Exposing fraud

Northwest Federal Credit Union fights financial crime with SAS®

Fraud is a constant concern for the banking industry, and while the issue continues to plague both small and large institutions alike, anti-money laundering software is helping the financial services industry keep pace with the ever-changing and sophisticated fraudulent activity of criminals the world over.

Comparatively smaller than most banking institutions operating in the US today, Northwest Federal Credit Union (NWFCU) – a not-for-profit financial cooperative of 105,000 members, with assets in excess of $2 billion and five branch offices in northern Virginia and Washington, DC – makes fraud prevention a priority and uses analytical tools to combat financial crime on behalf of its membership.

Pinpointing crime
In the past, NWFCU had to generate a number of transactional reports that contained a large volume of detail each day and then manually comb through each transaction to identify possible fraudulent activity. Today, life’s a whole lot easier for the credit union now that it’s using SAS Anti-Money Laundering – part of the SAS Enterprise Financial Crimes Framework for Banking – to pinpoint suspicious activity and stop criminals in their tracks.

"We'd been looking for suspicious, fraud-related activity using manual reports and it was very labor intensive; we were very interested in an alternative to enhance and streamline the process," says Nancy Huntoon, Security and Fraud Manager and Bank Secrecy Act (BSA) Compliance Officer at NWFCU. "Our internal system did not generate alerts and we had daily, weekly and monthly raw data reports – basically, 50 to 100 pages of transactions to look over. It was very difficult to get through them each day.

"SAS Anti-Money Laundering has definitely been a huge asset for us from a process and efficiency standpoint; it's really made a world of difference. It crunches all the data and readily provides the fraud and money laundering scenarios and risk factors up front. It's helped us with our time management by identifying possible fraudulent activity or transactions, which allows us to focus more accurately on suspicious alerts. Now, our BSA Specialist can effectively review the new alerts and move on to monitoring case activities on a daily basis. In the past, it might have taken the specialist more than a day to just work through the large volume of transactional data."

Removing the guesswork
According to Huntoon, her team monitors a wide variety of fraud scenarios and risk factors – such as large cash withdrawals and deposits, wire transfers, the velocity of debit card activity and money structuring – and says the predefined scenarios and factors in the SAS solution helped the credit union adapt to the new system very quickly.

"We didn't exactly know where to start in analyzing our transactions, so we took the scenarios out of the box to start," she explains. "We've done a few tweaks to a couple of the scenarios, such as changing some dollar amount thresholds or time frames, and now that we are more comfortable with the application we review each scenario every six months just to make sure we're seeing what we need to review. From the standpoint of pinpointing certain activities, it has enabled us to further define what we actually need to look at, and how to categorize each activity. SAS has made it easier to pinpoint more indicators that we may not have seen before. It takes a lot of the guesswork out of the process and helps us catch things earlier to prevent potential fraud losses."

Establishing connections
To build upon the credit union's financial crimes capacity, Huntoon and her team are also building a householding process to analyze the relationships between member accounts, and the money that moves between them, to identify suspicious activity.

"The flexibility of SAS allows you to synthesize your analysis of transactions and prevent potential fraud," concludes Huntoon. "I like SAS' customer support structure and their availability. SAS was the best fit overall – from service to install to the actual application. The solution had most of what we needed; if it wasn't available, it was certainly programmable. There's a lot of flexibility."

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