e2gen Sanctions Monitoring
Sanction Monitoring
Financial institutions are under an obligation to induce measures to safeguard against inadvertent breaches of international, national as well as internal sanctions. Failure to comply with the published “Sanctions” list can lead to loss of prestige, seizure of funds and penalties against both the institution and its officers. As the desire for more automation of financial messaging continues to increase, the pressure to automate any compliance requirements becomes crucial to this success. As the compliance check is incorporated as part of the institutions workflow process, the now fully automated transaction cycle becomes more attainable and manageable.
Sanctions Lists
e2gen’s Sanction Monitor (SM) solution was initially introduced to the e2gen platform based on the legal requirements of the Office of Foreign Asset Control (OFAC) in the United States. It has since evolved, allowing for the incorporation of any “Sanctions Lists” including those of the Bank of England (BOE) and WorldCheck. Additionally, your own internal black and white lists can be imported automatically or manually entered.
Any new sanction lists that may be created by a regulatory organisations or government can also be imported into e2gen. This simply requires its structure to be defined within e2gen’s business data dictionary and an import process configured.
SM makes use of a centralised database providing a configurable and consolidated repository for all sanction lists, which are downloaded, typically from the Internet, and imported directly into the module. To ensure full compliancy, we refresh the solution with its new details as and when required.
Sanction Monitoring Overview
e2gen’s Sanction Monitor provides the automatic checking of all electronic messages and any other data exchanged between your institution, external entities and third parties.
SM provides global monitoring for a branch network with centralised messaging services or alternatively it can provide an excellent solution for individual branches using their own messaging services.
All checks for potential sanction breaches are performed in real time. SM automatically protects the institution by alerting the required users immediately to any potential issues. Ensuring the appropriate actions are taken in a swift manner. The real time monitoring provided by the solution significantly reduces the risk of seizure of funds or inadvertent booking of non-compliant funds.
In addition to monitoring the message flow, SM can be configured to monitor new account opening events and perform periodic sanctions checks against existing accounts in back office systems.
Integrated Solution
SM can be implemented as either a standalone application or as part of a fully integrated messaging solution with automated processing. The solution is message format independent. Any number of message services can be configured and supported (e.g. SWIFT, local clearing, electronic banking etc).
The solution provides standard integration for all of the popular iSeries ‘back office’ systems for bi-directional sanctions monitoring including the following:
• Equation
• G3
• IBIS
• ICBS
• MIDAS
• OLYMPIC
• Proprietary
Exception Processing
All messages received or sent between the external gateways such as SWIFT, Electronic Banking, Domestic Clearing etc can be monitored. Transactions are compared against the enriched sanctions database. Any identified sanctions breaches are immediately blocked and notified to your compliance officers before the message is sent to the interface system or processed. This is an assurance that all information is monitored and subsequently, controlled within a single system.
The sanctions monitoring is ideally configured to form part of the institution’s manual and automated Straight Through Processing (STP) workflows. Any issues detected will be reviewed and managed, halting the workflow process. On authorisation of the sanction any manual initiated processes can be resumed. In the case of an STP workflow, this can automatically be resumed if required.
What To Check
Any message format within e2gen can be configured to specify what fields/sub-fields within that message need to be sanction checked. This way spurious details such as dates, amounts, exchange rates or fields containing reserved code words can be ignored thereby reducing needless processing and the possibility of false hits.
Sanction Blocks, User Alerts & Notifications
When a potential sanction breach is detected the message containing the blocked information is immediately removed from normal processing. Typically the message is isolated in a compliance department within e2gen. This department is configured to restrict user access to only those staff members responsible for sanction monitoring and reporting. Potential breaches are immediately notified to specified individuals either through the e2gen application and / or e-mail. In addition to notifying users the system offers configurable escalation procedures ensuring that any breaches are managed in a timely manner.
The message or account data containing the breach and the reason for the breach are presented to the user as part of the notification. The data source for the match (e.g. OFAC, BOE etc) is provided showing the full sanction details. As each occurrence is investigated users decide if the breach is valid and take appropriate action. In the event that the sanction hit is false the message can be approved and will automatically be returned for normal processing.
In order to release a message for further processing users have to approve and authorise of the event as an invalid ‘hit’. Every instance approved in this manner will automatically be user, date and time stamped and the database updated to ensure that non-valid matches are minimised in the future. The solutions’ ability to learn from operator intervention ensures that the false or non-valid match rates drop dramatically.
The following features are available to the compliance users
• Block/Unblock Account Management
• Real Time Alerts
• On Line Investigations
• Internal Escalation
• Audit & Monitoring
• Process Management
• Over-ride Facilities
• Maintenance
• Reporting
Application Systems Compliance
Sanction lists are dynamic and this requires institutions to review existing client data held in the Back Office system regularly. e2gen provides the ability to automatically extract selected data from specific files for sanction monitoring. Data extraction can be scheduled to suit the institutions own operational requirements.
e2gen can also be configured to monitor new client or account opening events in real time. As new details are opened the solution will extract the relevant inform and check it against the latest set of sanctions.
Sanction Monitor – Some Features
The sanctions lists provided by the main sources are simply a collection of words and data – in a range of formats. In order to provide meaningful and efficient sanction checking e2gen takes the imported data as the basis for creating an enriched database.
The database continues to evolve over time with the addition of new information and user augmentation that refines the data relationships. The incidence of potential false matches drops dramatically as the system fine-tunes itself to your operational environment. Some of the facilities provided to enrich and fine tune the system are indicated below.
Restricted & Group Words
e2gen allows grouping of word with common meanings, for example translations such as Banco, Banca, Banque and Bank or abbreviations such as Company and Co. allowing for linguistic variations and abbreviations.
The context of any word is also important and has to be taken into account during sanction checking. Some words, for example, “OF” and “THE” may have no relevance and can be ignored, as can any numeric data. Alternatively a word may constitute a violation and is therefore a valid sanction occurrence. A further example is where a word can have a referential relationship i.e. it is only in violation if it occurs with at least one other related word defined in the Sanction list.
In order to simplify this classification process an intelligent database is provided allowing the easy identification of the words that are most commonly used. These views provide an easy method of classifying commonly used words; helping to dramatically reduce potential false matches being identified.
Phonetic Search Capabilities
The Sanction Monitor also provides algorithms for translating text phonetically ensuring that incorrectly spelt words, words in the wrong order and compound words etc are checked against the sanction lists.
BIC / Clearing Code Checking
Countries can be also be marked as sanctioned - e2gen will automatically flag all related principal cities and all related SWIFT bank identifiers.
BIC codes are checked to see if the country of residence has been sanctioned. The Institution name and the city of the BIC code are also checked against the database. National clearing codes can also be checked in a similar way to the BIC codes by cross-referencing data maintained automatically from the BIC+ database supplied by SWIFT.
Database Access & Efficiency
The e2gen Sanction Monitor module shares the central database and messaging infrastructure providing system wide processing efficiencies.
Audit & Compliance
All of the restricted words (sanctions) identified during processing are logged against the message and the field identifiers together with the reason for the match. Matches must be individually authorised by at least one officer before any further message processing is allowed.
The list of sanction hits is held permanently with an audit log of subsequent activities (e.g. authorised for further processing) the officer(s) and each activity is date and time stamped.
Key Features
• Phonetic Scan Enabled
• Scanning of Any electronic Messages
• Scanning of Client Accounts in back office system
• Real- Time Alerts & Escalation
• Configurable List Management
• Loaders for external Lists
• Integral to Intercept e2gen product range
• Can monitor any number of application & messaging services
• Installs on the IBM iSeries/400
• Real time monitoring of all inbound and outbound messages
• Back Office - New Client / Account Checking
• Back Office - Existing Client / Account Checking
• Provides full OFAC, Bank of England, Worldcheck and other published sanction lists monitoring
• Uses the institutions’ own `Black Lists’
• Allows ‘White Lists’ to be defined
• Allows manual input of sanctions
• Real time notification of potential breaches
• Automatic blocking of breaches
• Internal and external escalation
• BIC & Clearing Code Checking
• Sanction list and user audit
Appears on these sections
Product and service specifications
| Database |
• DB2
|
| Language used |
• Other
|
| Operating system |
• IBM i (i5/OS)
• Windows 2003
• Windows Vista
• Windows XP
|
| Pricing structure |
• Per seat
• Volume-based
|
| User interface |
• GUI
|
Tags:
sanctions monitoring, iSeries, SWIFT, MIDAS, OLYMPIC, Equation, compliance, IBM, automatic, workflow
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