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Financial CrimeMitigationAn award-winning solution that covers watch-list screening, anti-money laundering,fraud prevention, and KYC.Temenos Financial Crime Mitigation (FCM) solution enables banks of any size and inany region to protect their reputation, and their customers while avoiding regulatoryfines and loss, and improving throughput and optimizing TCO.

IntroductionTemenos award-winning Financial Crime Mitigation is a complete solution that coverswatch-list screening, anti-money laundering, fraud prevention, and KYC through a rangeof intelligent and flexible modules that seamlessly embed into any core system to ensurethe highest detection rates at the lowest costs. With more than 200 active clients, from theglobal tier 1 banks to smaller regional financial institutions, our complete FCM solution offerspre-packaged financial crime mitigation protection across all Temenos products and is alsoavailable standalone. Componentized, the product can be deployed in its entirety or partiallyto cover only specific business needs. Customers can then add capability as these needschange or evolve.25 yearsof experience in banking softwareand financial crime mitigation“Within the last two years using the financial crime tools from Temenos, wewere able to reduce our TCO by approximately 50%, followinga major project to identify our cost saving potential by identifying gaps,centralizing as much as we could and making use of our economies of scale.Peter Haener, Head of AML Monitoring and Surveillance Compliance“Temenos provides a specialist offering, evidenced with a strongmarket position, and should be considered by financial institutionslooking to review their financial crime solutions. 02

MarketBackgroundAs clients are rapidly moving from traditional to digital banking, more channels are beingadded to keep the client experience consistent and positive. Thus, banks are facing difficultiesin controlling all new access points exposing them to an increased risk of financial crimeand damaged reputation. According to the United Nations, an estimated 1.6 trillion islaundered globally through banks each year for criminal enterprises and terrorist activities.Compliance costs are rising, estimated to climb by 50% in the next five years. Since theGlobal Financial Crisis in 2008, fines to non-compliant banks exceed 320 billion, whileonly 1% of money laundering flows are intercepted. With the 99 percent of illicit financialflows going undetected, trust in banks is falling, prompting regulators to focus more and moreattention on them. There is plenty of room for improvement, and banks have already startedidentifying financial crime mitigation as one of their key priorities. Banks that invest will havethe advantage of protecting their reputation, long-term value and avoiding cost. Leveragingtechnological advanced solutions is mandatory for banks to quickly identify threats, rather thantrying to do so by adding more headcount.Counter terrorism financingFailure to connect across multiple systemsOne of the main weapons to combat terrorism istargeting finance. Alternative payment methods that hideboth users and transactions like virtual currencies are ofparticular appeal.By neglecting to view information across their myriadsystems, many financial institutions fail to identify criminalactivities as they are in progress (or even after theyhave occurred).A piecemeal approach to financial crimeCost cutting to the detriment of preventionMany organizations have financial crime systems for agiven task or coverage area however, these are oftenused in isolation offering a superficial yet functionallyinadequate layer of protection. Sophisticated criminalsexploit the gaps between these independently operatedsystems, often leveraging weakness in one channel to gainaccess to another.Viewed primarily as “cost centers”, fraud detection groups,and Financial Investigation Units (FIUs) are continuallyfacing budget cuts and staffing reductions. Yet as regulatorsincrease scrutiny on the financial industry, the number andamount of fines are growing precipitously. Customer trustand a frictionless user experience can also be seen as abusiness enabler, translating to bottom line benefits.Fines from sanctions breachesFraudThe extensive utilization of sanctions as a foreign policytool is on the rise. As a result, there is an increasing focus onbreaches which are resulting in increased fines to individualbanks (some running into US billions). Such fines are oftenaccompanied by a requirement for enhanced complianceto be carried out by the offending organization.Fraud costs the banking industry approximately 67billion per annum1. Using technology-enabled techniquesfraudulent attacks are becoming more sophisticated andtheir consequences more severe. Fraud can happen acrossmultiple accounts and jurisdictions. Being able to accuratelyidentify fraud in real-time, and before it occurs, is essentialin order to protect your customer’s assets and your brand.Trust is ever more critical in a digital banking world.1) Association of Certified Fraud Examiners 03

Financial CrimeFunctionality OverviewSuspicious ActivityPreventionReal Time and batch basedTransaction and BehaviouralMonitoring for fraudulenttransactions and precursorsto fraud activityProfileCore Banking(Temenos or other)Real Time and batch basedTransaction and BehaviouralMonitoring for suspectedmoney launderingactivitiesCustomer DataAccount DataReal Time TransactionsKnowCustomer (KC )Due Diligence& Risk ScoringScreenWatchlistScreening 04

Suspicious ActivityPreventionSuspicious Activity Prevention (SAP) is a pre-packaged real-time, online transaction monitoringsolution, highly efficient in identifying fraud.SAP uses a combination of AI-based sophisticatedalgorithms and expert business rules to block suspicioustransactions based on real-time behavioral analysis. Inthis way it allows clients to identify in real-time fraudulentand money laundering transactions as they occur. Ituniquely builds user and customer profiles to detect andstop suspicious transactions. Looking at attributes suchas balance, frequency, transaction amount, currency,and transaction type parameters can be combined andcompared to “usual behavior” or predefined patterns.The addition of Peer Group Identifier capability offers furtherassistance, by focusing the detection efforts on the highestrisk transactions. Specifically, the tool uses advancedstatistical analysis and machine learning to assess largequantities of data to build a unique financial ‘DNA’ for eachcustomer, it then compares their behavior to that of theirpeers. In this way, it enhances detection and reduces alerts.All this provides an essential function, the ability to stopsuspicious transactions before the funds are moved.The Suspicious Activity Prevention module monitors transactions in real-time to blocktransactions that are identified as suspicious.Suspicious Activity PreventionCore Banking System / Payments GatewayBatchReal nsactionsHistoricalTransactionsFraud Behavior analysisbased on historical dataBatchAlertsAuthorize/ BlocktransactionsEngineFraud DetectionRulesReal timeAlerts 05

ProfileProfile is a pre-packaged anti-money laundering solution.Profile provides web-enabled, end-to-end customerprofiling, and transaction monitoring which easilyintegrates into any core-banking platform. Full controlis also ensured through flexible configuration as well asan automatic report generator and customized reportingreducing your data mining costs. Profile’s processing anddetection engines are accurate, fast, easy to configure,and simple to use. It ensures clarity through comprehensivedashboards and reports.The Profile module creates alerts when current customer behavior differs from previousbehavior or is indicative of money laundering, matching reference patterns.ProfileCore Banking System / Payments GatewayBatchReal TimeCustomersAccountsKC statusLiveTransactionsHistoricalTransactionsAML Behavior analysisbased on historical dataAuthorize/ BlocktransactionsEngineBatchAlertsAML DetectionRulesReal timeAlertsRegulator 06

ScreenScreen protects your business by delivering industry-leading levels of detection and falsepositives at the lower costs.Using sophisticated algorithms, smart contextual whitelists,and robotic processes automation dramatically reducesoverheads and costs by reducing “false positive” alerts.Screen protects your business by screening your customersand all types of transactions against watch lists (includingsanctions). Its versatile, risk-based approach integrateslists from various sources; public, commercial or privateapplying geographical and business rules. Sophisticatedalgorithms and highly effective scanning methods deliverthe lowest rate of “false positive” alerts in the industrywithout compromising your detection rates. Screen’sflexible workflow framework allows you to define roles/access rights, context-based validation and 4, 6 or anynumber of review steps with the objective of operatorproductivity and accuracy. Screen provides additionalcomplementary features such as sophisticated wizards tofurther reduce false positives; a comprehensive solution forall your screening needs.Lowest rate of“false positive” alertsin the industryThe Screen module screens transactions and customers against sanctions and a bank’s own lists.ScreenCore Banking System / Payments GatewayReal-time Payments& Customer RecordsSanctions &PEP ListsStatus OK orpotential hitCustomer PEPStatusScreen EnginePotential hitConfirmation OKor true hitAuto alert evaluation using AAE module andManual alert evaluation by the compliance officer 07

KnowCustomerPlusKnowCustomer Plus (KC ) is a risk-based solution that allows banks to formalize informationand calculate risk based on customer attributes.A KYC solution that allows banks to formalize customers’information according to their risk profile. At the accountopening process, but also during the entire customerlife cycle, KYC workflow builder is using configurabledynamic forms to enable tailored questions to eachspecific profile. More thorough and advanced thanstandard KYC (Know Your Customer) solution it uses adetailed matrix including the status, range, and countsto calculate the risk based on customer’s attributes.The system offers the ability to add search criteriafilters or create, amend or delete assessments. It usesadvanced and fully configurable algorithms to calculatecompliance risk scores of new and existing customersbased on the customer profile. In this way, the systemprovides greater flexibility, accuracy, and control.The KC product allows a risk-based approach. The risk level calculation is flexible, automatic,and executed during the entire customer life cycle.KC Core Banking System / Payments GatewayRiskcalculationmatrixCustomer, Product &PEP Status InformationRisk LevelRisk calculation engine 08