"The initiative, which will ripple through the whole industry when the FSA
commences consultation on a regulation regarding this retrospection process
in the autumn, is long overdue", says James Phillips, Business Development
Director at STB Systems Ltd, the UK's leading specialist in AML software.
With some 160 financial institutions as clients of its regulatory and compliance applications, STB has considerable industry expertise. Phillips
remarked "it is therefore no surprise that we have seen this coming. We often encounter financial institutions that acknowledge they are not aware if accounts on their books, many of which will have been opened before the introduction in 1994 of mandatory customer verification controls, may well belong to persons or corporations whose identity is not reliably known and
STB-Detector allows financial institutions to automate their customer due diligence controls. The product traps identity verification, recording what verifications the financial institution has performed and has on file, and stores these as documentation images. "Even before this important announcement from the FSA yesterday, we have been asked for and are able to provide search facilities for existing account holders versus bad-guy lists. To quote the FSA: 'you just can't have those time bombs ticking away in your portfolio', we are able to deal with this for our clients", added Phillips.
STB-Detector's Account Opening Due Diligence module - which can be applied both to existing customer re-documentation and retrospection projects - lends itself directly to industry-specific requirements: Phillips again commented on the FSA intention to consult on the introduction of a rule to move up the standards of customer identification across all sizes of financial institutions: "STB-Detector takes, as thresholds, the minimum verification standards stated in your risk-based policy, which will of course vary between investment banking, retail banking, equities trading and so on. These standards will also take into account the customer types involved and will automatically identify any customer account records without adequate verification. The beauty of this approach is that if the institution increases or changes its standards, and this will happen as regulatory pressure increases, then all accounts that breach new standards simply drop directly into exception reports. Customer documentation records may be sorted according to type of verification, expiry date, type of customer and so on, thus allowing any financial institution using this system to illustrate that they have bought-in to the approach the FSA is now clearly taking".
Phillips also reaffirmed the suitability of STB-Detector for clients seeking an all-round solution. "It is interesting to see that the "big 6" have also stated that re-confirming customer identity is only one part of a successful
AML strategy. We quite agree. They also believe strongly that ongoing monitoring of transactions is equally as important as strong KYC controls.
Again, the Account Behaviour functionality in STB-Detector is deliberately designed for this by monitoring automatically for unusual account activity.
In one package, therefore, we provide account behaviour monitoring and the
absolutely crucial controls of customer identity verification documentation
which today's FSA announcement make essential functionality for all financial institutions. The FSA has stated that whilst this is not a compulsory procedure, an argument that the bad guy became a customer of the financial institution before 1994 will be somewhat hard to sustain."
STB Systems Limited is one of the world's leading vendors of automated compliance reporting solutions for the financial markets. Founded in 1984,
STB is market leader in London, New York and Hong Kong. STB's solutions are designed to automate the presentation of critical controls that protect banking businesses, handling both internal and external reporting to satisfy relevant regulatory bodies. The company is one of just five approved by the Bank of England for electronic reporting.
STB's solutions control and consolidate multiple data sources. The use of
rules-based technology ensures a stable product, and allows for development
of new solutions quickly and efficiently to meet the constantly changing
demands of regulatory, management, risk and other compliance reporting.
STB's core competence has led to new products for its customers including
the development of an anti money-laundering system.