration into its other products. Accuity is clearly focused on providing more to its existing clients with its Compliance Solutions. Technology-wise, it is also much simpler to provide additional solutions to self-developed products.

This really means that the additional tools, when standing alone, compete with much bigger rivals like Thomson Reuters and Factset. Plus, one of its products seems to be powered by LexisNexis, so, it is merely an integration of another vendor’s product into its own product.

Not that there is no value in these solutions, but there isn’t a great amount of value unless Accuity is a primary vendor for your compliance department. That goes back to our first claim, which is that we do not know of any financial institution that uses Accuity.

However, there is great potential of Accuity. It is a subsidiary of Reed, a business information company. Should they really decide to invest in competing in this space, financial institutions will have more options. The question for Accuity is whether it has missed to boat on becoming the primary source of information for the compliance officer.


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


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ComplyTech: Actimize

Nice Actimize

Actimize is the industry leader in ComplyTech. It was acquired by NICE, a software company that focused on big data analysis. Actimize brought with it financial industry knowledge, regulatory compliance and customers. Among the top 100 largest banks in the world, more than 25 of them probably use Actimize. Actimize is as close to a full service Compliance Suite as it gets so far. Even still, with its focus on the financial crime side of the department, it is lacking in tools for regulatory compliance. NICE would do very well by creating a joint venture with Thomson Reuters or Bloomberg or some other financial information company and making Actimize the Compliance Department’s sole function tool. (Obviously, it couldn’t compete with the ERP systems for the business management activities, though.)

 


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


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ComplyTech: Tonbeller Compliance Solutions

Tonbeller Compliance Solutions is a competitor to Actimize. It also provides AML/Financial Crimes solutions, but it focuses more of Governance, Risk and Compliance solutions. That is to say, it is a GRC controls tool, primarily.

FICO is a network that Tonbeller is the primary partner of. FICO, Fair Isaac Corporation, is where a consumer’s FICO score comes from.


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


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ComplyTech: Semagix

 

Semagix is a technology company that focuses on AML, Financial Crimes, KYC and EDD. The company name is a merger of semantic and magics. Semagix focuses on semantic search of the web with internal systems to build profiles on transactors through a financial institution’s systems. The company bought the AML technology by merging with SearchSpace in 2007.

 


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


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ComplyTech: Mantas

FROM Bloomberg

Oracle Financial Services Software Introduces Oracle Mantas

Oracle Financial Services Software Introduces Oracle Mantas Energy and Commodity Trading Compliance (ECTC)

Automates Trade Surveillance and Expands Insight Into Trading Activities to Enable Compliance and Operational Risk Managers to Efficiently Monitor the Trading Behaviors of Energy and Commodities Market Participants

SAN FRANCISCO, CA — (Marketwire) — 09/21/10 — ORACLE OPENWORLD — Oracle (NASDAQ: ORCL)

News Facts

— Oracle Financial Services today introduced Oracle Mantas Energy and Commodity Trading Compliance (ECTC).

— Oracle Mantas ECTC provides comprehensive functionality to automate trade surveillance; identify unusual behaviors of interest on trading desks of energy and commodities market participants; effectively manage rigorous trading and market-making surveillance processes; meet stringent regulatory requirements; and achieve an operating environment that protects a firm’s reputation and customers. Compliance-Specific Platform Addresses New Regulatory Requirements

— Over the past several months regulatory agencies like the CFTC, FERC and FSA, have set clearer mandates and dispensed stiff penalties requiring energy market participants to intensify their compliance initiatives.

— In addition, the recent Dodd-Frank Wall Street Reform and Consumer Protection Act brings comprehensive reform to the regulation of over-the-counter derivatives and authorizes the CFTC to undertake further rule making, if required, that could benefit from automated trade monitoring.

— To address this regulatory landscape, Oracle Mantas ECTC offers financial institutions the ability to promote a culture of compliance throughout the organization and monitor proprietary and customer trading activity to:

— Identify potential instances of market manipulation, unfair treatment of customers, and market abuse using sophisticated pattern recognition techniques;

— Gain an enterprise-wide view of compliance risk through structured behavior detection “scenarios” and advanced alert generation tools;

— Increase visibility into trade-by-trade interactions between traders and other market participants to identify potentially problematic practices or inferior order handling;

— Detect complex behaviors that are difficult to monitor using spreadsheets or other manual mechanisms;

— Minimize false alerts;

— Work with imperfect market and/or trade data, such as omitted trade data elements like time stamps;

— Investigate individual alerts and automatically correlate and group related alerts for an enterprise-wide view of compliance risk; and

— Better respond to regulatory inquiry and examination.

— In addition, Oracle Mantas has integrated Oracle Business Intelligence Enterprise Edition (OBIEE) to enable compliance and supervisory users to further explore their trading data for unusual trends, patterns, or other behaviors of interest.

— Oracle Mantas ECTC is part of the Oracle Mantas suite of financial crime and compliance management applications, including Oracle Mantas’ Anti-Money Laundering, Fraud, Know Your Customer, Broker Compliance and Trading Compliance, which helps financial institutions to reduce false positives, achieve quicker time-to-compliance, and improve their audit cycles.

Supporting Quotes

— “Financial institutions and trading firms face increasingly rigorous regulations and compliance initiatives, including those governing energy and commodity trading. As the stakes continue to rise, firms must work quickly and efficiently to implement new measures, technologies and tools to protect their customers and their brand. Oracle Mantas ECTC combines industry-leading automated behavior detection and robust investigative analytics that enable unprecedented visibility into trading activity and compliance and marks a transformation in energy and commodity trade surveillance,” said Bill Nosal, Head of Product Management, Governance Risk & Compliance, Oracle Financial Services Analytical Applications.

Supporting Resources

— Automating Energy and Commodity Trade Surveillance – The Time is Now!
— An Oracle Whitepaper
— Automating Energy and Commodity Trade Surveillance — An Oracle On demand Webcast
— Follow Oracle Financial Services on Twitter
— Join the Oracle Financial Services Community on Facebook
— Oracle in Financial Services

About Oracle Financial Services Software Limited Oracle Financial Services Software Limited (referred to as “Oracle Financial Services Software”) (Reuters: ORCL.BO & ORCL.NS) is a majority owned subsidiary of Oracle. Oracle Corporation (NASDAQ: ORCL) is the world’s largest business software company. For more information, visit http://www.oracle.com/financialservices.

About Oracle Oracle is the world’s most complete, open, and integrated business software and hardware systems company. For more information about Oracle, please visit our Web site at http://www.oracle.com.

Trademarks Oracle and Java are registered trademarks of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.

“THE FOLLOWING IS INTENDED TO OUTLINE OUR GENERAL PRODUCT DIRECTION. IT IS INTENDED FOR INFORMATION PURPOSES ONLY, AND MAY NOT BE INCORPORATED INTO ANY CONTRACT. IT IS NOT A COMMITMENT TO DELIVER ANY MATERIAL, CODE, OR FUNCTIONALITY, AND SHOULD NOT BE RELIED UPON IN MAKING PURCHASING DECISIONS. THE DEVELOPMENT, RELEASE, AND TIMING OF ANY FEATURES OR FUNCTIONALITY DESCRIBED FOR ORACLE’S PRODUCTS REMAINS AT THE SOLE DISCRETION OF ORACLE.”

 


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


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