Great steps for banks to check money-launderers

BANGALORE, INDIA: Globally, financial institutions and the banking sector have perpetually been under threat from money-launderers and criminals.

It is alarming that money-laundering flows are reported to be in excess of $1 trillion every year, primarily by drug dealers, arms traffickers and other criminals. And combating this issue continues to be a major challenge for the financial sector.

This is where Unisys, an information technology company providing IT services, software and technology that solve mission-critical problems for commercial organizations from across the world, steps in.

In an exclusive interview with CIOL, Unisys Asia-Pacific solution program director, Ian Selbie, throws light on the threats, counter measures and steps to tackle the issue, especially in the Indian context.

CIOL: What are the major security challenges faced by the Indian financial sector currently?

Selbie: The Indian banking industry has grown at a phenomenal pace over the last decade — at an average of 18 per cent compared to more than seven per cent GDP growth. At the same time, banking fraud and money-laundering activities have also been on the rise, with fraudulent documentation and identify theft high on the list of threats impacting all areas of banking.

While organizations are increasingly deploying various software solutions to detect fraud and money-laundering activities, these solutions may not cover the full range of threats or are often implemented for certain banking operations only.

Further, several banks still rely heavily on traditional methods, such as staff monitoring and sample review of transactions, which don't assure the end-to-end protection that banks require to guard themselves against such threats. The ability to monitor these activities in real time to prevent such fraud and the rapid deployment of counter measures is the need of the hour.

CIOL: How good are Indian institutions in dealing with these issues? What should be done to monitor and counter these issues?

Selbie: Post India's membership to the Financial Action Task Force (FATF), the focus on anti-money-laundering (AML) initiatives has increased. Further, the RBI has issued various guidelines to banks on reporting fraud and on the implementation of robust fraud detection and prevention systems.

In particular, as Web banking expands from Web and file transfer to mobile/smartphone and social media channels, the RBI recommends taking an integrated multi-channel approach to information, transactions and fraud, in order to lower costs and increase effectiveness.

It is imperative for financial institutions to deploy a comprehensive, cost-effective solution that is able to identify, detect and prevent attacks across multiple channels in real time.

CIOL: What are the international financial regulations that have a considerable bearing on the Indian financial sector?

Selbie: In the aftermath of the recent global financial crisis and given the rise in money-laundering and terrorist financing, regulation of the financial sector and benchmarking regulatory practices have assumed greater significance globally, and India is no exception.

As a member of the FATF, India has also accepted the enhanced responsibility of developing and implementing laws, regulations and other measures, to combat money-laundering, terrorist financing and other related threats to the international financial system.

India has also ratified the United Nations Convention Against Transnational Organized Crime and the U.N. Convention Against Corruption, besides constituting a financial stability and development council charged with facilitating inter-regulatory coordination to ensure compliance with the nation's international obligations.

CIOL: In what ways has Unisys customized its solutions to cater to the anti-money-laundering and fraud detection needs of its clients?

Selbie: We have developed certain customized solutions around AML and fraud detection to address the specialized needs of organizations based on their strategic imperatives. Our Fraud Detection and Anti-money-laundering solutions architecture spans products, channels, and regions to deliver a comprehensive intelligence solution — from advanced detection to investigation, response, and recovery. We provide clients with intelligence to control their defenses and make better informed decisions to create and maintain secure operations for their organizations.   

One of Unisys's solutions, Secure Document Delivery, ensures that the ever-increasing volume of business communication and documents are managed through e-mail in a manner that is safe, secure, and convenient for the receiver. This solution delivers rapid reduction in paper, production, and postage costs, and enhanced customer experience by revolutionizing how high-volume documents are delivered, responded to, or paid.

We also have a unique Identity Management solution that helps clients efficiently manage and audit user access to information systems, thus protecting valuable financial information and assets. The solution allows businesses to centrally manage digital user identities and is based on deep experience in designing, integrating and operating complete life-cycle identity management systems.

CIOL: Which are your solutions focused on the Indian market?

Selbie: Fraud and money-laundering are global issues, even if there are specific local regulatory requirements in individual countries. We draw on our expertise and best practice approaches gained from working with other financial institutions globally and here in Asia, including the Bank of Taiwan and DBS Singapore.

India is a very important market for Unisys to both serve our global client base. For instance, Unisys Global Sourcing India facilities and the specialized LEiDA team develop many of the security systems used globally across our clients and for local businesses, such as the Delhi International Airport and Air India.

Over the past two years, we have greatly expanded our investment in India as a global development centre. Our employee base in India now exceeds 4,000 and serves as the global development centre for our biometric, security and other leading solutions.