Transcript AML
FATCA Leveraging existing IT solutions for compliance Jeroen Dekker, Senior Product Manager Financial Crime Risk Management SWIFT Poland National Member & User Group, December 11, 2013 Once upon a time, in a new land called AML… Onboarding Core Banking Monitoring 2 © 2013 Fiserv, Inc. or its affiliates. Agenda • Our Perspective • Quick Introduction to FATCA • What We’ve Been Seeing • FATCA Team Functions • Requirements Round-up • Case Study • Call to Action 3 © 2013 Fiserv, Inc. or its affiliates. Fiserv International Today Number 1supplier of software & services to the FS industry for 6 years (FinTech100) NASDAQ quoted (FISV) Polish Customers: • • • • – $4.42 bn Revenue 2012 Strong presence in Poland: – $597m Free cash flow • • 17000 clients worldwide 70+ countries and multiple languages • 25+ years experience 19,000 employes 40+ employees in Poland © 2013 Fiserv, Inc. or its affiliates. Local office since 1993 Regional Internet and Mobile Warsaw Competency Centre Regional 24/7 HelpDesk Solutions serviced in Poland • • • 4 ING Bank BZWBK Millennium Bank Santander Consumer Bank • Core Banking application Front End and Teller applications Fraud and Reconciliation Management applications Custom development services Technology Solutions Across the Institution Payments Solutions for optimizing all aspects of the payments mix to help you create efficiency and drive growth Customer and Channel Management Solutions for attracting, retaining and growing customer relationships 5 © 2013 Fiserv, Inc. or its affiliates. Processing Services Solutions for managing account-based transactions – reliably and securely Risk and Compliance Solutions for proactive risk prevention and mitigation Insights and Optimization Solutions that help you transform data from information to actionable business insights Fiserv offerings around SWIFT traffic Risk / Financial Crime Sanctions Screening Control / Processing Reconciliation AML monitoring Trade Processing Fraud Prevention Payments processing FATCA monitoring 6 © 2013 Fiserv, Inc. or its affiliates. Today’s perspective Solutions • • • • • Fraud AML Sanctions Corruption FATCA Data focus Capabilities • Customers • Accounts • Transactions • Anomaly detection • Case Management • Reporting Financial Crime Risk Management Software Platform Behavioral Monitoring Industries • • • • • 7 Retail Commercial Private Securities Insurance © 2013 Fiserv, Inc. or its affiliates. Regions • • • • • EMEA ASPAC LACC NA USA Financial Institutions 1000+ clients Market leader What is FATCA? • Foreign Account Tax Compliance Act • U.S. regulation to combat offshore tax evasion by U.S. taxpayers • Regulations produced by U.S. Internal Revenue Service (IRS) • Targeted mainly at financial institutions outside the U.S. • Requirements to identify and report certain (U.S.) accounts • Through prescribed onboarding, remediation, • • • • monitoring processes Severe (withholding) penalties for non-compliance U.S. institutions tasked with monitoring/enforcing Final regulations published in February 2013 Phased implementation from 2013 through 2017 A new frontier in Financial Crime Risk Management 8 © 2013 Fiserv, Inc. or its affiliates. How FATCA evolved… and spread • FBI case against UBS • HIRE Act passed in 2010 • Drafts & Notices • IGA Models • Final regulations • Delayed implementation • Guidance • …? 9 © 2013 Fiserv, Inc. or its affiliates. Global initiatives: FATF OECD G8 / G20 EU What we have been seeing Tax A typical FATCA project team 10 © 2013 Fiserv, Inc. or its affiliates. The Team’s Current Focus Onboarding Primary processes: • Additional data capture • Forms & procedures • Decentralized approach CDD Core Banking Data warehouse Task force > Standing central FATCA team • Manage project phases • Database reports for monitoring & control 11 © 2013 Fiserv, Inc. or its affiliates. Fiserv Core Banking – FATCA Phase 1 Identification and Due Diligence Phase 1 Changes • Bank Level Parameterization of IRS issued GIIN • Branch Level Parameterization of IRS issued GIIN • Add additional Static Data pages • Create new ‘Foreign Tax Compliance’ pages • Modifications to Customer to Customer Relationships page • Create new ‘Foreign Tax Compliance Exception’ report • Modifications to Bank Profile Maintenance Report • Modifications to Customer Information Maintenance Log • Modifications to New Customer Information Report New ‘Foreign Tax Compliance’ pages 13 © 2013 Fiserv, Inc. or its affiliates. ‘Foreign Tax Compliance Exception’ report 14 © 2013 Fiserv, Inc. or its affiliates. A Central Back Office FATCA Team – For What? CDD, Core, CRM and Payment systems New Accounts Pre-existing accounts Payments Your FATCA Team ? 15 © 2013 Fiserv, Inc. or its affiliates. Reporting Central FATCA Team Functions (1/2) Act as a second line of control Handle exceptions and escalations • Avoid single points of failure • Detect and alert what falls through the cracks • Assure process consistency & correct outcomes • Use automated (double) checking of data 16 © 2013 Fiserv, Inc. or its affiliates. • Workflow & case management remediation • Holistic view of final status for all customers Maintain central oversight • Understand, manage, inform • Produce lists, metrics, special cases • Normalization across all operations & systems Prepare for future examinations • IRS or local examiners, internal audit • Show and justify how decisions were made • Audit trails, recordkeeping, reporting Example 1 – New Individual Client Walks in Self-certification • • • • US taxpayer Not US taxpayer Don’t know Refuse to answer (pending) KYC data • • • • • Address(es) Phone number(s) Nationality Country of birth Identification, etc. FATCA Status 17 © 2013 Fiserv, Inc. or its affiliates. • • • Automated Detection • • Does KYC data reveal any US indicia to contradict a claim of ‘Not US taxpayer’? Do we have enough KYC data to verify such claims? Did we receive Self-Certification, and receive it on time? (90 days) Alert ‘US taxpayer’ for second line approval/classification Alert ‘Don’t Know’/ ‘Refuse’ for escalation Once a year Report new US accounts whose aggregated balance on December 31 exceeded $50,000 Example 2 – New Entity Client Walks in • Determine Chapter 4 classification during onboarding • Capture address, ownership and business type data A tool for the back office FATCA team can provide: Scenarios to verify Chapter 4 status against available data Escalate classification issues to the FATCA team Alert Passive NFFEs with owner(s) with US indicia Daily alerts for changes in circumstances 18 © 2013 Fiserv, Inc. or its affiliates. Central FATCA Team Functions (2/2) Remediation of pre-existing accounts • Project best led by centralized back office • Ingest hits from electronic/paper searches • Manage tasks, documentation, decisions 19 © 2013 Fiserv, Inc. or its affiliates. Periodically determine reportable accounts • FATCA status and current (aggregated) balance • Periodic automated selection & data collection • Prevent duplicate/repeat reporting Prepare, validate, generate, send reports Perform ongoing monitoring • IRS XML Form 8966 or local equivalent • On all new and pre-existing accounts • Controlled and auditable process • Location, structure, ownership, their location • Don’t underestimate data and workflow • Payments to nonconsenting accounts/FIs Issues Not Tackled Today • Forms required during onboarding/remediation • Ongoing tax reporting to IRS • Withholding (determination, calculation, execution) 20 © 2013 Fiserv, Inc. or its affiliates. Example 3 – Existing Account Remediation CRM Core System X AML Import US indicia hits as alerts Case Management Workflow Tasks Document capture Classification Reporting 21 © 2013 Fiserv, Inc. or its affiliates. … and check against balance thresholds and exemptions for relevance! Tooling Requirements Round-up • Data on customers, accounts, balances, transactions, process • Automated analysis, detection rules, alerting • Workflow and case management • Regulatory reporting • Management reporting • Audit trails • Flexibility for future requirements (FATCA and copy-cats) If only there were such a system… 22 © 2013 Fiserv, Inc. or its affiliates. Client Case Study • Global insurance and wealth management firm • Agents, locations, business units as first line • Corporate compliance as second line • Leverage existing system used for AML, Fraud, Market Conduct • Add first-line FATCA process outcomes as data feed How they use it • Detection scenarios for changes, inconsistencies, notifications • Use of case management for remediation, approvals etc. • Management reports for counts and lists 23 © 2013 Fiserv, Inc. or its affiliates. Monitoring, Control and Reporting for FATCA Compliance CDD, Core, CRM and Payment systems New account classification Pre-existing accounts Ongoing monitoring Payments withholding Your FATCA Team Data: AML, indicia, payments, FATCA process Detection: verification & monitoring • • • • Automated checks Exception handling Approvals and audit Central oversight Case management: remediation & audit Management Reporting IRS XML Reporting 24 © 2013 Fiserv, Inc. or its affiliates. Call to Action • Use your time wisely • Learn from AML history • Look and plan ahead • Leverage proven capabilities 25 © 2013 Fiserv, Inc. or its affiliates.