Bank regulators in Latvia have increased scrutiny on banks suspected of allowing money laundering, resulting in record fines and more bank audits. One of FICO’s customers, Norvik Banka, is taking an early lead in this fight, using the FICO® TONBELLER® Compliance Solutions to fight money laundering and financial crime.
“We had been using an in-house system to comply with Latvian regulations around money laundering, and based on the latest AML audit we ran a tender with global AML IT providers, of which FICO TONBELLER provided the best fit for our organization,” says Oliver Bramwell, Chairman of the Board at Norvik Banka, which has the country’s widest network of branches and finance and accounting groups. “The FICO TONBELLER system will allow us to improve transaction control significantly, enhance transaction transparency and decrease the bank’s operational risks.”
Mr Bramwell was interviewed for an article that appeared last week in Retail Banker International. He told RBI’s Patrick Brusnahan: “If you look back over the last 10-15 years, there have been quite a lot of negative reputational issues regarding Latvia as a money laundering centre for Eastern Europe. Obviously, we have close ties with Russia and Ukraine. This has been a major issue for the country.
“Based on the fact that Latvia wanted to become a member of the OECD, and with a general drive to clean up the banking sector with regards to AML issues it had seen, the whole state was driving to have much stricter AML regulation in the country. That was well advised by the OECD and the World Bank.”
Bramwell told RBI about the changes in the Latvian regulatory regime: “At the start of this year, there’s been significant change in the local regulation which is basically bringing up the banking system when it needs regulation to be one of, if not the strictest, the leading AML requirements for the banking industry and other market participants.
“Historically, the AML approach has been a risk-based one, as per leading global organisations’ requirements. The approach is now a smart risk-based approach. One of the key requirements of that is to establish a risk-scoring system which is now giving a much more detailed analysis and evaluation of the risk that each customer and their behaviour brings.”
The FICO® TONBELLER® Compliance Solutions enable Norvik Banka to use this kind of scoring system, which goes beyond simply evaluating a new customer. “Once they’ve had their initial scoring and we’ve established their risk ranking, the key is then to monitor that on a daily basis, based on their transactions, and to ensure that the score is not drifting too far from what you estimated it to be,” Bramwell told RBI. “This can lead to the basic score changing, which leads to multiple scenarios which would require the KYC team to work with the client to discuss whether this is a change in business behaviour or something suspicious that could lead to an AML report.”
Subscribers to Retail Banker International, a Timetric publication, can read the article here.