Fiserv [NASDAQ: FISV]: A True Enterprise View of Risk

Jeffery Yabuki, President & CEO, FiservJeffery Yabuki, President & CEO Three years back, a global U.S. Customs Service investigation exposed the widespread use of insurance products for laundering by international drug traffickers. The investigation revealed that approximately 80 million dollars in drug money was laundered through insurance policies issued in various locations around the world. The traffickers often cashed out policies prematurely, despite penalties for the early withdrawals. The drug traffickers allegedly purchased more than 200 insurance policies through brokers, naming members of the group and family as beneficiaries. Policies were paid for using wire transfers and checks purchased with drug money.

In the current economy, insurance companies are largely exposed to risks, targeted by money launderers, fraudsters, and terrorists, as certain insurance products can be used to legalize the proceeds of crime. Local regulators as well as intergovernmental organizations like the Financial Action Task Force (FATF) have recognized this risk and required insurance firms and intermediaries to establish AML programs and file regulatory reports if any suspicious activity is found for annuity contracts, insurance policies, and any other insurance products with cash value or investment features. As a part of mitigating these risks, organizations need to be armed with technology-enabled solutions that help in meeting specific needs of insurance firms.

As a global risk management services provider, Fiserv’s fraud and Anti-Money Laundering (AML) compliance solutions deliver superior risk protection against fraud, money laundering, sanctions violations, and tax evasion. With their proven track record of providing AML solutions to insurance firms, Fiserv’s AML Risk Manager helps insurers to quickly and cost-effectively manage and adapt to the new challenges and help meet regulatory compliance requirements. “There are three dimensions of risk, i.e., compliance obligations, reputational, and the moral imperative risks. Firms need to ensure the customer data are protected as well as their financial integrity,” says Jeffery Yabuki, President and CEO at Fiserv. “Focusing on the triple risk dimensions, we look at the data through the lens of technology—analytics, and predictive models—assisting CIOs to manage risk and address any solvency requirement.”

As a global leader in financial risk management, Fiserv supports asset liability management, market risk, credit risk, liquidity risk, interest-rate risk, and funds transfer pricing capabilities to give organization a truly enterprise view of risk.

Assessing Risks

The company’s complete end-to-end AML Coverage for Life Insurance—AML Risk Manager helps life insurance firms and intermediaries in establishing a comprehensive risk-based AML strategy geared for the industry that encompasses of robust risk mitigation and regulatory reporting functionality.

The solution provides innovative strategies to monitor transactions and events involving policies, parties, and producers, based on known insurance money laundering scenarios—such as lump sum payments, early withdrawals, frequent address changes or high-risk payment methods. Built on the industry leadership in AML, FATCA, and Watch List Filtering, AML Risk Manager delivers powerful new analytics and visualization tools for real-time detection, investigation, and interdiction.

Focusing on the triple risk dimensions, we look at the data through the lens of technology— analytics, and predictive models

The financial crime risk management solutions from Fiserv empower financial institutions including insurance firms to quickly respond to new financial crime attacks by offering integrated capabilities to model, detect, and resolve risks in real-time, all residing on a common platform.

Risk Management at its Best

Fiserv’s Financial Crime Risk Management solutions— Payment Fraud Manager, Check Fraud Manager and Customer Risk Manager—can be deployed individually as best-in-class solutions or in combination for an enterprise approach, with a holistic view of a customer’s behavior and relationship. Whether used separately or together, these solutions provide innovative capabilities to support regulatory compliance and fraud prevention capabilities.

Payment Fraud Manager delivers real-time responses for Wire, ACH, SEPA and other emerging real-time payment networks using advanced analytics and scorecards to focus fraud investigators on the highest risk transactions. On the other hand, Check Fraud Manager incorporates predictive analytic models, signature analytics, and real-time decline capabilities for items presented at the teller window and via Remote Deposit Capture (RDC).

Furthermore, Customer Risk Manager provides customer-level profiling and risk scores based on predictive indicators and non-financial event information across the customer relationship. Organizations are able to detect relevant changes in a customer risk profile before a criminal has the opportunity to perform a financial transaction such as an Account Take Over (ATO). The Customer Risk Manager profiling and scoring can complement other fraud and compliance solutions to increase their effectiveness and reduce false positives.

One of the early adopters of Fiserv’s risk management system, Manulife—a Canadian based insurance firm and financial services provider—implemented a standard set of risk mitigation analytics that helped them address specific requirements in various locations. Starting with focusing on particular jurisdictions the client moved on to manage the potential risk of life insurance products successfully.

Innovative Risk Detection

As a part of uncovering insurance money laundering scenarios, AML Risk Manager provides innovative policy and party monitoring and detection.

For instance, when an unusual activity is detected, alerts are delivered directly to the desktop and ranked by risks so that the most suspicious alerts can be investigated first.

"A large part of our mission is to enable our clients to deliver financial technology solutions and customer experiences that enhance differentiation and build their businesses"

Alerts can easily be segmented based on the organizational structure, policies, and processes. For example, PEP matches can be forwarded to one group, while suspicious activity alerts are forwarded to another. The solution uses a unique combination of detection techniques including analytics, rules, behavioral profiling, peer group analysis, and list matching, designed specifically to identify insurance money laundering risks. This unique approach delivers highly accurate results minimizing the numbers of false positives the compliance team receives.

AML Risk Manager also monitors non-financial events such as change of address, change of beneficiary and early redemption/cancelation, as well as monitoring activity around relevant dates such as the end of the free-look period, the planned maturity date, and tax considerations. Intermediaries can also be monitored leveraging the solution’s peer group analysis capability to detect any abnormal broker or agent behavior. Further, AML Risk Manager scores each policy at policy acceptance and on an ongoing basis, so that high-risk customers are monitored more closely.

In addition, the solution’s list matching capability provides real-time or batch mode list screening and analysis for new and existing customers against standard or internal lists. All detections result in an alert that can either block a transaction immediately or mark it as high-risk for investigation and ongoing monitoring. At policy opening, the list matching functionality can be conducted in real time via Web services.

Safeguarding the Future

Fiserv is driving innovation in payments, processing services, risk and compliance, customer and channel management and insights and optimization, and leading the transformation of financial services technology to help their clients change the way financial services are delivered. While there are many tools that can manage distinct risk areas, very few can combine processes and crime areas for a consolidated, holistic view of risk prevention and management. Combining these processes directly impacts the bottom line, Fiserv helps institutions increase profitability and also gain a greater business insight into risk.

Based on the advanced analytics implemented in their solutions, Fiserv is today manifesting the experience and expertise that they derived from previous engagements. For the future, they want to continue investing in analytics and provide more visualization of relationships between financial advisors and customers to detect different types of financial crimes. “Our clients look to us to keep everything working together, delivering a high-performing, secure, and consistent user experience,” says Jeffery Yabuki, President and CEO, Fiserv. “A large part of our mission is to enable our clients to deliver financial technology solutions and customer experiences that enhance differentiation and build their businesses.”

- Eileen Singh
    March 02, 2017