Tag Archives: Regulation

Risk & Compliance AML on AWS: Breaking Through the Compliance “Cloud Ceiling”

Plane flying through clouds
Oct022017

I predicted last year that in 2017 financial crime compliance would break through the “cloud ceiling,” and we are certainly seeing more and more organizations deploying AML and KYC technology in the cloud. This is why it’s important that the FICO® TONBELLER® Siron® Anti-Financial Crime Solutions has just achieved Amazon Web Services (AWS) Financial Services Competency status.

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Fraud & Security PSD2 – Why Customer Communications Are Key

PSD2 with question mark
Sep192017

As I discussed in a previous blog, consumers have not been extensively educated on the impact that PSD2 will have on them. Many of the outcomes of PSD2 will be positive – the Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs) will give people access to a range of new services that will help them to manage their money better and give them more flexibility in the payment providers they use. However, the fraud prevention measures that form an integral part of PSD2 will have a knock-on effect for consumers. In some instances, security checks will make initiating a payment more difficult and irritating. Sometimes the checks may even stop it. Poor Customer Management will Impact the Bottom Line We already know that introducing friction into customer transactions is viewed negatively. Many organisations consider losses to abandoned transactions as important or more important as losses to fraud. PSD2... [Read More]

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Fraud & Security PSD2 – Why is Transaction Risk Analysis Important for PSPs?

PSD2 with question mark
Sep042017

Worried about increasing levels of fraud, particularly in remote payments, the regulators have made fraud prevention a cornerstone of PSD2. The regulated use of Strong Customer Authentication (SCA) by payment service providers (PSPs) to secure payments is laid out in the Regulatory Technical Standards for PSD2. However, the use of SCA to secure every payment over €30 could cause problems for PSPs. It could impact the level of customer service they can offer by forcing them to add friction to the consumers’ payment process, forcing consumers to re-authenticate themselves using multiple factors at the point of payment. There is a difficult balancing act between fraud reduction and customer experience. PSPs will be allowed to manage this balance by securing payments using transaction risk analysis (TRA) – as long as they can keep their fraud rates low enough (see the transaction value table from the regulatory technical standard, below). TRA is... [Read More]

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Collections & Recovery Collectors: Don’t Let IFRS 9 Blindfold You

IFRS 9 on blindfold
Aug302017

There’s a clear pecking order when it comes to the IFRS 9 accounting standard that goes into effect in January. It’s an accounting standard, not a piece of banking regulation, so the hierarchy is Finance, Risk and then Collections. This makes sense, but for debt managers it will cause problems. It’s likely that many debt managers will be blind next year on how they can influence impairments. Here’s how things will happen. Your Finance team will talk to your organization’s accounting firm and auditors, and they will agree how IFRS 9 should be implemented. They will probably work your Risk department when it comes to preparing the predictive models that are required to determine expected loss under IFRS 9. Once that’s done, the rules for your organization will be binding. It’s unlikely that the Collections team will be part of the process. And if you’re in Collections, you might think... [Read More]

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Risk & Compliance Will CECL Be a Plus or Minus for Your Competitive Position?

Starting line of race
Aug292017

Whenever there’s a major change in standards looming, companies subject to it understandably go into heads-down mode, focusing on what they need to do to become compliant. Often, there’s an enormous challenge just getting to the start line—the point where the change is required standard practice. For help with reaching the starting line for CECL, the new current expected credit loss impairment model in the US, check out FICO’s just-published CECL Hot Topics Q&A. My colleague Lynda Woodward and I answer questions such as: What is the biggest difference in the change from incurred loss to expected loss? What if we don’t have sufficient data to estimate lifetime losses? There’s a lot of talk about increased volatility in allowance estimates under both CECL and IFRS 9. What are the main causes? Are there some hidden implications of CECL for customer experience and relationship building that I should be considering early... [Read More]

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