Newgen Presentation on FATCA

• 12 weeks before we hit FATCA deadline

• If you have not yet started, think about Assessment, Gaps, Rules, Audit, Reports... Risks

• Adapt to the change and then change to Last

The Clock is Ticking

What are the main Challenges for Banks?

• Regions:AsiaPAC, North America, Europe

• Sample Size: 63 Organizations

• Interviewees:

CIO’s Compliance Head Head of Risk Operation Managers

Key findings from Survey conducted by Newgen

Time is Critical- Pre-Configured Templates

Unpredictable FATCA regulations- Agile BPM Platform

Ensure Compliance– Logs and Document Management Solution

Complicated FATCA Procedures - Case Management and Workflow

Monitoring and Reporting Tools needed – Configurable Reports using Reporting tool

Customer Relationship - Communication Management

23Countries

92Compliance Officers

63Financial Institutions

1

2

3

4

5

• FATCA compliance is a derivative of Core Banking/AML?

FATCA needs comprehensive, risk mitigation and case management approach.

• FATCA is not my problem, it is the compliance or legal or technology or ???

FATCA requires program governance and ownership with joint participation and alignment.

• FATCA is about identification, I guess ?

Cursory analysis of customers is not enough. Needs domain experience and ability to execute.

• FATCA is all about IRS ?

FATCA is not a one time, quick fix solution. Sons and Daughters of FATCA are just shaping up.

The Myth Busters

• Regulation to combat offshore tax evasion on US source income maintained with FFI

• Goal: Identify US Person status and accounts held by such individuals & entities (>10%)

• Approach: US Indicia based & above certain aggregated account balance threshold

• Documentation Collected: If US Indicia identified, additional documentations required which are beyond AML obligations

• Additional Complexities: Change in circumstances, 30+ statuses, repeatable remediation procedure, unpredictable changes in regulation expected in future

FATCA

• Aims to check money laundering

• Goal: Identify Beneficial Owner who owns or controls the account / customer (>25%)

• Approach: Risk Based approach

• Documentation Collected: Mainly for identifying beneficial owner

Anti-Money Laundering

Purpose of AML and FATCA

FATCA Requirement AML System Enhancement Right Approach For FATCA Compliance

Indicia Rules Only Specific fields mapped Pre-Configured rules, code-less rules are defined for all electronic searchable data and can be changed and managed

Agility of creating new rules

None Rules Engine with Agile interface for creation and modification of rules

Account Aggregation Will be built in as a check A part of seamless rule engine

Remediation Third Party application or coded small in-flexible process

Flexible Case Management solution toaccommodate remediation period for different customers

Communication with customer

To be handled outside of solution Case Management and Correspondence Module with strict audit logs and ready-to-use templates

FATCA – The Right Approach

FATCA Requirement AML System Enhancement Right Approach For FATCA Compliance

Auditing Framework No unified approach Comprehensive FATCA specific Audit Logs

Document management System

None DMS Module integral part of solution

Recalcitrant Customer New module to be built Pre-configured in solution and IGA specific policies can be configured easily

Evolve with Regulation Code to be changed and modules to be installed

Agile interface with almost no coding required for further Regulatory Changes

Manage other country FATCA regulations (UK, Germany, France etc.)

Further modules must be created Configurable. Same infrastructure can be used to configure future changes

FATCA – The Right Approach

Newgen FATCA Consultative Solution Approach

1: Ability to record/maintain and report account history for suspect/remediation and recalcitrant customers as audit file.

2: Create a e-file of all documents in the case file for easy archival/search/access and collaboration for customers documents,

Audit and Document Management

1: Annual US account reporting by participating FFI’s.

2: Validity of W Forms

3: Operational/Investigative and Transactional reporting for FATCA lifecycle management.

Reporting

1: Follow-up on accounts awaiting data/document.

2: Automated escalations/alerts and exception management.

3: Electronic Forms.

4: Investigations and closure of case.

Workflow driven Case Management

1: Individual and Institutional

2: New Accounts

3: Existing Accounts

4: Aggregation Products

5: Threshold and Indicia checks.

Account Identification and

Classification

1: Develop Integration

Approach

2: Pull data from Customer

Database

3: Normalize and Clean Data

4: Aggregate Customer

records and balances

Acquire Customer Data

1: Conduct Gap Analysis

2: Create Project Plan

Plan and Scope

Initiation Classification Remediation Decisioning Archival

• Management of Customer Data

• Quality of Current Customer Data

• Identification of FATCA Reportable customers

• Unpreparedness of Technology

• Unpredictability of Regulation

• Keeping up with Future sons and daughters of FATCA

Operational Challenges of Implementing FATCA

Heterogeneous Source I/P Systems (Core)

Deposit (Retail), Capital Markets, Trust, Wealth, Investment,Insurance Systems etc.

Multiple entities with multiple core applications

Feed file from all core systems

Multiple file formats with varying data structures

Unique identifier & secondary identifier

Data Modeling & Transformation

Field level mapping for all feed files

Field wise data conversion of all feed files in a uniformstructure

Data type, length, mandatory & format validations

CIF & Account records linkages and balance aggregationacross feed files

Normalization & Cleansing

Normalize for homogeneous representation (e.g. KYC datafrom all systems represented uniformly)

CIF level & Account level data mapping (e.g. addresses storedat both levels)

Cleansing activity for ambiguous data elements (e.g. free textfields)

Exception management for missing data elements

Data Processing

Process rule(s) on applicable sets of data from all feed files

Remediation case management for success

Identified indicia association at field level with conforming,resolving & waiver documentation requirement

Exception case management for failures (with view to RM’s/ compliance users)

Reconciliation dashboard with drill down

Data Input, Modeling, Transformation & Processing

Newgen FATCA Solution Suite

United States

Financial Institutions

ForeignFinancial

Institutions

Legacy Systems

KYC

ElectronicDocuments

Data Warehouse

US

Ind

icia

Ch

ange

In S

tatu

s

Enti

ty L

egal

Sta

tus

Check Points

Registration and Segregation

Master Folder

Rules driven Due Diligence

Case Validation

Entity Analysis

Exempt

Due Diligence and Audit

DocumentationDue

Diligence

Decision and Reporting

Auto-Resolve

Report to Tax

Electronic Form

W-8 W-9

Know Your Customer System

Monitoring and Control

WHT Reporting

Case Management

Document Management

Communication Management

Real Time Data Validation

Change in Status & Periodic Review

Integration IRS form instructions

1. FATCA Readiness Surveys

2. Gap Analysis and Mapping of Data with Pre-Configured Rules

3. Extract data through Standard templates

4. Test-Run FATCA Solution

5. Implementation

6. User Approval

7. Compliance Sign Off

8. Training

Eight Step Newgen FATCA Program

1. FATCA is complex, ambiguous and instable

2. It will add Time and Cost.

3. It will require technology and evaluation of existing processes

4. Cursory analysis of customers is not enough

5. It will require program governance and ownership

6. Customer Relationships will be impacted

7. FATCA needs more than a quick fix

8. You will need an experienced implementation partner

Eight Things to Keep in Mind when Planning for FATCA

• Completeness and Readiness of a Future Ready Solution. Have deep domain expertise in FATCA regulations, reduces your risk to re-invent and go with the best practices.

• Reduced risk through best practice templates and on-time implementation.

• Significantly lower cost of ownership and resource tie-up with user empowered training program

• Much lower costs for the solution to adapt to new requirements with the configurable BPM framework

• Lower TCO driven by 60 day roadmap

• New age technology enables ease of integration with multiple systems

• Extensibility of the solution to other valuable process automation initiatives.

Been there, Done it, Proven results

Customer Case Study

• Four of the Largest Caribbean Banks

• Over 20+ live cases in the final stages

Challenges• Complicated On-Boarding processes • Identification of FATCA Eligible individuals• Non-uniform and Isolated, systems and manual processes • Manage complex customer relationships • Adapting to changing market dynamic

Benefits• Pre-configured Solution Accelerator reduces implementation timeline significantly• Uniform customer onboarding & KYC processes• Centralized & Decentralized FATCA compliance control & audit• Agility in Processes, specific to privacy islands like Bahamas• Extensive audit trails ensure constant monitoring• Flexible and configurable solution provide easy change management• Alerts and notifications for monitoring all cases • Real-time Automatic reporting and dashboards

Parameters of Project Success

Complete SolutionComplete and Seamlessly Integrated Solution

Onboarding – FATCA Rules Engine – Case Management – Reporting – CMS

Domain Expertise Best Practice Process templates for key FATCA Rule-Sets and domain consultants with knowledge pool of regulatory framework.

Delivery Expertise Newgen has a dedicated implementation team of consultants trained on Newgen BPM, besides a pool of trained partners in various regions

The Winning Risk-Free Equation

• Software Products in Business Process Management, Enterprise Content Management , Case

Management & Customer Communication Management

• Global footprint with 1100+ ECM, BPM and Case Management installations in 50 countries

across Verticals including Banking, Financial Services, Insurance, Shared Service Center and

Business Process Outsourcing, Government, Healthcare …

• Credited with world’s largest implementations

• Employee strength 1300+

• Innovative culture, Dedicated R&D centre, 40 patents

• Certified for ISO 9001:2008, ISO 27001:2005 and CMMI Level3

Newgen Overview – Company Snapshot

Investors

Offices

Singapore

USA

• Florida

• Washington DC

Canada

UK

UAE

IndiaSubsidiaries

2013 Impact Report

2013 ECM Wave

2013 Global Software Leaders Report

2011 Market Share Report

2014 Critical capabilities in case management report

2013 CCM MQ

2013,2012, 2011,2010,2009 ECM MQ Report

2014 iBPMS MQ participation, 2012 BPMS Market Update Report, 2010 BPM MQ

2011 Retail Loan Origination Vendor Landscape Report

Good Condition and Low Risk

Flexible and cost effective

Emerging market’s top 100 software

vendors

No 1 in India Content Management

Market

Top 3 value for money2011 BPM Decision Matrix

Industry Recognition

Very Large Installations

Comprehensive Case Management2012 ECM vendor evaluation Report

Our Global Customer Relationships

Banking & Finance

Insurance

BPO & Shared Services

Government

Singapore Star Shipping

RTBA

Customers in APAC