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Anti-Money Laundering Transaction Monitoring Systems Implementation By Derek Chau

Anti-Money Laundering Transaction Monitoring Systems Implementation by Derek Chau

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Summary

Effective transaction monitoring begins with proper implementation Anti-Money Laundering Transaction Monitoring Systems Implementation provides comprehensive guidance for bank compliance and IT personnel tasked with implementing AML transaction monitoring.

Anti-Money Laundering Transaction Monitoring Systems Implementation Summary

Anti-Money Laundering Transaction Monitoring Systems Implementation: Finding Anomalies by Derek Chau

Effective transaction monitoring begins with proper implementation Anti-Money Laundering Transaction Monitoring Systems Implementation provides comprehensive guidance for bank compliance and IT personnel tasked with implementing AML transaction monitoring. Written by an authority on data integration and anti-money laundering technology, this book offers both high-level discussion of transaction monitoring concepts and direct clarification of practical implementation techniques. All transaction monitoring scenarios are composed of a few common elements, and a deep understanding of these elements is the critical factor in achieving your goal; without delving into actual code, this guide provides actionable information suitable for any AML platform or solution to help you implement effective strategies and ensure regulatory compliance for your organization. Transaction monitoring is increasingly critical to banking and business operations, and the effectiveness of any given solution is directly correlated to its implementation. This book provides clear guidance on all facets of AML transaction monitoring, from conception to implementation, to help you: * Detect anomalies in the data * Handle known abnormal behavior * Comply with regulatory requirements * Monitor transactions using various techniques Regulators all over the world are requiring banks and other companies to institute automated systems that combat money laundering. With many variables at play on both the transaction side and the solution side of the equation, a solid understanding of AML technology and its implementation is the most critical factor in successful detection. Anti-Money Laundering Transaction Monitoring Systems Implementation is an invaluable resource for those tasked with putting these systems in place, providing clear discussion and practical implementation guidance.

About Derek Chau

CHAU CHAN YIP (DEREK) is Principal Technical Consultant at SAS Hong Kong since 2010. He was formerly a Technology Consultant at Hewlett Packard. He specializes in data integration and anti-money laundering. He received his Master of Science degree in Computer Science from the Chinese University of Hong Kong. MAARTEN VAN DIJCK NEMCSIK, LLM, PHD, has worked with SAS since 2012 as a financial crime and tax compliance domain expert and solution lead. He is part of the SAS Global Fraud & Security Business Intelligence Unit, responsible for internal and external training courses in the financial crime and compliance space.

Table of Contents

Prologue Acknowledgments 1 AN INTRODUCTION TO ANTI-MONEY LAUNDERING 4 1.1 THE EMERGENCE OF AML 4 1.2 AML AS A COMPLIANCE DOMAINDOMAIN 5 1.3 THE OBJECTIVES OF AML 7 1.3.1 Regulatory Reporting 7 1.3.2 Corporate Citizenship versus Profitability 7 1.3.3 About true and false positives and negatives 8 1.4 THE EVOLUTION OF AUTOMATED TRANSACTION MONITORING 11 1.4.1 From Rule-Based to Risk-Based 11 1.4.2 From Static to More Dynamic Transaction Monitoring 14 1.4.3 Latest Trends: Machine Learning and Artificial Intelligence 16 1.4.4 Latest Trends: Blockchain 18 1.4.5 Risk-based granularity and statistical relevance 20 1.4.6 Summary 20 2 TRANSACTION MONITORING IN DIFFERENT BUSINESSES 22 2.1 BANKING 23 2.2 CORRESPONDENT BANKING 24 2.3 BANKING - TRADE FINANCE 26 2.4 BANKING - CREDIT CARD 31 2.5 INSURANCE 32 2.6 SECURITIES 33 2.7 STORED VALUE FACILITIES (SVFS) 34 2.8 CASINOS AND ONLINE GAMBLING 36 2.9 LOTTERY AND JOCKEY CLUB 37 2.10 OTHER BUSINESSES 37 2.11 SUMMARY 38 3 THE ALL-IMPORTANCE OF DATA 39 3.1 ETL 39 3.2 EXTRACT: DATA AVAILABILITY AND SOURCING 39 3.3 TRANSFORM: DATA QUALITY, CONVERSION AND REPAIR 41 3.4 DATA LOAD AND FURTHER PROCESSING 46 3.4.1 Loading of the data 46 3.4.2 Data Lineage 48 3.5 MULTIPLE ETLS 48 3.6 SUMMARY 48 4 TYPICAL SCENARIO ELEMENTS 51 4.1 TRANSACTION TYPES 51 4.2 ACTIONABLE ENTITY 53 4.3 SCENARIO PARAMETERS 57 4.3.1 Use of Maximum instead of Minimum Value threshold 58 4.3.2 Threshold per Customer 59 4.4 PRE-COMPUTING DATA 59 4.5 TIMELINESS OF ALERTS 61 4.6 USE OF RATIOS 62 4.6.1 Ratio as Degree of Change / Similarity 62 4.6.2 Ratio as Proportion 64 4.6.3 Other Common Issues 64 5 SCENARIOS IN DETAIL 65 5.1 LARGE AGGREGATE VALUE 65 5.2 UNEXPECTED TRANSACTION 65 5.3 HIGH VELOCITY / TURNOVER 69 5.4 TURNAROUND / ROUND TRIPPING 70 5.5 STRUCTURING 74 5.6 EARLY TERMINATION / QUICK RECIPROCAL ACTION 76 5.7 WATCH LIST 76 5.8 COMMON SPECIFICATION ACROSS UNRELATED ENTITIES 77 5.9 INVOLVE UNRELATED THIRD PARTY 77 5.10 ONE TO MANY 78 5.11 TRANSACTING RIGHT BELOW REPORTING THRESHOLD 78 6 THE SELECTION OF SCENARIOS 80 6.1 SELECTING SCENARIOS 80 6.2 REGULATORY REQUIREMENT 80 6.3 BUSINESS DRIVERS 80 6.4 DATA QUALITY AND AVAILABILITY OF REFERENCE DATA 81 6.5 MAINTENANCE OF THE SCENARIOS REPOSITORY 82 6.6 HOW SPECIFIC A SCENARIO RULE SHOULD BE? 82 6.7 INTER-COVERING SCENARIO RULES 83 6.8 SUMMARY 84 7 ENTITY RESOLUTION AND WATCHLIST MATCHING 85 7.1 ENTITY RESOLUTION 85 7.2 WATCHLISTS 86 8 CUSTOMER SEGMENTATION 101 8.1 THE NEED FOR SEGMENTING CUSTOMERS 101 8.2 APPROACHES TO SEGMENTATION 102 8.3 OVERVIEW OF SEGMENTATION STEPS 104 8.4 ORGANIZATIONAL PROFILING 105 8.5 COMMON SEGMENTATION DIMENSIONS 105 8.6 CONSIDERATIONS IN DEFINING SEGMENTS 106 8.7 CHECK SOURCE DATA FOR SEGMENTATION 107 8.8 VERIFY WITH STATISTICAL ANALYSIS 108 8.9 ONGOING MONITORING 111 8.10 CHANGE OF SEGMENTATION 112 9 SCENARIO THRESHOLD TUNING 114 9.1 THE NEED FOR TUNING 114 9.1.1 Parameters and Thresholds 114 9.1.2 True versus False, Positive versus Negative 115 9.1.3 Cost 115 9.1.4 116 9.1.5 Adapting to the Environment 116 9.1.6 Relatively Simple Ways to Tune Thresholds 117 9.2 OBJECTIVE OF SCENARIO THRESHOLD TUNING 117 9.2.1 Increasing alert productivity 117 9.2.2 Definition of a productive alert 118 9.3 USE OF THRESHOLDS IN DIFFERENT KINDS OF SCENARIO RULES 119 9.3.1 Regulation-driven rules 119 9.3.2 Statistical Outlier 120 9.3.3 122 9.3.4 Insignificance Threshold 122 9.3.5 Safety-Blanket Rules 122 9.4 COMBINING PARAMETERS 123 9.5 STEPS FOR THRESHOLD TUNING 125 9.6 PREPARATION OF ANALYSIS DATA 127 9.6.1 Scope of Data 127 9.6.2 Data Columns 128 9.6.3 Quick and easy approach 129 9.6.4 Analysis of Dates 129 9.6.5 Stratified Sampling 130 9.7 STATISTICAL ANALYSIS OF EACH TUNABLE SCENARIO THRESHOLD VARIABLE 130 9.7.1 Population Distribution Table by Percentile (Ranking analysis) 133 9.8 DISTRIBUTION DIAGRAM COMPRESSED AS A SINGLE LINE 134 9.8.1 Multiple peaks 135 9.8.2 Zeros 136 9.9 ABOVE-THE-LINE ANALYSIS AND BELOW-THE-LINE ANALYSIS 136 9.9.1 Above-the-line analysis 136 9.9.2 Below-the-line analysis 137 9.9.3 Use of Scatter Plots and Interactions between Parameter Variables 139 9.9.4 Binary Search 147 9.10 WHAT-IF TESTS AND MOCK INVESTIGATION 148 9.10.1 What-if Tests 148 9.10.2 Sample Comparisons of What-if Tests 149 9.10.3 Qualifying Results of what-if tests 149 9.11 SCENARIO REVIEW REPORT 150 9.11.1 Scenario Review approach 153 9.11.2 Scenario Review Results 154 9.12 SUMMARY 157 About the Authors Index

Additional information

GOR011412158
9781119381808
1119381800
Anti-Money Laundering Transaction Monitoring Systems Implementation: Finding Anomalies by Derek Chau
Used - Very Good
Hardback
John Wiley & Sons Inc
20210218
304
null null null null null null null null null null
Book picture is for illustrative purposes only, actual binding, cover or edition may vary.
This is a used book - there is no escaping the fact it has been read by someone else and it will show signs of wear and previous use. Overall we expect it to be in very good condition, but if you are not entirely satisfied please get in touch with us

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