Chen Zamir

Still getting through FinCEN's proposed rule to Strengthen & Modernize Financial Institutions' AML/CFT Programs (it is 178 pages). Of note, the requirement for institutions to ensure that their program is not only risk-based and reasonably designed, but also effective and in-line with national AML/CFT priorities will be new for some. The word "effective*" is used 181 times in the document. And for innovative software providers like us and those looking to adopt/pilot new approaches, "innovation" is used 34 times (and is strongly supported throughout!). Also, performing risk assessments becomes a strict regulatory requirement (though you should already be doing it); with the requirement as part of your risk assessments to consider FinCEN's national priorities and to apply resources accordingly. And in their own words: "FinCEN, in consultation with the appropriate Federal functional regulators, intends for these updates to: (1) reinforce the risk-based approach for AML/CFT programs; (2) make AML/CFT programs more dynamic and responsive to evolving ML/TF risks; (3) ultimately render AML/CFT programs more effective in achieving the purposes of the BSA; and (4) reinforce the focus of AML/CFT programs toward a more risk-based, innovative, and outcomes-oriented approach to combating illicit finance activity risks and safeguarding national security, as opposed to public perceptions that such programs are focused on mere technical compliance with the requirements of the BSA." https://lnkd.in/eab-3PqY

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Fintechs and Sponsor Banks: If you are dealing with long Sanctions review queues (like I used to), this new release is a game changer. Problem statement: AML/BSA exam standards require banks to show their homework on any potential watchlist hits. Take a name like Jose Lopez, of which one of our clients had 300 on the books, we could be talking about 100s of manual reviews. Solution Statement: We can solve this problem with some additional controls to our platform and make meaningful operational impacts to the process. 1️⃣ Dual score controls: A two step process that eliminates a significant percentage of the manual queue by answering two distinct questions. First does the name match? Is this a strong match candidate to the source list. Secondly, when there's a name match, your analysts answer the question, is this really the same PERSON or ENTITY that is contained on the list? By creating a second score, the Entity Correlation Score (ECS), it gives users a way to create an automated way to weed out the vast majority of false positives. Using Machine Learning and AI capabilities additional features are extracted to help answer this question. Features such as age and date of birth, gender, country of residence and name commonality indices, etc. are leveraged to show the likelihood that the entities are actually the same person. Therefore a high name score and a low entity correlation score can systemically be labeled as false positives once the organization has tested and set thresholds to determine their comfort level with the ECS outputs. 2️⃣ One click research: For the people remaining on the list that are above the probability threshold, it used to take many clicks for an analyst to get all the research data to make a call. Gen-AI tools now surface all the supporting data with one click, along with a suggestion with supporting logic. 3️⃣ Auditability: Full audit logs record all the searches and results and custom reports allow a view of all the logs, changes and results as well for both screening and also automated population monitoring. Increased efficiency with ability to show homework. For the compliance nerds out there, read about the underlying details in our blog in comments. Now live for all Socure customers. https://lnkd.in/gAyViRnP

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#aml #antimoneylaundering #moneylaundering #financialcrime #fincrime Good to see a tool of use and value. If you haven’t checked out STOP THE TRAFFIK’s ‘Exploitation Analytics’ section and ‘Exploitation Analytics Services 2023 Proposal’, both are worth a look (links in comments). Check it out plus much on The Laundry® at: thelaundrynews.com

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N26 fined €9.2 million by BaFin for AML failures, but customer onboarding cap lift possible this year German regulator BaFin has fined N26 €9.2 million for AML failures. The penalty comes after BaFin concluded that N26 systematically submitted suspected money laundering reports late in 2022. This is the latest development in a series of regulatory actions against N26 concerning its AML controls. In 2021, BaFin fined the bank €4.25 million and imposed a cap on new customer onboarding. The cap, currently set at 50,000 new customers per month, remains in place alongside an ongoing audit presence. While BaFin extended the cap in July 2023 due to persisting deficiencies, Bloomberg reports that the regulator might lift it as early as this year. N26 claims to have implemented significant improvements to its reporting processes and invested heavily in personnel and infrastructure to combat financial crime. #N26 #AML #Fintech #Regulation #FinancialCrime #NeurobayStrategy #NeurobayCompliance #BaFin

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Earlier this month marked a major change in the UK’s fraud risk landscape with the new mandatory fraud reimbursement scheme taking effect. The new rules require mandatory reimbursement of up to £85,000 for victims of APP fraud. As regulators intensify their crackdown on fraud, staying one step ahead of emerging threats has never been more crucial. That's why Themis and Bottomline are conducting a study on emerging fraud trends — and we want your input! Take 5 minutes to complete this survey: Click here (https://lnkd.in/evSbQP7j) to take the survey.

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Navigating the complexities of Anti-Money Laundering (AML) compliance is non-negotiable in today’s financial landscape. As leaders, we must prioritize robust policies and procedures to protect our institutions from the risks of financial crimes, regulatory penalties, and reputational damage. If you're questioning whether your company's AML measures are up to par or if you're seeking ways to fortify your due diligence processes, I encourage you to read on. For those committed to enhancing their compliance frameworks, Intelligo’s comprehensive AML screening services are here to help. #AML #Compliance #FinancialIntegrity

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TL/DR: GAO’s new government fraud estimate uses a far more reliable methodology than standard fraud estimation techniques. What makes GAO’s new fraud estimation report different? To begin, fraud is hard to measure. That’s because fraud is deceptive, so no one knows how much fraud is happening at this very moment. The technique GAO used, the Monte Carlo simulation, is better at predicting unknowns, like fraud. But…why? When trying to estimate how much fraud is, in fact, happening at this very moment, you could use two types of statistical techniques: Probabilistic and deterministic. Most fraud estimates are deterministic, meaning they rely on outcomes that we know about. In the case of fraud estimation, that’s how much fraud we actually found. But, remember, fraud is deceptive, so we never found a LOT of it. Thus, the standard way of estimating total fraud is based on the small fraction of that total we have actually uncovered. Problematic, no? In contrast, Monte Carlo simulation is a probabilistic technique using randomly selected "what-if" scenarios to approximate the full range of possible outcomes, and the likelihood of each. For example, the distance between your home and office is fixed. A deterministic approach will only use known inputs: minimum and maximum travel time. In contrast, a probabilistic simulation might predict different travel times by considering unknown factors such as congestion, bad weather, and vehicle breakdowns, producing far more accurate predictions. So GAOs technique provides a far more reliable estimate of fraud. See GAO-24-105833 for more. #themoreyouknow #fraudrisk

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If you work in AML, you know you’re fighting 21st-century crimes with 20th-century tools. But what if we could share real-time, anonymized data from Bank A, to Bank B to… Bank Z? "Jen, have you lost your mind? That's impossible!" I know, I know, but imagine this: A bad actor gets flagged at Bank A. Within seconds, that information is anonymized and shared with every other financial institution. Suddenly, everyone can check their books to see if they carry that customer. The benefits would be… 1. Faster detection of complex, cross-border schemes 2. Reduced false positives (because more data = better context) 3. Improved ability to spot emerging trends and typologies I’m not just talking about banks. This could extend to FinTechs, crypto exchanges, and even regulators. Ok, I'm not naive. I know there are massive hurdles: • Legal and regulatory barriers • Privacy concerns • Competition issues • Technical challenges As we argue over ethics, criminals are sharing data, techniques, and resources freely across borders. Meanwhile, we're stuck in our silos trying to catch bad guys. We need regulators, financial institutions, and tech companies to come together and figure this out. Every second counts.

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For anyone watching the #PSD3 radar (and you should), this article is very informative and insightful. As stated in the article, a large focus of PSD3 has been on the combatting and mitigating of payments fraud. Some key measures from PSD3 will include (not an exhaustive list!): 👍Strengthening customer authentication rules by extending IBAN verification services 👍Requirements to strengthen Transaction Monitoring 👍Enabling data sharing between PSPs (including fraud-related) 👍Extending refund rights for fraud victims 👍Improving transparency on account statements 👍Levelling the plying field between banks and non-banks, by allowing non-bank PSPs access to all EU payment systems 👍Removing obstacles to open banking 👍Enhancing customer controls over their payment data 👍Extending refund rights in certain situations An exciting time to be in #payments #compliance #aml #paymentservices #psp #mlro #mlco #europe #EU #fraud #crossborder #guernsey #guernseyfinance #guernseyfinancialservices Aston CM (Guernsey) Limited Aston Currency Management https://lnkd.in/erH3kMfw

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The sixth important tech in financial crime compliance is machine learning, which helps detect and stop fraudulent activities by training models that learn from seen data, generalize to unseen data, and perform tasks. Most models today are supervised learning that uses labeled data (i.e. truth set) to train models to distinguish between legitimate and fraudulent activities. The higher the quality and quantity of the labeled data, the more accurate the model. The higher the dimensionality of the data, the more generalizable the model.

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Three core issues hold back AML compliance teams from succeeding at their mission 1. 👂 Poor communication between Fraud and AML tools and teams Fraud tools can block transactions. This is especially helpful in RTP, where criminals use the speed of money to exploit weaknesses in batch-based transaction monitoring and controls. Compliance teams often do not use this but know that what starts out as a possible fraud could be a money mule or sanctions hit. Also, to monitor a transaction a compliance team might want to NOT block the transaction in order to report it. 2. 👴 Legacy tools and point solutions that don’t solve the fundamental data issues. Teams might have a traditional transaction monitoring solution from their core provider and maybe a case management tool from another. Few of these enrich the underlying data and bring it to a quality where it is human-readable and can be easily visualized. 3. 💤 Reliance on manual effectiveness testing. Manual testing often samples a few transactions, with incomplete data and spreadsheets. This is a very limited way to test and not indicative of the entire customer base. Compliance leaders are flying blind. Read our guide to 10x’ing BSA/AML effectiveness for how to fix this (on sardine .ai/blog).

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Last chance to join us today at 10am for an overview of Monitored searches in the context of streamlining your AML compliance. ⭐ What are they ⭐ Why might you want to use them ⭐ Consideration on how to implement them AML compliance is a balance between risk, resources and cost. The implementation of monitored searches, more than most other tools helping to streamline compliance, needs consideration with the above context to be truly beneficial and effective. How you make use of it will depend on your firm, clients and approach to AML compliance. Hopefully 🤞 I will give a good enough overview for you to consider whether monitored searches should play a part in streamlining your compliance. You can still register here to join or receive a recording: https://lnkd.in/eBt23eZM #amlcompliance #monitoredsearches

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There's a huge amount of talk around the benefits of #AI within the fincrime space. And I don't disagree with there being huge potential! But there was a very smart and simple statement I heard from a senior figure in the banking space last week: Alerts cost money to handle It's imperative that the quality of alerts are the best it can be, whilst ensuring manual review is minimised to increase STP rates and reduce operational cost. The standout screening stat Salv's seen recently is 0.14% of transactions requiring manual review... think about all the extra fincrime work you can get done 🤯 #AML #TransactionScreening #SanctionScreening #KYC

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Financial Crimes Enforcement Network, US Treasury published a notice for FIs to operationalize threats related to timeshare #fraud and Mexico-based TCOs like CJNG. This was issued jointly with #OFAC and the #FBI. I certainly didn't have a 14 page document re: timeshare fraud and Mexican drug cartels on my 2024 BINGO card, but here we are. See the third point for 6 things you can do right now to act on this Notice. Here are the highlights, more comments in the attached pdf - 1) This notice will primarily be impactful if all #banks, credit unions, #trust companies, investors, brokers, and fiduciaries provide customer education. Pgs. 3-5 offer great keywords to use in your outreach. 2) After customer education, the typologies are pretty limited in operationalability (not a word, I know). This is where I will say again - if your #AML system does not allow you to operationalize advisories and notices from FinCEN, get a new one! 3) It is time to take a temp check of your transactional threat landscape as it relates to this notice - look at the following: a) age of the customer (elderly) and repetitive wires to Mexico; b) wires to Mexico with the terms "fees" and "taxes" in description; c) wires to Mexico going to the same/similar beneficiary but from different 60+ aged customers; d) search beneficiaries of wires to Mexico with the terms "travel", "real estate", "closing", "title", "realty", and "broker" (English & Spanish); e) wires from trust or #retirement accounts to Mexico; and f) internal transfers from trust/retirement accounts to checking then wires to Mexico. 4) Once that exercise is done, you will know how much exposure you have. 5) If there are any positive matches to # 3 above, do additional research on the businesses to see if they are newly formed. 6) Remember to use 314b info sharing with other US FIs! 7) If your #communitybank or CU is based in a large retirement community, you have a duty to at least brief your customers on this risk. Some things I'm confused by - pg. 9 states "U.S. financial institutions to continue to use, and potentially expand, their existing processes to collect and share information with foreign financial institutions in furtherance of investigations that involve cross-border activity"... what?? The reference is a footnote from Gacki's speech in May. But I am not aware of any legal mechanism by which US FIs (not the Tier1s) can share with info with a non-US FI? Please someone tell me I'm wrong. #ifollowdirtymoney

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Over the last decade we have issued only 4 fraudoftheday.com special alerts. This is unfortunately now the fifth. The Treasury Department issued a special alert noting that deep fakes are being weaponized by bad actors to steal money and bypass identity verification systems that rely solely on document authentication, liveness checks and referees who evalaute those conducting a transaction on line. As I have noted before, National Institute of Standards and Technology (NIST) needs to expand IAL2 immediately and move to a more data centric model. As we move into tax season, the fraud will escalate, there will be more victims and our systems will be overwhelmed. Our adversaries in China, Russia, North Korea and Romania are exploiting this new technology at scale. Fortunately, there is a way to easily stop the fraud and protect those in need. My tip of the day, is to never share your biometric information with a marketing company, where you are the product. https://lnkd.in/ewswppqA

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The Wolfsberg Group has published a document on enhancing the effectiveness of Monitoring for Suspicious Activity (MSA) in FIs. Here are some key points: ✅ Emphasizing Effectiveness: Shifting focus from technical compliance to effectiveness in monitoring for suspicious activity programs. It suggests that compliance with laws and regulations alone is insufficient and should strive for outcomes that contribute proportionately to the fight against financial crime. 🎢 Risk-Based Approach: The Wolfsberg Group recommends adopting a risk-based approach (RBA) to MSA. This means prioritizing resources to mitigate observed risks rather than solely focusing on theoretical ones. ​ By leveraging available data and productivity, allocate efforts more effectively and efficiently. 📊 Enhanced Analytical Capabilities: The document emphasizes the need to develop and improve our analytical capabilities to complement risk-based monitoring. ​ By leveraging targeted data analysis and investigations, we can gain deeper insights into potential suspicious activity and improve the effectiveness of the MSA program. ​ 🔁 Holistic Risk Identification: Proactively conduct holistic risk identification exercises on business to identify potential exposure to idiosyncratic risks and emerging threats. ​The broader approach will help stay ahead of evolving financial crime trends and strengthen risk management efforts. ​ 📲 Leveraging Technology: The Wolfsberg Group encourages the use of new technologies, such as machine learning, to enhance the effectiveness and efficiency of the MSA program. Advanced analytics, data visualization, and research can help identify patterns, streamline investigations, and improve detection capabilities. ​ ⏬ Download the report below ❓ Which of the technology providers do you prefer for transaction monitoring❓ #TCAE #KnowledgeBite #SAR #AML #FI #MSA

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