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#821550 - 09/24/07 04:21 PM AML System Data Integrity-FYI
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
I wanted to point out something I have noted at several banks in recent months in BSA/AML audits. Several of the banks used known AML systems but had major data integrity issues between the information in the AML system and that in their core banking system. One of the primary reasons was that not all transaction codes were accounted for and some transactions were being missed, transactions that affected the amount and number of cash transactions being picked up, which of course carries through to profiles, trends, totals for SARs, etc.

Another was that IT had made some system changes that did not consider impact on the AML system.

I recommend that you periodically check your data integrity by comparing several customers transaction detail, statements and AML system reports to make sure the numbers are consistent across all reports of the same data. Also double check your bank's transaction codes - start with the list of codes, not the transactions you think should be included. Make sure every one is accounted for.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#821568 - 09/24/07 04:31 PM Re: AML System Data Integrity-FYI Kathleen O. Blanchard
Hrothgar Geiger Offline
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Hrothgar Geiger
Joined: Jun 2005
Posts: 10,395
Jersey Shore
+1 for this advice!

We actively manage the 'fall-out' from feeds to our AML systems; customers that don't load, codes that don't match our tables, new transactions codes, even geo-codes.

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#821803 - 09/24/07 07:02 PM Re: AML System Data Integrity-FYI Hrothgar Geiger
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Good for you, sounds like a good process. I have been surprised at the transactions I have found not being picked up. Some were for large dollars and significantly skewed the system reports.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#821866 - 09/24/07 07:35 PM Re: AML System Data Integrity-FYI Kathleen O. Blanchard
FBH Offline
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FBH
Joined: Apr 2007
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The Land of Tax Free Shopping!
Another good practice is to be involved in changes to products, services, or hardware. I instituted a review level for changes to existing operations: The champion of the new application must document the impact on AML monitoing and reporting and have the AML Department review and sign of on it. A little bureaucratic, but hey - documentation saves!!
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#822913 - 09/25/07 08:11 PM Re: AML System Data Integrity-FYI FBH
TheQueen Offline
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Joined: Jun 2006
Posts: 85
CT
Would anyone happen to have an evaluation grid for an AML system? We currently have a system, but I am looking to formally document the effectiveness of the system.

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#823142 - 09/25/07 09:57 PM Re: AML System Data Integrity-FYI TheQueen
buggs Offline
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Data integrity can be a very difficult issue to get your hands around, especially if you have multiple interfaces from various systems.

You need be sure your AML compliance folks are involved in performing risk analysis on new products, services, acquisitions, and branch opening/closing projects. They also need to be involved with any project that impacts the AML system or a system that feeds data to the AML system.

It took a couple of years to finally identify and resolve our integrity issues. It was an expensive, difficult, and drawn out project.

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#823214 - 09/25/07 11:47 PM Re: AML System Data Integrity-FYI buggs
MagicCity Offline

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MagicCity
Joined: Apr 2003
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Fort Lauderdale, Florida
Thank you Kaybee for the heads up and guidance!
We were just talking about this issue and how to get our arms around it.
Great timing!

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#823247 - 09/26/07 07:27 AM Re: AML System Data Integrity-FYI MagicCity
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,293
It really is an important issue. If you read the Amex order, it was an issue there, so big that they stopped using a system.

One issue I saw involved vault cash and buying and selling of cash between tellers when a customer needed more cash than a teller had. It was a different tran code than a normal cash out and was not being picked up by the AML system.

Garbage in, garbage out!

I have recommended formal new product/new process approval processes for banks I have seen. BSA needs to be involved and processes should only move into production when all affected parties have signed off that it is a go.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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