NetPractice Exchange Vol 1 No 1

| NetPractice Exchange

NetEconomy Launches NetPractice!

A few years ago, the role of the Anti-Money Laundering (AML) analyst was minimal, if in existence at all. Most violations cited by regulators did not deal with inadequate detection and reporting of suspicious transactions. Today, AML analysts have become an integral part of the compliance team, and most fi nancial institutions that have received penalties for non-compliance were improperly picking up on suspicious transactions.

One of the most challenging elements of the rules on suspicious activity reporting is the subjective analysis of customer activity that AML analysts have to make. Typically, the rules include a requirement that a fi nancial institution report customer activity that it determines as: “serving no business or apparent lawful purpose...” This broad defi nition of suspicious activity is confusing, especially to those with little training on investigation techniques.

Furthermore, in line with a risk sensitive approach, monitoring for suspicious activity should be carried out in a manner consistent with a “reasoned” risk assessment. All this makes the position of AML analysts extremely challenging. Who can provide support and advice?

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Table of Contents

NetEconomy LaunchesNetPractice ............................Page 1

The NetPracticeAdvisory Board ........................Page 2

Rewards and Recognition .........Page 3

ERASE User in the Spotlight ............................Page 4

Featured Functionality ..............Page 5

Hot Docs ..................................Page 5

NetPractice Survey ....................Page 6

Financial Crime News from Around the World .............Page 7

Poll Question ............................Page 8

Calendar of Events ...................Page 8

ExchangeMay 2007

NetPractice presents this member-only newsletter to keep you up-to-date on our most current programs, projects, and products.

“NetPractice recognizes the critical role that anti-money laundering (AML) and anti-fraud professionals play in the fi nancial world – protecting their fi rms against non-compliance and serving as the fi rst line of defense against fraudsters and money launderers. By launching NetPractice we focus on helping these critical professionals by streamlining the exchange of vital information and best-practice strategies, and providing interactive resources, training and consulting services, to improve their impact on fi nancial crime management and compliance initiatives.”

Stan Harmsen van der Vliet, CAMS, Director • NetPractice

Deborah King, CAMS: Vice President and Director of Enterprise AML and OFAC Investigations, Citizens FinancialGroup, Medford, MA, USA. She has oversight responsibilityfor AML investigations, high-risk customer identifi cation and management, OFAC compliance, terrorist fi nancing, and PEP management. She has been working in the banking industry for more than 20 years, with experience in AML,fraud prevention, retail banking and operations. Ms King has a BA in Economics from Boston University.

Gabriel McLaughlin Adams, CAMS: Compliance Offi cer,Dexia S.A., Brussels, Belgium. Mr. McLaughlin Adam is co-responsible for Dexia Group's Anti-Money Laundering and Counter Terrorist Financing unit. His focus is on the global management of anti-money laundering monitoring systemsacross the Group's Operational Entities and Subsidiaries.

Saskia Rietbroek, CAMS: Financial Crime Advisor, NetEconomy, Miami, FL, USA. Ms Rietbroek was the original Executive Director of the Association of Certifi ed Anti-Money Laundering Specialists (ACAMS) and now has her own AMLtraining and consulting fi rm, AML Services International, LLC. She has a law degree from the Netherlands and Peru, an MBA from Florida International University, and is a frequent speaker on money laundering and terrorist fi nancing.


This newsletter is a quarterly publication by NetEconomy B.V. for NetPractice members and others interested in NetPractice or NetEconomy in general.

NetPractice Advisory BoardFlorisela Bentoera, Manager Compliance and AML Operations, RBTT Dutch Caribbean, Rooi Catootje Branch, Curacao, Netherlands AntillesThierry Istace, Coordinator of Projects for the Compliance Division, Dexia Bank, Brussels, Belgium. Deborah King, CAMS, VP Director AML Investigations, Citizens Financial Group, Medfort, MA, USAGabriel McLaughlin Adams, CAMS, Compliance Offi cer, Dexia S.A., Brussels, Belgium.Saskia Rietbroek, CAMS, Financial Crime Advisor, NetEconomy, Miami, FL, USA

NetPractice StaffDirector: Stanley Harmsen van der Vliet, CAMSMarketing Director: Alison Holland, CAMSCommunications Manager: Joyce Kooijman

This newsletter is for general information purposes only. The views expressed in this newsletter are not necessarily those of NetEconomy B.V. NetEconomy has taken all reasonable measures to ensure that the material contained in this newsletter is correct. However, NetEconomy gives no warranty and accepts no responsibility for the accuracy or the completeness of the material. In publishing this newsletter, neither the authors nor NetEconomy are engaged in rendering legal or other professional advice.

NetPractice, Loire 200-202, 2491 AM, The Hague, The NetherlandsTel: +31 (0) 70 452 5448, Fax: +31 (0) 70 452 5444, [email protected]

The NetPractice Advisory Board is comprised of international business professionals, power technologists, and compliance experts. We proudly present the Charter Members of the NetPractice Advisory Board:

Florisela Bentoera, CAMS: Manager Compliance and AML Operations, RBTT Bank N.V., Curaçao, Netherlands Antilles. Ms Bentoera is responsible for compliance opera-tions for the Netherlands Antilles with focus on assuring that proper preventive measures and controls are in place in relation to non-physical security aspects in the widest sense. She has the responsibility for adequate identifi cation and verifi cation procedures and guidelines for monitoring and reporting unusual transactions, and to assure compliance with the regulators’ and fi rm’s policies on the issue of AML & TF. Ms Bentoera studied Dutch Law and graduated from the Catholic University in Brabant, the Netherlands.

Thierry Istace: Coordinator of Projects for the Compliance Division, Dexia Bank, Brussels, Belgium. He is responsible for the implementation of anti-money laundering projects, mainly focused on ERASE, NetEconomy’s Financial Crime Suite solution. His functions also include being an advisor in the Competence Center for ERASE projects within the Group.

The NetPractice Advisory Board

NetPractice ExchangeNetEconomy Launches NetPracticeContinued from Page 1

An ERASE User CommunityIn April 2007, NetEconomy formally established NetPractice as a new branch. NetPractice is an ERASE User Community where AML analysts and Fraud investigators connect with peers for ideas, strategies and techniques to help them excel in the detection and investigation of suspicious transactions and fi nancial crime. The NetPractice community seeks to set the standard in this niche profession and provide continuing opportunities to upgrade knowledge and skills. Members share experiences, exchange information and create best practices in fi ghting fi nancial crime using ERASE technol-ogy. NetPractice facilitates a combination of several services which create unique benefi ts for our members. The center of our community is the NetPractice portal. It provides a secure and interactive platform to network, fi nd resources, training and valuable insights to increase your knowledge.

Want to become a member of NetPractice? Visit www.netpractice.org or send us an email at [email protected].


Rewards and Recognition

Active member contribution is incredibly important for the success of the NetPractice Community. To encourage members to be actively involved in the Community, we are introducing a rewards and recognition program. The program recognizes the achievements and accomplishments that support and contribute to the Community’s objectives. Members who are helping others to increase their knowledge and ERASE skills will be rewarded for demonstrating their commitment.

The concept of the rewards and recognition program is simple. Members can earn “NetCredits” when they volunteer their time, energy and skills to contribute to the Community. For instance, you as a member will be rewarded for sharing your experience and best-practice in online webinars; by contributing in writing articles; or even sharing your view in a weblog or forum.

What can I do with my NetCredits? NetCredits can be used for training purposes to increase your “ERASE Expert level.” You can use the NetCredits to “cash in” against more training on ERASE and Compliance or Fraud topics and advance your knowledge level.

How can I increase my ERASE Expert Level?Your individual expert level ranking is derived from your knowledge and experience with ERASE. Depending on your level and the amount of training and education you have received, you will automatically move to the next level.

There are four ERASE Expert Levels:1. Beginner 2. Intermediate 3. Advanced 4. Expert

Your ERASE Expert Level will be used to advise you which training sessions and workshops will best fi t your needs. If you just have started working with ERASE, your Expert Level will start at the fi rst stage - Beginner Level 1. This will indicate that you have basic knowledge of ERASE and that the recommended training program will help you to get to the Intermediate Level 2. How do I know my current status in the rewards and recognition program? Take the online ERASE skill assessment test!

Your current status is displayed in your personal settings on our NetPractice Portal, located in the left-hand navigation of the private home page section. Your personal settings will indicate your current number of NetCredits and your ERASE Expert Level.

If you do not know your ERASE Expert Level, you can put your knowledge to the test! Members can take the online ERASE skill assessment test to test their knowledge and experience in some of the key features of ERASE. The 20 questions will give you a basic understanding of your current ERASE skills. Some sample questions are:

• Have you created alert defi nitions yourself?• Did you ever create or modify workfl ows?

When you have completed the test, you will automatically receive your score and also a recommended ERASE Expert Level. This level will be used to advise you which training sessions and workshops will best fi t your needs.

For more information about the rewards and recognition program and to take the ERASE skill assessment test, please visit us at www.netpractice.org.

“Since 1993 NetEconomy has been committed to providing fraud and compliance professionals with a comprehensive and innovative ERASE platform to detect and prevent money laundering, terrorist fi nancing and transactional fraud. With the launch of NetPractice, a fi nancial crime thought leadership community is created for the fi rst time to utilize the vast experience of our users and CAMS- certifi ed staff. This powerhouse community combined with NetPractice’s world-class Advisory Board, will guide members to maximize their potential and deliver increasing value to their fi nancial institution.”

Sebastian Kuntz, CEO • NetEconomy

What is your favorite ERASE feature and why?The network analysis is one of my favorite features. In just a few clicks you immediately have a global view of a cli-ent relationship, and all products and persons involved on an account. You can also see the last 10 most important counterparties. With such a tool you gain precious time in any investigation.

My second favorite is the counterparty in transactions. ERASE shows where the counterparty is involved for each transaction. It means that when you click on counterparty information you will see every account involved in the whole system. It is particularly interesting in cases dealing with smurfi ng, where several people make small transac-tions individually and afterwards transfer the money to a common third person. For example, I had a case where a Congolese customer was depositing cash every month and transferring it the same day to a Russian citizen. After clicking on the counterparty I found similar operations from other Congolese citizens. That resulted in a declara-tion to the Belgian FIU.

Can you give one piece of advice to a new ERASE user?ERASE is a nice tool but it will never replace a human being. It gives you a typical transaction, with plenty of information about Who? From where? and Frequency? BUT it will never tell you WHY? You have to see ERASE as a good starting point for an investigation. For example, ERASE will never replace the contact between the client and the branch manager who has knowledge on his client and their transactions. You may have good cards in your hands but you need to use them to get a good result.

What is your most ingenious ERASE alert investigation tip?The related information about an account. The number of existing alerts on an account is really an interesting

topic. You have a good overview of the risk views that are involved. An account which generates four alerts on two different risk views is more suspicious than another.

The use of the profi le information is of course essential to understand the behavior of a client (behavior comparison over months or years). It is useful to see abnormal behav-ior or seasonal behavior.

If you had 15 extra minutes in your busy work day, what would you do with it?I take a break everyday. I call it a personal break, calling my family or taking a coffee with colleagues and talking about something else other than work. It can also mean reading a press article or just eating an apple or an energy bar. Fifteen minutes is necessary to recharge my batteries. We are not machines, we need to have breaks to refresh our minds. It makes me more alert and means I am more effi cient over the course of the day.

What is your favorite piece of advice from an AML seminar, course or conference?Conferences and seminars about the newest money laundering trends are very enlightening. The new tech-niques used to launder infl uence our work. Every time that we close off any techniques available to launderers and increase our opportunities to catch them, criminals fi nd yet another way. We have to be aware of these in order to perform in an effi cient way to fi ght them.

I recently heard about peer groups (a subdivision of risk people by age, nationality, residence, personal status etc.). It can be a good technique to screen our customers. The only inconvenience is that we are afraid not to be able to put all our customers in peer groups. If this is the case, we won't be able to follow and screen all the customers but only those in the peer groups.

ERASE User in the Spotlight

Name Alexandre FRANCK Title AML Offi cer Organization Dexia Bank Belgium Short Bio 1996-2000 Adjunct inspector at CTIF-CFI, Belgian AML FIU 2000-2004 Legal controls on DBB Depositary Bank 2004-Present AML Offi cer


Breadcrumb NavigationA very handy new feature in version 4.1.5 of ERASE pro-vides what is known as breadcrumb navigation: the ability to see where you have been before. In earlier releases of ERASE, for example, as you click through the various screens of the software to drill down to transac-tion details, it can be a bit diffi cult to get back to your starting point. You either have to close screen after screen, try your luck at the “Back” button of your Internet browser, or go to a main screen to retrace your steps. Of course it is possible, but there are smarter ways to navigate. To make your work easier, we have implemented this well-known technique – its name is derived from the old

New Payment Methods Report (Financial Action Task Force, November 2006): Money laundering through the exploitation of prepaid cards, Internet payment systems, mobile payments, and digital precious metals

http://www.fatf-gafi .org/document/17/

0,2340,en_32250379_32237217_

37627409_1_1_1_1,00.html

Mutual Evaluation: Turkey (Financial Action Task Force, February 2007): Assessment of the implementa-tion of anti-money laundering and counter-terrorist fi nancing standards in Turkey

http://www.fatf-gafi .org/document/3/

0,2340,en_32250379_32237217_

38238787_1_1_1_1,00.html

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Resolution 1737 (United Nations, December 2006): Sanction from the Security Council on Iran, includ-ing freezing the fi nancial assets of persons or entities supporting its nuclear activities

http://www.un.org/News/Press/docs/2006/

sc8928.doc.htm

Evaluating the Vendors of Anti-Mon-ey Laundering Solutions (Celent, Au-gust 2006): Profi les and evaluates 19 vendors of anti-money launder-ing software, including NetEconomy

http://anti-moneylaundering.neteconomy.

com/landingpage.php?r=homepage

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From Anti-money Laundering to Fraud Prevention and Manage-ment (NetEconomy, January 2007): Whitepaper outlining strategies to tackle fraud and how to leverage existing investments in anti-money laundering to detect fraud.

http://www2.neteconomy.com/solutions/

downloads

Transaction Monitoring for Building Societies (NetEconomy, October 2006): Describes challenges and solutions for building societies and credit unions when monitoring for suspicious activity.

http://www2.neteconomy.com/solutions/

downloads/

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fairytale about the boy who found his way home from the woods by having dropped small breadcrumbs on his way in. At the top of the window, ERASE now displays the route you took to get to your current page. Moreover, you can click on any of your previous destinations and ERASE

will take you straight to that page. So if you started from Alert 755 and proceeded to a network analy-sis, as in this

screenshot, just one click will take you back to Alert 755, for example to change its status to “Closed – Not Suspi-cious.” It might only save you a couple of clicks in this ex-ample, but as you will know from your own investigations, the drill-down trail can get pretty long and this easy way to track back can save you signifi cant time and thinking!

In every edition of the NetPractice newsletter, we shall highlight a user function in ERASE to provide extra detail on how you can use it to improve your daily work. In this edition we shall look at the breadcrumb navigation feature.

Featured Functionality

Hot DocsLink to these Hot Docs from www.netpractice.org.

NetPractice SurveyResponses to Survey Crucial in Decision to Launch NetPractice


Last October, NetEconomy conducted a survey to 250 users in order to gain feedback about the interest of forming an organization like NetPractice. The survey results were over-whelmingly supportive of the idea to launch this interactive user group community, where users can network and com-municate with each other on an ongoing basis throughout the year.

NetEconomy received a 65 percent response to the survey. The survey’s results and several conference calls with clients, suggested that all respondents saw the clear benefi t of having an online and interactive user group community. The responses infl uenced NetEconomy in determining the scope of NetPractice’s services to address specifi c needs.

Here are some of the results:

80 percent of respondents said that the number #1 reason to become a member of an online community is to create a ‘best practice’ community, interact with peers, and to share expertise. 98 percent of respondents chose money laundering as the most important topic of fi nancial crime that NetPrac-tice should cover.

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Building effective scenarios and risk views to detect suspicious activity with ERASE was considered the most important issue that they would like to receive assistance on from fellow peers. 60 percent of respondents prefer a combination of online and onsite training. Nineteen percent would only prefer onsite class room training. 85 percent of respondents want to gain more training and education in dealing with money laundering alerts, case investigations and legislation.

“The results of the survey show good evidence that there is a need for more knowledge, sharing and learning,” says Stan Harmsen van der Vliet Director of NetPractice. NetPractice will address the needs uncovered by the respondents and will grow to become a leading platform for fi nancial crime services and professional networking for both experts and newcomers in the fi eld of monitoring fi nancial crime and money laundering.

A copy of the complete survey is available for review at www.netpractice.org.

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60% 19%

21% Online training

Onsite training

Both

Sixty Percent of Respondents Prefer a Combination

of Onsite and Online Training

Financial Crime News from Around the World

NetPractice staff brings to you the latest fi nancial crime news from around the world.

UK The January 2007 KPMG Forensic UK Fraud Barometer Report says that organized gang frauds doubled in the second half of 2006. The year saw 277 fraud cases coming to court in the UK, the largest number ever recorded in the 20-year history of the Barometer. More than 40 percent of the fraud cases that were analyzed in the second semester of 2006 were carried out by professional criminals, compared with a quarter of cases in the fi rst half of the year. Companies’ own managers were responsible for 40 percent of fraud. The value of the fraud cases (£837m) coming to the UK courts in 2006 was the third highest in the Barometer’s history. Much organized activity was targeted at the fi nancial sector, which suffered £141m worth of fraud in total. There were many examples of gangs carrying out web-based scams to obtain and abuse credit card information, and several gangs placing or coercing members of bank staff to pass on confi dential account and card details.

NetherlandsOn 12 March 2007, the Dutch Ministry of Finance circulated proposed new legislation on money laundering and terrorist fi nancing to Dutch banks for consultation. The goal of the legislation is to implement the Third EU Directive. One law has been drafted for that purpose alone, a second law intends to replace and consolidate existing regulations at the same time. Banks had until March 30 to respond, after which fi nal versions will go to the Dutch Parliament for voting.

IranOn 9 January 2007, the US Department of the Treasury issued a media release saying it “designated” Iran’s Bank Sepah and related entities for providing support and services to designated Iranian proliferation fi rms. Earlier, on 8 September 2006, the US Department of Treasury issued a media release indicating that it had “designated” Iran’s Bank Saderat for facilitating the fi nancing of terrorist activities. The designations prohibit all fi nancial transactions between US persons and Bank Sepah, Bank Saderat and related entities. The media releases are available on the US Department of


Treasury’s website at: www.ustreas.gov/press/releases/hp219.htm and www.treas.gov/press/releases/hp87.htm.

MacauIn March 2007, US Department of the Treasury issued a fi nal rule under Section 311 of the USA Patriot Act against Banco Delta Asia and its subsidiaries. Banco Delta Asia is a small, family-run bank with 30,000 customers and $389 million in deposits, which is allegedly aiding North Korean fi rms procuring components for nuclear missile programs, and laundering funds from counterfeit currency and narcot-ics. Covered US fi nancial institutions must terminate all correspondent or payable-through accounts with this bank, and, "take reasonable steps to identify any indirect use of correspondent accounts by Delta to the extent that such indirect use can be determined from transactional records maintained through the Covered Financial Institution's normal course of business." See: http://www.treas.gov/press/releases/hp315.htm.

US The US Financial Crimes Enforcement Network (FinCEN) has revised the Suspicious Activity Reporting (SAR) form for banks and credit unions. These fi nancial institutions can start using the new SAR (Form 111) on 30 June 2007, and its use will become mandatory on 31 December 2007. Along with the new template, FinCEN has also issued new specifi cations for electronic submission of SARs and other Bank Secrecy Act forms. See: http://www.fi ncen.gov/fi ncen_form111.pdf.

NetPractice, Loire 200-202, 2491 AM The Hague, The NetherlandsPhone: +31 (0)70 452 5440 Fax: +31 (0)70 452 5444, [email protected]

©2007 Fiserv, Inc. 5/07

Contact

Calendar of Events

Complitech London 17 - 18 May 2007

Fiserv, PCS User Conference South Dakota 4 - 5 June 2007

NetEconomy’s User Group Conference Brussels 4 - 5 June 2007

Fiserv, Galaxy Annual Client Conference Las Vegas 10 - 15 June 2007

Sibos Boston 1 - 5 October 2007

ABA Money Laundering Conference Washington 21- 23 October 2007

Poll Question

Our poll question on NetPractice.org for this month is:

Question: How do you prioritize suspicious activity detected in your institution?

Answers: By the amount of money involved in the suspicious transactionDeviation compared to historical activityBy countries involved in the suspicious transaction

Please submit your vote at www.netpractice.org.

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NetPractice Exchange Vol 1 No 1

Documents

Transcript of NetPractice Exchange Vol 1 No 1