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SA set to stamp out money laundering

By Bill Hoggarth
Johannesburg, 15 Oct 2002

The new Financial Intelligence Centre Act (FICA) addresses money-laundering head-on for the first time in SA. Businesses having to comply with the new Act will welcome business intelligence software now available to help detect and report on suspicious transactions, as required by the Act.

SA plays a notorious role in the international money laundering scene. Finance minister Trevor Manuel recently estimated the amount of illegitimate money flowing through this country as between R2 billion and R8 billion, out of a total of approximately R600 billion.

The Financial Intelligence Centre Act of 2001, certain chapters of which recently came into operation, aims to crack down on money laundering. Certain bodies are now obliged to identify and verify their clients, and businesses have to report on suspicious transactions to the Financial Intelligence Centre.

"The Act seeks to identify the proceeds of unlawful activities, and combat money laundering," says Bill Hoggarth, managing director of SAS SA. "Through it, the government is telling business people they had better wake up to the new reality. They will now be imprisoned if they do not proactively report on unusual transactions which may indicate that money is being 'cleansed'."

The Act places an obligation on all employees - if they fail to report suspicious transactions they are liable for imprisonment of up to 15 years. It compels companies to identify current and new clients, and keep records of transactions and clients.

"On the whole, South African business is unprepared for this new legislation," says Hoggarth.

SAS, the leader in business intelligence, however, has been working in this field for a number of years and has the technology and expertise to help. The company can assist in detecting money laundering, and lower the costs associated with this detective work.

"We are in a unique position to provide an end-to-end solution to businesses and government alike, as they seek to enforce the stamping out of money laundering activity in SA," says Hoggarth.

SAS globally has recently announced an anti-money laundering solution which enables financial institutions to detect and report criminal financial activities more effectively, thus reducing risk, meeting government regulations, and protecting shareholder and consumer confidence.

"In SA, we are also working in close partnership with SITA to explore how government can best provide the technology required to both prevent, and report on, money laundering," says Hoggarth.

The anti-money laundering solution from SAS provides organisations with the ability to refine detection measures and logic to more accurately report exceptions throughout the enterprise. The capability to 'tune' the solution increases detection rates while reducing the number of false positives.

Alan Yong, research director, financial analytics for research house Aberdeen Group, describes the new offering as "very impressive. The comprehensive offering, built on SAS' leading analytical and data management technology, is a strategic application and a framework that can be tuned to satisfying other needs of financial services organisations, such as fraud and customer relationship management," he says.

The solution addresses an enterprise-wide risk management need in the financial services industry. Built on a banking-specific, integrated and open-ended architecture, the solution can gather information from different data sources, transform the appropriate data into useable knowledge, identify potential money laundering activity and report on the results.

The solution allows customers to modify and prioritise anti-money laundering detection logic. Organisations can use customised logic to track scores of suspicious transactions across many business units. Powerful and scalable advanced analytical models provide the intelligence to constantly refine existing business rules and to discover new ones to increase the accuracy of the automatic detection engine.

Analytics can also help weigh the severity of rules violations and rank suspicious behaviour, enabling more effective investigation efforts. Customer details are constantly reviewed against suspected criminals 'hot lists' issued by law enforcement agencies and other public information on suspicious organisations and individuals through regular cross-checking of the customer base, new customer files, and updated customer records.

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SAS

SAS provides software and services that enable customers to transform data from all areas of their business into intelligence. SAS solutions help organisations make better, more informed decisions and maximise customer, supplier, and organisational relationships. Solutions from SAS, the world's largest privately held software company, are used at more than 38 000 business, government and university sites around the world. Ninety-nine of the top 100 companies on the Fortune 500 - and 90% of the Fortune 500 overall - rely on SAS. For 25 years, SAS has been giving its customers The Power to Know. For more information, visit http://www.sas.com/sa.

Editorial contacts

Lianne Osterberger
Citigate Ballard King
(011) 804 4900
lianne@ballardking.co.za
Michelle Chettoa
SAS Institute
(011) 713 3400