December, 2005

Automated Solutions for

Financial Crime Prevention

Presented by: Johnny Harb General Manager Haydrian MENA

Haydrian Confidential

AML Legislation and Enforcement

» National Strategy for AML & CFT

• Team Work between Government, Regulators, FIU, Police, Banks and Vendors

» Legislation

• Bank Secrecy Act –1986

• Financial Action Task Force (FATF) –1989

• US Patriot Act –2001

• EU 2nd & 3rd Money Laundering Directives – 2001- 5

» 101 Financial Intelligence Units

• FIUs Procedures and the EGMONT Group Guidelines

• Syrian and Lebanese Special Investigation Center (SIC)

Haydrian Confidential

Penalties for AML Non-Compliance

» Serious Regulatory Actions….

• Riggs Bank $25M

• AmSouth Bankcorp $50M

• Union Bank of Switzerland $100M

• Arab Bank $24M

• Bank of New York $38M

• Citibank, Japan, Branches shut down by FSA

Intensity of regulatory actions increasing.

What are Vendors doing in the AML/CFT Market?

Haydrian Confidential

Haydrian Expertise in Financial Systems

» H. Robert Heller – Formerly Chief Economist-BofA, IMF, Governor Federal Reserve Board, President-Visa International

» Tom Cleveland – Formerly SVP-BofA, Bank Founder, Federal Reserve Bank

» Martin Owen – Previous Head of the Financial Crime Policy Unit, UK Financial Services Authority

» Richard Gibbons – Formerly Chief Compliance Officer, Deutsche Bank Group, SEC Regulator, EU & FATF Advisor, IBM AML Expert

» John Parkey – Previously MicroSoft Program Manager, CEO of High Tech Companies, Recognized Technology Leader

» Dell Keehn – Formerly Investment Banker, CEO of Financial Companies

» Delmer Davis – Formerly IBM GM Financial Services-Asia & South America, CEO of Financial Technology Companies

Haydrian Confidential

Haydrian Corporation

» Global expertise in best-of-class financial solutions while leaders at:

» Headquartered in Bellevue, Washington. Offices in US, Latin America, Middle East, and Asia

» Founded to bring tailored, comprehensive compliance solutions to financial institutions

Introducing XM3

Haydrian Confidential

XM3 – Key Design Points

» Accuracy—lower false positives and false negatives, better information for management of both risk and the compliance process

» Flexibility—easily managed and extended as bank needs change

» Security—difficult to compromise the system but easy for senior management of the bank to control

» Low Cost—more efficient and productive AML monitoring and compliance with little IT support, low implementation cost, low price point

Haydrian Confidential

Management Selection

New Customers/Account Relationships (Flag and Monitor)

Business Type (Risk Rating)

Domestic and Foreign Correspondent Banks (Flag)

Bank private lists

Account History (History of Alerts)

Customers’ Net Worth – Liquid and Total – vs. Transactions

Location of Residence, Nationality

Identify High Focus Customers

Haydrian Confidential

Logical Entities - Uncover Hidden Relationships

Haydrian Confidential

PEER GROUP AVG

$3,000

$3,000

$6,000

$2,000

$4,000

INITIAL DECLARATION FOR ACTIVITY

$3000

$2000

$4,500

$275

$14,425

ACTUAL

WIRES IN $9,000

WIRES OUT $5,000

CASH DEPOSITS $10,000

ATM WITHDRAWALS $300

COMPOSITE BALANCE $10,700

Time Period: 30 days

Detection of Unusual Behavior

ACTUAL

INITIAL DECLARATION FOR ACTIVITY

PEER GROUP AVERAGE

HISTORICAL AVERAGE

HISTORICAL AVG

$5,000

$6,000

$7,000

$5,000

$4,000

Haydrian Confidential

Bank’s Custom White List

EU List

Central Bank List

OFAC List

Bank’s Custom Black List

Transaction/Customer Data

Scored Results

Example Usage, based on threshold specified by Financial Institution:

• Transaction Blocked

• Customer Risk Score Assigned

• Alert Generated

• Etc.

Other Lists

Watch List Management

Watch List Analysis

Haydrian Confidential

Watch List

Pattern Detection

Logical Entities

Historical Activity

Correlates All The Data Necessary for Speedy Analysis and Secure Resolutions

Haydrian Confidential

Transaction Alerts

Haydrian’s RISK MATRIX Approach

Pattern Detection

Peer Group

Account History

Known Scenarios

High Focus

Service Changes

Logical Entities

Watch List

23 41 55 42 Risk Score

Activity Across Multiple Transactions

Alert

92

KY

C

√√ √√

TRANSACTIONS

TR

AN

SA

CT

ION

12 8√√

Haydrian Confidential

Haydrian Case Manager

» Browser-Based User Friendly

» Risk-Weighted Prioritization

» Case Management Workflow

» Speeds/Simplifies investigation process

» Complete audit log available for internal and regulatory review

Automated Solutions for

Anti Money Laundering

Haydrian Corporation Confidential

XM3 Case Manager

Demonstration

Haydrian Confidential

Architecture and Data Flow

Bank’s Internal Financial Systems

Compliance TeamExecutive

Alert DistributionEmail, cell phone,

pager, fax

Data Input

Case Manager

Analytics

Data Store Rep

ort

ing

Se

rver

Web Interface

Haydrian Confidential

Two ways to deploy Haydrian solutions:

Application Service Provider

In-House Implementation

» Secure server environment

» Affordable and reliable solution

» Can easily grow as you do

» Compliance staff simply logs in

from their web browser

» No software or hardware to install

and maintain by your IT staff

» Rapid integration and deployment

Haydrian Confidential

XM3 Advantages

» Complete, comprehensive package

» On-line, browser-based Case Manager

» Customizable, selectable detection modules

» Low training, operational investment

» Local, fully-trained XM3 support

» Single all inclusive price

» Lowest total cost of ownership

Haydrian Confidential

The Haydrian Local Support Commitment

Haydrian Confidential

Haydrian Locations

Corporate Headquarters400 112th Ave NE, Ste 210

Bellevue, Washington 98004 USA

Tel: +1 425 635 4242

IndonesiaWisma 46 Kota BNI

16TH Floor Suite 1605Jalan Jendral Sudirman Kav. I

Jakarta 10220 IndonesiaTel: +62 21 251 5044

Haydrian MENAStephan Building

Banks StreetBeirut Downtown

LebanonTel: +961 (0)3 334 775

Pakistan920 9th Floor

IBM Technology TowerShahrah-e-FaisalKarachi, PakistanTel:92 21 278 5373

PanamaWorld Trade Center, 1 Piso

Area CommercialCalle 53, Marbella

Apartado Postal 0832-0588 WTC, Panama – Republica de Panama

Tel: +507 270 7094

SpainPaseo de la Castellana, 95

Torre Europa, 15th Floor28046 Madrid SpainTel: +34 91 418 6913

USA - MiamiWaterford Business Park5201 Blue Lagoon Drive

8th FloorMiami, Florida

33126 USATel: +1 954 9413