1 27 April 2004 CFS Division Day – New York Fraud, Money Laundering, Terrorism & Compliance in the Financial Services Industry Automated Solutions to an Integrated Problem

2 27 April 2004 CFS Division Day – New York Product Demonstrations  Patriot Act Connection (PAC) –One component of an integrated set of financial intelligence solutions for banks, thrifts, and credit unions.  Compliance EYE –Compliance EYE is a web-based (ASP) securities trade surveillance system

3 27 April 2004 CFS Division Day – New York The Components of the Problem FRAUD  Reputational Risk  Bottom Line Monetary Losses  Lawsuits  Prison –Before 9/11 few agency examination issues Fraud

4 27 April 2004 CFS Division Day – New York The Components of the Problem MONEY LAUNDERING  Reputational Risk  Lawsuits  Prison –Typically little or no money loss –Before 9/11 aimed at drug enforcement and tax evasion Fraud Money Laundering

5 27 April 2004 CFS Division Day – New York The Components of the Problem TERRORISM  Reputational Risk –9/11 –Not typical “hiding illegal money” laundering –Involved very small dollar amounts Fraud Money Laundering Fraud Money Laundering Terrorism

6 27 April 2004 CFS Division Day – New York Fraud USA PATRIOT Act The Components of the Problem COMPLIANCE  Reputational Risk  Compliance –Fines –Loss of charter –Loss of GLB powers –Multiple agency enforcement actions  Prison Money Laundering Bank Secrecy Act OFAC Terrorism

7 27 April 2004 CFS Division Day – New York Fraud, Money Laundering, Terrorism & Compliance: An Integrated Problem Fraud USA PATRIOT Act Money Laundering Bank Secrecy Act OFAC Terrorism That requires an integrated solution The CFS opportunity

8 27 April 2004 CFS Division Day – New York International in Scope Financial Action Task Force (FATF) on Money Laundering  Argentina  Australia  Austria  Belgium  Brazil  Canada  Denmark  European Commission  Finland  France  Germany  Greece  Gulf Co-operation Council  Hong Kong, China  Iceland  Ireland  Italy  Japan  Luxembourg  Mexico  Kingdom of the Netherlands  New Zealand  Norway  Portugal  Russian Federation  Singapore  South Africa  Spain  Sweden  Switzerland  Turkey  United Kingdom  United States Fraud USA PATRIOT Act Money Laundering Bank Secrecy Act OFAC Terrorism FATF The Egmont Group of Financial Intelligence Units

9 27 April 2004 CFS Division Day – New York BSI’s Financial Intelligence Solutions Integrated & End-to-End Pringle (Policies) Training CIP Checklist AML Software Risk Assessment Matrix ID Flag International Data Source Case Management Organization And Process Design Account Opening Transaction Processing Auditing And Reporting Account Closed Information Resources / CHQ

10 27 April 2004 CFS Division Day – New York BSI’s Financial Intelligence Solutions Overview Risk Management User Management Billing Automated Routing Case Management Core Processor Record Retention Fraud File System 1System 2 System 3 BANKBSIVendors Identity Verification Global hi-risk check Other (TBD) OFACFINCen AML Software Professional Services Resources and Tools

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22 27 April 2004 CFS Division Day – New York World-Check  A database containing the names of high-risk individuals and businesses (senior political figures, terrorists, money-launderers, etc.)  Covers the United States and 230 other countries  Over 400 institutions (from banks to government) use W-C to screen their customers for risk.  Concise profile provides information aliases, alternative name spellings, relationships and synopsis explaining why individual or business has been identified as high-risk (original sources provided as Includes links to source information for verification purposes  Virtually every sanction list, plus 100,000+ other sources, including law enforcement, regulatory actions, watchdog groups and international media

23 27 April 2004 CFS Division Day – New York Key Benefits  Improves efficiency of business account verification  Addresses fraud losses  Ensures consistency between business units  Multiple delivery options  Easy to use  Resources available to facilitate integration

24 27 April 2004 CFS Division Day – New York Compliance Tools for the Securities Market

25 27 April 2004 CFS Division Day – New York Source of Risk in Securities Compliance:  AML  Fraud  PATRIOT Act  Trade Irregularities

26 27 April 2004 CFS Division Day – New York SEC Rules Require Monitoring of Trades for:  Loss in Equity  Turnover Ratios  Cost-Equity Ratios  Transaction Suitability  Portfolio Suitability  Front-running  Discretionary Activity  Mutual Fund Switching  Approval Levels  Mutual Fund Breakpoints  Broker Risk Profiles  Spoofing

27 27 April 2004 CFS Division Day – New York CCH Wall Street Compliance EYE An integrated surveillance tool to monitor trade and trade-related data for compliance with all applicable regulatory requirements

28 27 April 2004 CFS Division Day – New York Compliance Officer CCH Wall Street 3 rd Party Data WSP Regs Compliance EYE OFAC Other Mutual Fund Data Clearing Firms Inefficient Use of Time CCH Wall Street Trade Surveillance and Case Management Growth Opportunity OMS Other firm data a/c infoSuitability criteria Manual Processes Increasing Workload Inconsistent Audit Terms Reactive, Not Proactive