What do Barclaycard, Brewin Dolphin, Investec, Skandia and Gartmore have in common? In addition to their status as blue chip financial services institutions servicing a global client base, they all turned to sophisticated screening software to comply with stringent anti-money laundering legislation, including the 3rd EU Money Laundering Directive.
This directive, which came into effect in December 2007, placed rigorous information management requirements on financial services organisations to systematically screen their client base to ensure they were not unknowingly doing business with criminals, terrorists or fraudsters.
Should a firm, knowingly or unknowingly, breach this directive - or any other legislative requirements such as Basel II, MiFID, the Prevention of Terrorism Act and the UK Proceeds of Crime Act - they risk ruining their reputations and will incur hefty financial penalties and operational trade restrictions.
Prior to investing in specialist software Brewin Dolphin, Gartmore and Investec had utilised in-house solutions but found these lacking when measured against the stringent legislative requirements. In particular, Investec's in-house system used to screen its 50 000 client records was not robust or efficient enough to comply with new anti-money laundering requirements or the ever-increasing Know Your Customer challenges.
Gartmore, too, needed a more automated and consistent foundation for mitigating risk, that is, an easy and efficient means of monitoring and screening its 400 000 client records across the business from selected sanctions lists, such as the Bank of England and OFAC in line with its risk-based approach.
All five companies turned to Datanomic's dn:Director for Sanctions & PEP (Politically Exposed Persons) Screening solution to ensure compliance with domestic (UK) and global legislations and to protect their brands.
With such a large customer base, Barclaycard had to ensure every measure possible is taken to prevent potential money laundering activities and protect the Barclaycard brand. With increasing regulation and the need for an anti-money laundering (AML) and counter-terrorist solution, the company made a company-wide commitment to screen all customers against The Bank of England's Financial Sanctions list, together with lists from the local country and of politically exposed persons (PEPS), before any financial services are made available.
It also decided to undertake retrospective screening on all existing customers every time a new name is added to either The Bank of England or OFAC lists.
Having planned its approach, Barclaycard set very short timescales for the implementation of a solution to complete the task. “Other suppliers could not provide the functionality or speed of deployment that we needed, so we opted for dn:Director,” said Mark Bishop, Risk Partner at Barclaycard.
“We deployed Datanomic's Sanctions & PEP Screening solution to maintain and control our PEP list and Bank of England OFAC monitoring,” said Lillian Brown, Divisional Director of Compliance for Brewin Dolphin. “In particular, we wanted to cut down on the number of 'false positives' and automate what is an intensely administrative process while eliminating human error.
“The solution has streamlined our previously manual processes, and helped us to mitigate risk. It's given us the added assurance of both compliance and peace of mind, and will save us considerable time and money,” she said.
Investec now easily and efficiently screen its 50 000 client records on a monthly basis with the Datanomic system being accessed by both the Compliance Department and the Client Relationship team. “Datanomic's dn:Director gives us greater flexibility, a more robust platform and better reliability for accurately screening our client base,” said Anne Gallagher, Head of Compliance for Investec Asset Management.
With Datanomic, Skandia is able to avoid wasting time and effort dealing with recurring 'false positives' of known or suspected politically exposed persons. In doing so, Datanomic is able to minimise the operational impact of achieving and maintaining Skandia's regulatory compliance requirements on the day to day operation of the business.
“Because the majority of Gartmore's business comes from intermediaries, such as the large banks or long-term savings specialists,” added Steve Elkins, Chief Compliance Officer and Money Laundering Reporting Officer, “our customers have already been through substantive due diligence as they've come to us through a regulated firm so our risk profile is different to a financial institution with people walking in off the street to deposit cash.
“However, we screen our entire client base once every month using dn:Director in line with our risk-based approach. Our previous system used to present a lot of 'false positives'. dn:Director enables us to filter out matches we don't want and applies fuzzy logic where necessary, which means we can ask it to think outside the box.
“Previously, all our sanctions matching with the old system had to be done by the Compliance Department,” he noted. “Financial services firms really want to focus on output rather than making an industry out of developing the system. The system and resulting output needs to be easy to use and understandable to the business as part of the 'business as usual', and incorporate the firm's view of risk, as well as the company's business model. Datanomic empowers the business to do this, rather than making it yet another task for the Compliance Department.”
dn:Director is available in South Africa from Bateleur Software.
Lizette Sander, Product Manager at Bateleur Software, said the pressure is on for South African businesses to fortify their systems against access by money launderers, terrorists and others whose activities may compromise foreign policy or national security.
She believes Datanomic's position as the de-facto standard for risk and compliance screening in the UK, together with its global deployments for tier one customers such as Barclays Plc, makes it the natural choice for South African financial services firms seeking a robust, reliable and proven solution for threat mitigation and compliance with anti-money laundering, counter-terrorist financing and other critical industry legislation.
“In the sub-Saharan region we are experiencing huge expansion in availability of banking services, and are delighted to be working with Datanomic to meet the needs of our enterprise customers,” Sander said.
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