Example Scenarios

Powerful ways Panoptic can protect your business

PANOPTIC IS A FORCE MULTIPLIER. IT ENABLES ORGANISATIONS TO ACHIEVE OPTIMAL COMPLIANCE WHILE REDUCING COMPLIANCE HEADCOUNT. READ ON FOR SOME EXAMPLE SCENARIOS AND SOLUTIONS.

Customer risk management

REAL TIME INTELLIGENT CUSTOMER RISK MONITORING: EXTERNAL RULE CHANGE

Challenge

A change to the external rules environment is announced. Owing to the discovery of widespread counterfeiting of photocard driving licences, starting six months after the date of the announcement driving licences will no longer be an acceptable form of identification for CDD purposes.

Solution

Panoptic stores detailed information concerning the CDD held for each customer, including type of document, expiry date and quality of copy. It can be set to reject a particular form of ID document from a given date, and to provide reminders leading up to that date.

Panoptic can instantly identify all customers relying on driving licences for identification purposes, delivering substantial savings on the compliance manpower which would otherwise be required to undertake this task.

Customer risk management

ANNUAL REVIEW AND RISK TREND REPORT: INCREASING THE TEMPO OF CUSTOMER REVIEWS

Challenge

Following an onsite inspection of Bank Y which revealed significant weaknesses in its AML systems and controls, the Bank is ordered by its regulator to review all customer files annually for AML purposes and to demonstrate that it is continually monitoring the risk which each customer poses.

Solution

Panoptic’s collection of all relevant data on a single platform – ranging from images of CDD documents to transaction records and call reports – together with its sophisticated reporting capabilities enable it to collate and present all the information required for an annual file review in a single PDF document, saving all the time which would otherwise be required to dig the relevant information out of disparate systems.

Because Panoptic monitors customer risk in real time in response to changes in the risk environment, transactional data and aging/suitability of CDD, it can show the risk trend over time for individual customers and the entire customer base, allowing users to see at a glance if things are moving in the right direction. It will also flag individual customers whose risk profiles have changed when the change occurs, rather than as part of the year-end review process, allowing Bank Y’s staff to react immediately to important developments in customer risk.

Customer risk management

RELATIONSHIP RISK MANAGEMENT: ADVERSE PRESS

Challenge

A report in the Wall Street Journal links wealthy businessman John Smith to bribery allegations. Bank Z has relationships with Mr Smith and numerous companies linked to him via complex ownership structures.

Bank Z’s chief risk officer asks for an urgent analysis of the totality of the Bank’s exposure to Mr Smith and the companies of which he is an ultimate beneficial owner.

Solution

The relationship risk functionality in Panoptic enables Bank Z’s head of compliance to view all relationships linked to Mr Smith instantly, together with their composite risk scores, and to produce a PDF report on all relevant relationships within moments of receiving the chief risk officer’s request.

Customer risk management

KEY TERM SEARCH: SANCTIONS

Challenge

Following an arms trafficking scandal, the United States Treasury’s Office of Foreign Assets Control (OFAC) imposes snap sanctions on a former Soviet Republic (Country X).

Financial institutions which wish to continue to have access to the US Dollar are ordered to cease business with all resident nationals of Country X with immediate effect.

 

Solution

Panoptic’s dynamic risk profiling tools allow the risk score of Country X to be increased with immediate flow-through to the risk profiles of customers with known connections to it.

The powerful keyword search functionality enables instant checking of all relevant fields, across all customers, for references to Country X, removing the need to manually search multiple systems holding different components of customer data.

COMPLIANCE/RISK MANAGEMENT

RISK REPORTING: TAKE INFORMED DECISIONS ON CUSTOMER REVIEWS INSTEAD OF RANDOM SAMPLING

Challenge

Bank A’s compliance staff aim to undertake second line internal reviews of one per cent of customer files annually to check that customer on-boading and annual reviews are being carried out in accordance with the compliance procedures manual. The vast majority of Bank A’s retail customer base are categorised as ‘standard risk’, and in selecting files for review, the compliance team has little alternative to random sampling.

While compliance are aware from previous sampling that procedures are not always being followed correctly by Bank A’s staff, they have not been able to identify which customer files are most at risk of sloppy handling and they don’t have the manpower to undertake second line reviews of every retail customer file. As a result, their random sampling process is the equivalent of searching for needles in a haystack.

Solution

Using Panoptic’s real time risk management software engine, Bank A’s compliance staff can instantly identify customer files which are non-compliant with the user-definable standards applied by Panoptic, including those which were compliant last year but are not any longer as a result of the expiry of CDD documentation, those in which the quality of recorded CDD is poor, or in which required approvals have not been obtained.

The compliance staff can retrieve all the necessary information themselves, and have available a complete log of who undertook what action on a given file when, enabling them to identify staff who are failing to meet the Bank’s standards and take appropriate action.

COMPLIANCE/RISK MANAGEMENT

GROUP RISK AND RISK TREND: INVESTMENT FUND SUBSCRIBERS

Challenge

Bank B has a customer relationship with a successful investment fund, Fund C, which has around two thousand individual subscribers. In the wake of a prominent scandal involving another investment fund being abused for money laundering purposes, Bank B’s board decides that the Bank’s risk rating of Fund C should include a risk rating of Fund C’s investors.

In monitoring the ongoing risk profile of Fund C, the key challenge for Bank B’s compliance staff lies in ensuring that the Fund’s overall risk rating remains responsive to changes in the risk profile in any of the Fund’s investors

Solution

Panoptic’s innovative Entity Group Risk functionality enables users to create groups of entities and monitor them collectively for risk management purposes. By using Entity Group Risk, in the event that the risk profile of one of Fund C’s investors increases sharply, Bank B’s staff will see an increase in the overall risk profile of their customer – Fund C.

In addition, Panoptic’s risk trend feature will allow Bank B’s staff to instantly view and analyse changes in Fund C’s risk profile over time, helping them to take smarter decisions during periodic reviews.

GOVERNANCE & REPORTING

SMART ALERTS: REAL TIME CUSTOMER RISK MANAGEMENT

Challenge

Bank D manages a customer base of over ten million legal and natural persons, with hundreds of thousands of new customers being on-boarded each year. Work by the Bank’s internal audit team has identified that relationship managers are not always following the Bank’s procedures when on-boarding customers: the correct KYC documentation is not being consistently obtained, and some PEP customers are not being submitted to more senior members of staff for approval prior to on-boarding.

Because Bank D is so large it is not feasible for compliance or the internal audit team to check every new business application before it is approved. Inevitably, some customers are being on-boarded without the documentation or approvals required by the Bank’s procedures having been obtained. Until now, such instances have only come to light in the course of random sampling undertaken years after the event by the internal audit team. By the time they have been identified, many of the staff concerned have left the Bank.

Solution

Panoptic can easily identify any existing relationships in which required documentation or approvals are absent. But it can also report on attempts to create new relationships which contravene Bank D’s policies, in real time.

Panoptic’s Smart Alerts can be configured to generate a message to a nominated user or users as soon as a defined compliance event has occurred. This will allow Bank D’s compliance staff to receive targeted instant alerts identifying any attempts to complete customer on-boarding without complying with the Bank’s procedures, enabling them to ensure that the Bank is protected from undue customer risk, and that staff who may require further training or disciplinary action are swiftly identified.

GOVERNANCE & REPORTING

ADVANCED REPORTING: EVIDENCE BASED BUSINESS RISK ASSESSMENT

Challenge

Bank E has been visited by its regulator and the Bank’s board have just received the regulator’s subsequent report. It is sharply critical of board governance of risk management; in particular the regulator noted that the board adopted a written Business Risk Assessment (BRA) three years ago and promised to keep it under regular review, but has not in fact reviewed or updated it since.

The regulator was particularly unimpressed to be told by a non-executive director during its visit that, in the absence of new information on the risks within the Bank’s customer base, it was difficult to see how or why the BRA should be updated.

The regulator has informed the Bank that it will be making a follow up visit in six months’ time, during which it wishes to see proof that the Bank is using an evidence-based process to drive refinements to its BRA, and that the Bank will be able to operate a dynamic, responsive BRA thereafter.

Solution

Panoptic’s real time risk monitoring and reporting software can provide the Bank’s board with automated reports showing the changes in risk profile of the Bank’s entire customer base, or of smaller sections of the business, on a daily basis if required. It can also identify trends in risk profile over time, allowing board members to see immediately and with complete accuracy how particular risks have evolved over, for example, the preceding quarter.

This enables the board to sensitise its BRA to growing and declining risks, and to demonstrate to the regulator that it has used solid evidence to inform the decisions that it has taken to amend (or not to amend) its Business Risk Assessment.