The anonymity of digital currency transactions perfectly suits the criminal element. Are bitcoins and other cyber currencies a threat to our global financial system?
According to Economy Watch, Russia’s top exports are oil, natural gas, metals, timber and defense equipment. Unofficially, Russia and its Eastern European neighbors are making big business with a faster-growing export – fraud. And many of the fraud networks have been in business for years. Why can't we spot them and shut them down?
The USDA says known cases of food stamp fraud costs approximately US$1 billion per year. But it's impossible to know how much goes undetected. John Cassara, a former special agent for the Treasury Department’s Financial Crimes Enforcement Network, says the USDA should extend its use of analytics to include a hybrid approach that can "recognize fraud earlier in the process – and even stop it before it occurs."
Traditionally, insurers have relied on adjusters to flag cases for possible fraud. CNA and Allianz suspected they weren't catching all of the potential fraud - and they were right. The two insurers now have a higher detection rate because they rely on advanced analytics to automatically analyze claims and flag those that are questionable.
Economic capital is that something extra that senior management needs for staying financially afloat in tough economic times. Tara Skinner uses the tale of the Titantic to describe risk capital risk management best practices.
Data governance requires measurement and constant improvements of data quality. That’s a mountain of a job without clearly defined roles and responsibilities. This is the second in a series of risk management videos discussing risk management. In this installment, Peyman Mestchian, Managing Partner at Chartis Research, and Tom Kimner, Head of Americas Risk at SAS, talk about data governance and the need for specialized departments, technology and skills.
Peter Sofarelli, Director of Financial Services Sales at SAS, talked with Katie Sillo at Argyle Executive ForumSM. They discussed the advancements in analyzing portfolio risks and how banks are employing new technologies to keep up. Sofarelli says there's never been a better time to operationalize your corporate risk strategy into day-to-day business processes.
M-payment remittances are replacing traditional banks and money services that have historically charged high fees for small transfers. The advantages and pitfalls of these M-payments for law enforcement and financial services are many. Former US Treasury Special Agent John Cassara maps what he sees in the road ahead and gives advice for protecting your firm.
With CCAR, regulators will hold bank holding companies to more stringent standards for capital planning and stress testing. We asked our banking customers what their biggest struggles are with compliance and how they are addressing them.
Data management is a high priority for banks for several reasons - not the least of which is regulatory compliance. But developing the processes, instilling the culture and implementing the necessary technology is no small feat. Felix Liao from SAS says the effort will pay off in the long run. He says, "... a large portion of the compliance related data management requirements map well with traditional data governance capabilities." And that's just good business sense.
Terrorist and criminal organizations continue to raise funds through a wide range of criminal activities, and their financing efforts often prey on vulnerable government programs. This case study of a Hammoud terror cell shows how a hybrid analytic approach empowers government agencies and law enforcement to connect the dots.
Given recently enacted compliance laws like the Foreign Account Tax Compliance Act (FATCA ), there’s never been a better time to re-examine your current CDD processes and enabling technology. Automated analytical tools can help you accurately segment and identify customers by the risk they represent so you can monitor them appropriately and make the best use of investigative resources.
Trade-based money laundering can take many forms, from simple bartering to commodity exchanges. As long as the parties don’t get too greedy, they can go virtually undetected. John Cassara, former intelligence officer and Treasury Department special agent, invented the concept of Trade Transparency Units. Today, he talks about the value of analytics in countering trade-based money laundering.
In the first installment of our risk management video series, Peyman Mestchian, Managing Partner at Chartis Research, and Tom Kimner, Head of Americas Risk at SAS, discuss the principles and the questions the principles leave unanswered. For instance: How will the principles be implemented, executed and enforced? What kind of investments do you need to make? What is risk data?
Cybercrime is responsible for the loss of billions of dollars. Cybercriminals steal identities, hijack networks and access sensitive data. And the tools and techniques they use are continually evolving. What can you do to stop them? Minimize the risk?
Given the tightly regulated environment banks face today, the importance of data quality cannot be overstated. Beyond the obvious benefits of staying one step ahead of regulatory mandates, having accurate, integrated and transparent data will drive confident, proactive decisions to support a solid risk management foundation.
Today’s regulators now employ big data analytics to uncover troubles in the commodity swaps market. Staying ahead of innocent compliance errors – and quickly identifying the occasional bad actor from within – will require some tough analytics of your own.
No one wants his name associated with a global financial meltdown. Poor David Li. The misuse of his beautiful model contributed to the financial crisis that started in 2008. Model risk can never be eliminated, but Sunny Zhang believes there are at least three things modelers can do to help manage it.
For issuing banks, a critical aspect of controlling card fraud is CPP analysis. CPP analysis identifies the likely merchant location where card numbers were stolen, allowing banks to mitigate future fraud on other compromised cards.
Working together, agencies can harness the power of big data to understand the continuum of past, present and future – with a proactive focus on the future. Since the big data analytics foundation is available, there are no excuses. The mission of public health, safety and security, require us to take action.
Stress testing is not new to the risk world. But the increased complexity, expected frequency and firm-wide nature of scenarios present new challenges. That being said, to deliver a successful stress testing program, there are five key areas you should address.
John Cassara says that history has shown us that our efforts in anti-money laundering – following dirty money, identifying and taking away illicit proceeds, and punishing money launderers – is abysmal. What can we do to change this?
Credit risk classification systems have been in use for a long time, and with the advent of Basel II, those systems became the basis for banks’ capital adequacy calculations. What is needed going forward is an efficient and honest dialogue between regulators and investors on capitalization.
The speed and volume of information necessary for modern SIU analytical efforts has created a need for analysts with specialized skills. The skill set includes an ability to amass data from disparate sources and shape it into a format that helps identify, analyze, investigate, manage and understand fraud risk.
Last week's announcement by The European Banking Authority of its 2014 EU-wide stress test triggered an uproar of divergent opinions and criticism that will rumble for some time. This new methodology will profoundly impact how the European and global economies evolve.
How rigorous are you in determining membership eligibility? If you are not diligent enough, you may be letting money slip out the door. In fact, by some estimates, between 4 and 18 percent of all health plan benefits are paid out in error due to eligibility fraud issues.
Experts discuss the trends and technologies that affect how financial institutions handle the growing number of regulations and regulatory agencies. They answer the question of how data and analytics help.
Cyber marketplace. Digital bazaar. What do you call an underground shopping center of tutorials on fraud methods – hacking social media sites, obtaining anonymous bank accounts, trafficking in counterfeit currency and acquiring stolen credit card information? Law enforcement uses a combination of boots on the street and analytics to catch the cyber criminals – both “shoppers” and “store keepers.”
Across the world, law enforcement agencies are making more intensive use of data visualization technologies. They gain a real-time view of locations, layered with crime, traffic, geospatial, weather and other data. This means decisions are based on solid, robust data and resources allocated to guide intervention and crime prevention. Data visualization can make this possible for you too.
In the battle against cybercrime, it often seems that as soon as you've learned the ins and outs of one threat, another comes along that is twice as devilish. It's like running a 100 meter hurdle against an Olympian - and your hurdles are twice as high. Jen Dunham and Chris Smith discuss five hurdles you might be facing and how they think you can compete in that race.
The former leader of a successful and sophisticated fraud enterprise that operated in Southern California recently spoke to a group of leading fraud investigators in Florida about how he was able to steal so much money from them, who does it and why it's so easy.
Everyone leaves a data footprint behind to follow – bank accounts, travel patterns, phone records and online activity. That sounds useful. You could just sift through all of that to find the next terrorist. Right? Sounds good on paper, but that is a lot of data – really big data. The advantage of advanced analytics is that you don’t need to know what you’re looking for.
Trent Smith interviewed John Cassara about his book and what motivated him to write it. Cassara says he combined the things he learned as a former “street” agent with some of the things he’s learned from SAS. Cassara uses fiction to show some of the real challenges and dangers in terrorism financing.
Last week, the Basel Committee on Banking Supervision released the “Supervisory framework for measuring and controlling large exposures,” which provides a less strict definition of capital and revised formulas for measuring exposures and derivatives. What do you need to meet those changes?
Commonly used security tools are no match against a security hole like Heartbleed when data volumes are very high or a long timeline is involved. High-performance analytics is critical for the type of behavioral analysis you would need to detect this type of vulnerability. Jen Dunham explains how.
Media and industry information might lead to the assumption that most insurers are using predictive analytics for well-defined improvements in the claims arena. But after conducting research and interviews with insurance executives, The Gorman Group and SAS found this was not the case. Most insurers underuse predictive analytics in claims – and fail to get the full value from their claims data.
Banks use multiple models to meet a variety of regulations (such as CCAR and Basel III). With increased scrutiny on model risk, bankers must establish a model risk management program for regulatory compliance and business benefits. Begin the planning by clearly defining what a risk model is.
To contain costs, health care organizations are changing the way they pursue claims overpayment. Traditionally, the focus was mainly on fraud. But today - in a process more broadly labeled payment integrity - plans are seeking to uncover a wider range of abuse, waste and errors and data-driven analytics is making that possible.
Keep your eye on the ball: In this case, the ball is your data. There is so much data today – and coming from so many places – that it’s no longer feasible for you to keep that information in multiple places across your organization. Those silos are risky because what starts as a cyberattack can often lead to fraud or money laundering, which is difficult to detect when data is scattered everywhere.
Millions of people now use their mobile phones for banking – and hidden among them are criminals. “M-payments will be one of the next big laundering methodologies that we have to confront,” says John Cassara, who spent 26 years as a covert CIA case officer and US Treasury agent.
Stress tests work well to highlight hidden weaknesses in a risk management system, such as hidden “hot spots” in a portfolio under extremely negative market conditions. When constructing stress tests, keep these six guidelines in mind.
The real value in big data analytics is that you don’t have to know what you’re looking for before you start. This is a huge benefit to law enforcement agencies that are facing tighter budgets and scarcer resources.
In the past, financial services organizations and government agencies have looked at cybersecurity as an IT problem. Today we know that we have to look at it as a risk management problem. Situational awareness should be part of the broader risk management strategy because cybersecurity isn’t just an IT problem.
Mike McConnell, former US Director of National Intelligence, told the US Senate, “If the United States were at cyberwar, it would lose.” If that is even remotely true, cyberdefenders need to be outfitted with the most effective weapon for winning that war – analytics.
Today's police forces are focusing their efforts on preventative policing - making it harder for criminals to commit crime in the first place. To accomplish that they need information on time and in a format that helps them identify and recognize suspicious behavior and activities.
Why make analytics a part of your claims processing? Because adding analytics to the claims life cycle
can deliver a measurable ROI. Just a 1 percent improvement in the loss ratio for a $1 billion insurer is worth more than $7 million on the bottom line.
The 14 principles of BCBS 239 cover a lot of ground, ranging from IT infrastructure and governance arrangements, to the way that risk management departments generate ad hoc reports. Understanding the four underlying themes may aid in compliance.
“Illicit proceeds from crime are blood money, and blood money should have no place in the U.S. financial system.” That was the conclusion of a report released in April by the Senate Caucus on International Narcotics Control. The best defense against those illicit financial networks? Big data.
SAS can help you build an analytic platform for CCAR and stress testing. And the good news is that you can use the models you’ve already built. We plug your models into our solution to give you the scalability – and functionality – you need.
Social media channels were once seen as a quick and easy way to communicate. Today, they can be a powerful channel for active group psychology – powerful enough to overthrow governments. Law enforcement agencies can no long stand on the sidelines – but how do you sift the useful information from the mundane chatter?
Theoretically, CCAR submissions can be developed and submitted using your existing risk and finance infrastructure. But there are some challenges to that approach. An analytic solution that is built to facilitate collaboration between risk and finance can produce some significant technical and business benefits.
Jim Caldelmo says that banks need to apply analytics – the same powerful analytics platform used to track sales and marketing – to protect customers against financial crime. Caldelmo, Executive Director and Banking Secrecy Act Officer at Ally Financial, provides seven questions bankers should ask themselves to know if they have a solid financial crimes program.
The real 'value add' of applying high performance analytics to big data is that agencies don't need to know what they're looking for before they start. Instead, the analytical techniques will model the data and push information of interest back to users, drawing attention to relevant content.
Jen Dunham has a unique perspective on the challenges facing law enforcement and intelligence analysts. Dunham, a former intelligence analyst with the US Army, has held a TSSCI security clearance with numerous agencies supporting organizations such as FBI, DEA, NSA, CIA, NCTC, State Department, Department of Energy, and state and local law enforcement. In this video, she talks about today’s cybersecurity challenges and her ideas for addressing them.
When it comes to fraud investigation, historically the process has been anything but quick. James Ruotolo talks about the value of real-time insights for insurers and gives recommendations for when that speed is invaluable.
Underwriting fraud is a growing trend in the insurance industry, spanning across all lines of business and customers – from individual policyholders to large global organizations. Read about three common types and their remedies.
The newly released Basel III final rules for capital adequacy will pose a challenge for banks that aren't prepared. But banks that are prepared stand to gain real business benefits from these evolving regulations. So what constitutes being prepared? Tom Kimner, head of the Americas Risk Practice at SAS, weighs in on the three things you need.
In 2010, US legislators estimated that the Treasury loses as much as $100 billion annually to offshore tax non-compliance. Their response was to pass the Foreign Account Tax Compliance Act (FATCA). And the US response may only be the beginning. How do you get a handle on the information you need to be compliant?
Across the world, prisons perform a similar function – as places where individuals who have committed crimes can be confined and their movements and freedoms restricted. Gordon Harrison, talks about the systems that contribute to and quickly gather information about prisoners so that you can fulfill a duty of care to them, the staff and the community.
Mobile can fundamentally change the banking experience and strengthen customer-bank relationships. But those new payment methods are fueling a rush of cyber-attacks across the world. Ellen Joyner provides best practices to ensure collaboration between law enforcement and financial institutions - a critical component to protecting consumers’ money.
As a result of PPACA, the US health care system has been injected with millions of new consumers of health care services. This means more health care revenue potential and some new areas for real concern to health payers. Julie Malida writes about the top five areas of concern health payers should be on the lookout for in 2014.
Ten years ago, authorities were focused on dealing with complex, organized conspiracies. Those threats still exist but now we are also dealing with a new kind of terrorism, where individuals or small isolated groups carry out attacks in isolation. Joanne Taylor asks, "How can we deal with this new kind of terrorism, where individuals or small isolated groups carry out attacks in isolation.
Banks need a holistic view of their data in order to accurately detect risk. They also must overcome the challenges associated with poor data quality and the "noise" generated by existing control systems. Laura Hutton, Director of Banking and Solutions at SAS, explains how technologies can improve a bank's visibility into operational risk.
In the world of early-stage hedge funds, hedge fund managers are reluctant to share position-level data, because they don't want to reveal their strategies. That means that firms like Larch Lane Advisors must augment the limited data from these funds with information from hedge fund databases. And that's precisely why they chose SAS – for fast, reliable risk results from limited data.
Mobile is the fastest growing banking service, and the always-connected generation expects secure, on-the-go banking. But cybercriminals are also children of the digital age. And they are quick to find – and exploit – any weaknesses in these new technologies. Longitude Research conducted a survey to find out what cybersecurity challenges banks are facing.
By performing deeper analyses on data captured in-stream, and then injecting the results back into the business in real time, firms can better manage market risk, liquidity and counterparty credit risk during the trading day.
While government is, by no means, the only industry fighting fraud, government agencies face unique challenges. Join in discussions about the many ways analytics is driving change.
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