This approach is based on the classification of customers into risk categories in order to trigger additional clarifications for business relationships or transactions that have an increased risk. ZKB has defined the following standards:

Know Your Customer:
creation of risk categories, preparation of a customer profile in order to obtain background information on a business relationship
Know Your Transaction:
evaluations and analyses of transactions
Know Your Process:
defined workflows, review of the monitoring of risk customers and transactions

Task: Creation of Risk Categories, Focusing on relevant Cases, Reduction in the Number of Clarifications

The main motivation behind the optimization of the own software solution was to implement the SFBC regulations on a targeted basis. Previously the evaluation of transactions had concentrated on the review of limits and domicile risks. The risk classification and the automatic activation of integrated processes was lacking. By virtue of the high number of clarifications the sensitivity vis-à-vis the reported transactions was also reduced. Therefore the objective of our efforts was to concentrate on the actual relevant hits.

MLDS: Monitoring, Clarification and Workflow as an integrated Solution

The MLDS software solution provides an electronic analysis and evaluation of risks that can arise on a new or existing customer relationship. A glance at the transaction history enables an individual analysis of any special features to be made. Furthermore, a check is made as to whether risk countries are involved, either in relation to the domicile or the nationality of the customer, the origin and target countries of the transactions or the location of the business activities of companies. Approx. 20 criteria are applied to existing customers to determine business relationships that have an increased legal and reputation risks. The evaluation is performed on a periodic basis.
An unusual transaction or transaction type systematically triggers defined activities to be performed by the persons involved (customer advisor and his superior), for example, the processing of suspicious cases and their historicization.

Result: Transparency and clearly reduced Processing Costs

Matthias Huber, project leader at ZKB and responsible for the integration of MLDS, explains: "We were not making any progress by generating reports and creating huge amounts of data. We considered it more important to weight risks and to initiate clarifications. From this basic concept the requirements for the "Electronic transaction monitoring/implementation of the SFBC money laundering regulation" were specified. Twelve solutions of different suppliers were evaluated.

A modeled Business Logic creates Transparency and Comparability

The Visual Rules rule technology is the basis on which the risk categorization was buildt. Rule trees modeled in graphical form represent the business process logic with the corresponding decision reasons.

The primary benefit of this transparent structure is that the reasons underlying the risk classification and the transaction analysis are clear and can be manually changed taking into account the dual to triple control principle defined in the workflow. In addition the MLDS simulation options allow the rule trees to be efficiently optimized prior to their activation.