“Best Practices In Trade Based Money - IBF - Best Practices In... · 4 ESU cap 750ml Merlot, ... functionality described for Oracle’s products remains at the sole discretion of

BySuresha Iyer

Certified Anti Money Laundering Specialist

(CAMS)

Senior Director, Oracle Financial Services

Presentation by Oracle Financial Services

IBF Connect (Compliance) 2016"GETTING COMPLIANCE READY FOR FINANCIAL SERVICES IN 2020”

“Best Practices In Trade Based Money

Laundering Prevention - Next Generation

Transaction Monitoring"

Copyright © 2016 Oracle and/or its affiliates. All rights reserved. |

Prevent & Mitigate Trade Based Money Laundering Best Practices in TBML Prevention

Oracle Confidential Restricted

R SURESHA, Certified Anti Money Laundering Specialist (CAMS)Senior Director Oracle, FSGBU28 Oct 2016


The Trade Finance AML - Haystack

Involvement of

multiple parties

Document centric

Over and under

valuation of goods

Collusion between

buyers and sellers

Disguising of

applicant’s identity

3

Tremendous volumeof trade, easy to hide

individual transactions

Complexityinvolved in multiple

foreign exchange transactions

Limited resourcesavailable to banks wanting to detect

fraud



Questions we need to ask…

•What ?

•Where ?

•How ?

4Oracle Confidential Restricted


What? Trade Based Money Laundering Regulatory Development

Trade Based Money Laundering, guidance issued by FATF (June 2006)

Best Practices Paper –Best Practices on TBML issued by FATF (June 2008)

APG typology report on TBML issued by Asia Pacific Group on Money Laundering (July 2012)

Banks’ control of financial crime risks in trade finance issued by Financial Conduct Authority (July 2013)

Guidance on AML & CFT controls in trade finance and correspondent banking issued by the Monetary Authority of Singapore (October 2015)

Guidance Paper on Combating TBML issued by The Hong Kong Association of Banks (February 2016)


Governance

•Policies and Procedures

•Roles and Responsibilities

•Risk Assessment

•Staff Training & Awareness

General AML Controls

•Customer Due Diligence

•Correspondent Banking Relationships

•Transaction Screening

•Transaction Monitoring

Trade specific controls

•Trade Finance Profile

•AML Red Flags

•Dual Use Goods

•Documentary Fraud

Framework - Mitigating TBML risksways to mitigate

risks


AML Red FlagsTrade Finance Profile Dual Use Goods Documentary Fraud

Prepare Client Trading Profile

Prepare Client Risk Profile

Provide trade processing teams sufficient time to investigate e.g. excessive volumes, overpricing / underpricing, incorrect description of goods

Use the red flags checklist as a starting point of transaction review instead of tick the box exercise

Ensure sufficient understanding and proper assessment of the red flags by staff (e.g. thorough training)

Update the red flags on a periodic basis

Develop detailed list of dual use goods with multiple categories

Develop internal register of goods regularly traded by the customers

Good understanding and awareness of dual use goods by processing staff

Taking into account relevant red flags in a transaction

Proper scrutiny of documents to identify documentary frauds

alteration of key information

forged documents

over and under invoicing / shipment

phantom shipment

multiple bills of lading and invoicing

incorrect description of goods to import / export banned goods or claim subsidies

Trade specific controls

Framework - Mitigating TBML risks


Where ? Internal and External DataInternal DataExternal Data

Structured Semi-Structured Unstructured

FI’s Transaction Processing SystemsKYC & Client On-boarding SystemsBuyer/Seller ERP System Interfaces

SWIFT MessagesSpreadsheets

Trade Documents, ContractsEmails, Telex

Country List (Ports, Tax Havens…)Trade Service UtilitiesCustoms, Revenue Dept. SystemsCompany DatabasesDual Use Goods, Sanctions Lists

Social Media, Negative NewsSearch Sites, Company Websites, Deep Web



Behavior

Modeling

Profiling & Trend Analysis

Text Mining

Statistical/ Predictive Analysis

Sequence Mining

Link Analysis

Rule Engines

Explore and Understand Risks

Big Data Discovery

Visual Analytics

Execute repeatable typologies

Data Quality and Governance

Centralized Enterprise Data Model

Enterprise Alert and Case Management

Enterprise Data Lake

How ?

Big Data Discovery


Analytics: Then and Now


Input Description

4” end cap

4 in cap screw

4 in box b-ball cap

4 ESU cap

750ml Merlot, screw cap

Text Mining Semantic Recognition using Contextual Information



Big Data Discovery & Visual AnalyticsA picture is worth a thousand words

Mispricing

Visualization of Networks across Clients and Counterparties

Sentiment Analysis across Goods Traded by Customer/Segment

Statistical Visualization for Over/Under Invoicing


Average Price across all customersAverage Price – Customer A


You may have started the process…

© Manisha Khanna




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Oracle Confidential – Internal 17

Complimentary TBMLWhitepaper – Next Generation Transaction Monitoring

ACAMS Paper – TBMLCapturing the New Frontier with Analytics

Data Analytics Infographic & other resources


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