Corp America March 2017

48 CORP AMERICA / MARCH 2017 , For financial and other institutions, managing relationship risk across the enterprise is difficult, if not impossible without specialized technology andmethodologies for finding the bad guys. For the last 18 years, Safe Banking Systems (SBS), headquartered inMineola, NY, has been thinking ahead of the risks to combat money laundering, terrorist financing, fraud, and other criminal activities. Finding the Bad Guys “Our innovative anti- money laundering (AML) solutions help financial and other organizations comply with OFAC, Bank Secrecy Act (BSA), USA PATRIOT Act and other regulatory mandates,” says David Schiffer, President and CEO, Safe Banking Systems. These regulations require institutions to conduct due diligence on their customers, determine which customers pose the highest risk and then mitigate this risk with ongoing monitoring. This is referred to as Know Your Customer (KYC), Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD). A Principles-based Approach “Working with large complex databases is one of SBS’ core strengths. This expertise is what enables us to find the bad guys -- those individuals and entities that often remain undetected in customer databases,” adds Schiffer. Rules-based systems, which are widely used for customer screening, cannot handle scale and uncertainty with high- volume databases. “We follow a principles-based approach, which is more effective at quantifying and qualifying risk,” says Schiffer. “Our understanding of entity resolution and our methodology for exposing possible identity matches and non-obvious relationships across disparate data sources are what make the difference.” To keep pace with the ever- changing AML environment, emerging trends and technologies, SBS has made a significant investment in its own “think tank.” Big Data, artificial intelligence, machine learning and social media have influenced SBS’ research and product development. The company’s flagship offering, SAFE Advanced Solutions® Visual Intelligence Platform, incorporates many of these leading-edge technologies. It provides actionable AML intelligence and a proven methodology for entity resolution. Severity and Probability Financial and other institutions must screen their customer databases against lists of sanctions, politically exposed persons (PEPs) and reputationally exposed persons (REPs) found in adverse media to identify possible matches. These matches, or alerts, must be reviewed by compliance staff to determine the risk they pose to the organization. SBS facilitates this process with two proprietary metrics that measure not only the severity but the probability of a matched pair of records. SAFE Exposure Index® is SBS’ patented method of ranking PEPs and other high-risk entities in third-party reference files to determine the severity of the match. SBS combines this methodology with a probability alert scoring model, SAFE Strength Index, to deliver alerts that are prioritized according to their risk and likelihood of being true matches. These two metrics improve an institution’s operational efficiency by eliminating false negatives and dramatically reducing false positives. Recognizing that sanctions, PEPs and REPs are not static information sources and entity resolution is not a static pursuit, SBS delivers a daily surveillance model that is better aligned to a world where customer and web information change constantly. This is a significant differentiator. Using advanced link analysis, SBS digs deeper and broader into the hidden relationships found in a customer profile to uncover associates, friends and family members who might also pose an elevated risk. Financial institutions must take a risk-based approach by performing EDD on their pool of high-risk customers. SBS takes a more holistic view. “Our daily monitoring and surveillance of all customers, not just the high-risk group, ensures that any changes to customer risk will be captured as and when it occurs,” states Schiffer. SBS in Action The real-world impact of SBS’ solution and the actionable intelligence it provides can be seen in several high-profile cases which first gained media attention in 2009. SBS identified six men in the publicly available Federal Aviation Administration’s Airmen Registry who retained their federal aviation licenses in spite of being suspected of crimes that posed a risk to national security. The FAA and TSA revoked these licenses within 24 hours of reading the news-breaking article in the New York Times. Subsequently, while working with the same FAA registry, SBS identified Fernando Melciades Zevallos Gonzales, the founder and owner of one of the largest airlines in Peru. Although in prison on drug trafficking and money laundering charges, Zevallos, aka the Al Capone of Peru, still maintained a valid FAA pilot’s license. Demonstrating the critical role of advanced link analysis, SBS also found close associates and other Zevallos relationships involved in a $500 million money laundering scheme. A Winning Combination Leveraging the diverse expertise of the company’s professional staff with its cutting-edge technology enables SBS to uncover anomalies in data and identify risk. The combination of innovative technology, thought leadership, responsive service and dedicated support has earned SBS recognition among top industry research firms. SBS was named best-in-class watch list filtering solution by Aite in 2015 and was also Chartis’ 2017 RiskTech100® category winner for customer satisfaction. “Being a smaller company gives us the flexibility to adapt to new trends, new technology and new developments,” points out Schiffer. “It ensures we deliver on our mission of helping to protect our clients from regulatory and reputational risk.” 1702CA44