Safe Banking Systems (SBS), headquartered in Mineola, NY, has been thinking ahead of the risks to combat money laundering, terrorist financing, fraud, and other criminal activities for over 15 years. “Our innovative anti-money laundering (AML) solutions help financial and other organizations comply with OFAC, Bank Secrecy Act (BSA), USA PATRIOT Act and other regulatory mandates,” says David Schiffer, President and CEO, Safe Banking Systems. These regulations require institutions to conduct due diligence on their customers, determine which customers pose the highest risk and then mitigate this risk with ongoing monitoring. In the industry, this is referred to as Know Your Customer (KYC), Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD).
Our innovative anti-money laundering (AML) solutions help financial and other organizations comply with OFAC, Bank Secrecy Act (BSA), USA PATRIOT Act and other regulatory mandates
To keep pace with the ever-changing AML environment, emerging trends and technologies, SBS has made a significant investment in its own “think tank.” SaaS, big data and social media have influenced SBS’ research and product development. Their flagship offering, SAFE Advanced Solutions® integrates a number of unique components that provide actionable AML intelligence and a proven methodology for entity resolution. Name and address matching algorithms within an artificial intelligence engine are based on fuzzy logic. Two proprietary metrics measure the severity and probability of a matched pair of records. SBS holds a U.S. patent for SAFE Exposure Index®, its method of ranking politically exposed persons (PEPs) and other heightened risk persons and entities. The company combines this methodology with a probability alert scoring model, SAFE Strength Index, to deliver more accurate alert candidates that are prioritized according to their risk and likelihood of being true matches. These two metrics improve an institution’s operational efficiency by eliminating false negatives and dramatically reducing false positives.
Recognizing that sanctions, PEPs and REPs (Reputationally Exposed Persons) found in adverse media are not static information sources and entity resolution is not a static pursuit, SBS delivers a daily surveillance model that is better aligned to a world where customer and web information change constantly. This is a significant differentiator. “SBS provides clients with a dynamic solution that proactively identifies risk, leaving no stone unturned,” assures Schiffer. Using advanced link analysis SAFE Advanced Solutions digs deeper and broader into the hidden relationships found in a customer profile to uncover associates friends and family members who might also pose an elevated risk.
Regulators’ guidelines require banks and other institutions to take a risk-based approach by performing EDD on their pool of high-risk customers. SBS takes a more holistic view.
SBS’s methodologies are being used as the gold standard for gap analysis— where customer risk scoring and other applications in the market are measured against SBS’ results. “Being a smaller company gives us the advantage of being more flexible to adapt to new trends, new technology, and any new developments in our area of expertise and core competence,” points out Schiffer.
The real-world impact of SBS’ solutions and the actionable intelligence they provide can be seen in several high-profile cases. Several years ago, SBS identified six men in the publicly available Federal Aviation Administration’s Airmen Registry who retained their federal aviation licenses in spite of being suspected of crimes that posed a risk to national security. The FAA and TSA revoked these licenses within 24 hours of reading the news-breaking article in the New York Times. Subsequently, while working with the same FAA registry, SBS identified Fernando Melciades Zevallos Gonzales, the founder and owner of one of the largest airlines in Peru.
Although in prison on drug trafficking and money laundering charges, Zevallos still maintained a valid FAA pilot’s license. While documenting the activities of the Zevallos organization, SBS’ advanced link analysis exposed Stephen A. Freeman, the legal and financial business representative of Zevallos, a significant position within the organization. A seemingly innocuous client with accounts in two reputable financial institutions, Freeman did not raise any red flags despite his involvement in a $500 million money laundering scheme. Demonstrating the critical role of link analysis to find close associates and other relationships, two of Freeman’s law partners were subsequently found in another institution. “You showed us the risk we didn’t know we had,” extols one of SBS’s clients.
The combination of humans and technology enables SBS to uncover anomalies in data and identify hidden risk. SBS’ SAFE Forensic Analysis leverages the expertise of the company’s investigative professionals and advanced technology to identify hidden links, relationships and cultural factors in an institution’s customer population.
The next phase for SBS is further exploration of Information as a Service and social media to ensure greater efficiencies and entity resolution.
“Terrorists, drug kingpins, fraudsters, criminals and money launderers will continue to challenge the status quo. Regulators, financial institutions and technology companies need to work together to identify bad actors, take preemptive action and stay one step ahead,” wraps up Schiffer.