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Anti-Money Laundering Mantas Solutions Paper

Words: 4625, Paragraphs: 45, Pages: 16

Paper type: Essay , Subject: Black Money

As an overview, Mantas began as a business unit focusing on meeting the demands Of an ever-changing global financial services industry. In the mid-sass, the Mantas team began work as a business unit of SARA International, Inc. Focusing from the start on meeting the needs of the global financial services industry the first Mantas products addressed trading compliance and best execution for the National Association of Securities Dealers(NASA) and Merrill Lynch.

Today, both systems remain in operation with the NASA Advanced Detection System monitoring every trade that goes through the NASDAQ and Merrill Lunch’s BEAMS helping that fire-l lead the industry in Best Execution evaluation. Recognizing the value this technology could provide, SARA International in readership with Safeguard Scientific, Inc. , a developer and operator of emerging infrastructure technology companies, spun-off Mantas, Inc. , in May 2001. In October 2003, Safeguard Scientific, Inc. NYSE: SAFE) made an additional investment in Mantas. This investment was directed towards continued global expansion and product advancement. ” Today, Mantas provides more than five thousand professionals in financial institutions worldwide with analytic applications that concentrate on risk management, performance management, fraud detection and operational analysis needs to improve business. The company primarily focuses on enterprise-wide anti-money laundering, surveillance and trading compliance software.

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Some Of the companies that Mantas provides its services to include: BAN Omar, Barclay Capital, Charles Schwab, Citibank and Merrill Lynch. These companies receive solutions that address their risk management, performance management, fraud detection and operational analysis needs. Mantas, Inc. Is a global software company that has developed a behavior detection technology that allows businesses to identify undiscovered risk and opportunity. They recently were honored in 2003 from Waters Magazine, for their Behavior Detection Platform, receiving the “Best Compliance Solution” award. The company has also been ranked as a leading compliance vendor in reports from Trouper, Client Communications and Butler Group. ” The Mantas steward programs acts as a starting point to improve business applications, It provides reliable protection in different areas such as: changes in regulatory culture, loss prevention applications that can expose unseen risks and losses, revenue generation applications that identify opportunities for institutions to increase revenues, improving customer attestation and reducing cost of sale. Room their website the services that Mantas provides include: Regulatory Compliance: Mantas Anti-Money Laundering Mantas Trading Compliance Mantas Broker Compliance Mantas Mutual Fund Compliance Mantas Advance Mantas Select Loss Prevention: Mantas Fraud Detection Mantas Operational Risk Analysis Revenue Generation: Mantas Client Assurance The behavior detection technology that Mantas provides to its different financial institutional clients is one of the industry’s most complete solutions for avoiding risk, surpassing regulatory requirements, and enhances client relationships.

The software is able to analyze the different behaviors of the people within a corporation. It starts with the customer, moving onto the employees and then finally to the corresponding partners in every transaction that takes place. It is able to do this without time constraints, letting its customers see the different trends and patterns for the past, present, and future. Being able to do this allows people using Mantas to analyze and sort through different decisions with accuracy and confidence.

Mantas allows its customers to fully understand their business increasing their ability to decide between Which risks ND opportunities they are willing to take. By making their product user friendly and the results easy to understand, Mantas has become one Of the industry’s leaders for compliance regulations and analytical data distribution. The amount of information that Mantas can handle is superb. For just one independent client they are able to process over one hundred billion fields of data on any given day.

In addition to their user friendly benefits, “Mantas Scenarios are already coded, tested, and ready to use, enabling customers to realize benefits much sooner than with other, more time-consuming alternatives. There is no learning take, or fuzzy-adaptive-black box scheme to run. We code it in right from the start because we understand the business and the business user. Mantas gives financial institutions and communications seer. ‘ice providers the ability to monitor and analyze customer, performance and transaction information across the entire organization for a complete and accurate picture of behaviors of interest.

As result, it’s now possible to detect suspect behavior early enough to mitigate risk, report and prioritize findings without manual intervention, comply with changing regulations, increase revenue by improving operations, and identifying up-sell and cross-sell opportunities. ” Using advanced knowledge and technology developed together with banking and brokerage experts, the services Mantas provides can collect and analyze transaction data, while then sorting through what is relevant and the information that is going to need a course of action.

This information allows their clients to be able to confidently assess what different areas throughout the entire organization are in need of improvement. Whether it is detecting suspicious behavior as in the forms Of money laundering, which this paper will further explore, or if is analyzing the different trends n the market, Mantas is able to report and prioritize its finding Without any manual intervention. “The Mantas technology platform utilizes multi-strategy data mining algorithms that detect patterns.

It is a Web-enabled, end-to-end solution that includes data preparation and transformation; data mining and pattern analysis; pattern detection and alert management; proven scalability; open architecture; and integration with ALARM and workflow tools. For brokerage firms: Mantas provides products addressing best execution, equities trading compliance, SEC disclosure, and anti-money laundering and fraud. For banks: Mantas offers products for anti-money laundering and fraud, including surveillance of wire transfers, checks and monetary instruments, and electronic/ Internet transactions.

For exchanges: Mantas provides products addressing market regulation and integrity, fraud, and customer relationship management The problem Money laundering is quite a large occurrence which happens with illegally earned money. Money which is received through illegal transactions such as illegal arms sales, trafficking of illegal narcotics, prostitution, illegal alien smuggling is sent through either legitimate businesses or banks to “clean” the money and not sake it questionable in the eyes of the public, and therefore in the eyes Of the United States government.

Without the large amounts of “dirty’ money which is later “cleaned” through laundering international organized crime would not be able to function. Even mentioned in a 1997 House Committee of International Relations meeting on the Threat Of International Organized Crime and Terrorism, Louise Shelley stated: “Transnational organized crime will proliferate in the next century because the crime groups are among the major beneficiaries of globalization.

Benefiting from increased travel, trade, telecommunications networks and computer links, they are well positioned for growth. The MIFF recently estimated that the proceeds of the drug trade now contribute 2% of the world’s economy. If the money from tax evasion and other illicit activity is added, the total is several times larger. Organized crime groups in the next century will control an even larger share to the world’s economy because the illicit share of the world’s economy grows annually.

Illegal businesses are highly profitable and remain untaxed. Two percent of the world’s economy is “dirty” money and that is quite a lot, also acting in that many places in the world are not financially in the best state that they could be. Some countries even profit from the illegal drugs produced in their country which are shipped out, used, and then the money which is gained through the sale of these illegal products is then laundered and funneled through many different mediums to make the money that was made seem legitimate.

Also in that same speech as previously stated, she also claimed: “International organized crime groups are the reverse of legitimate multi- national corporations. Most major multi-national corporations are based in the industrialized world and market to the developing world, whereas transnational organized crime groups are largely based in developing countries and market to the developed world. Extremely profitable, they are even harder to regulate than the multinational corporation Whose activities span countries, and their growth has been prolific.

Furthermore, the incentives for control are not there. Many countries lack economic alternatives and crime groups become dominant economic and political forces. Off-shore banking centers thrive in such settings, drawing money steadily from countries with powerful crime groups and eager tax evaders. High level corruption also impedes action against these groups. Lack of harmonize legislation and the absence of mutual legal assistance treaties make it impossible for foreign powers to effectively act against the crime groups.

There are three stages of money laundering: placement, laundering and layering, and integration Placement is the placing of the illegal funds in the financial system and can be done either directly or indirectly, Directly a person gives cash deposits or drops sealed bags off at the bank or financial institution. Indirectly the use of a front is used, basically a fake organization that sounds like a viable equines. From there the actual laundering occurs. The main idea is to break a paper trail or an audit trail, Vichy in essence could prohibit them from being found out.

Criminals would use many different transactions, bank accounts, institutions, and jurisdictions. The criminals would use many different banks and even use banks in different countries out of the main country that they are having illegal practices in. The actual integration Of the money cannot be related to its criminal origin and is even invested into legitimate and legal businesses and investments; this further launders the money because any profit made Off Of hose investments is clean.

Some more examples of money laundering situations are; misuse of a not for profit organization, informal money or value transfer systems, entry of illegal funds and layering of illegal funds into the securities sector. Setting up a company as a front is a well known way of money laundering and the use of false or stolen identities, or documents. This increasing problem in the United States and the world pressured computer programmers and software companies to develop and produce tort wide use a system that would monitor transactions and bring attention to any account or accounts that have questionable activity.

An example to this is, large amounts of money being deposited at any one time, or difference in consistence of money being deposited. Money that goes from being deposited weekly, from $1 SO to all of a sudden tens of thousands or hundreds of thousands of dollars would set off an alert in the system. Anti- Money Laundering systems have been used ever since the LISA Patriot Act in 2001, banks and brokerage firms have to file any suspicious activities with the government, or must meet the harsh penalties In most cases being a really large fine.

Any bank or firm that does not comply can be fined anywhere in the upward mount of SSL million. The agencies that were monitored also included all lending firms and Other financial institutions that deal with monetary transactions between multiple clients. Such things that raise a red flag to the systems are a customer’s employment history not matching their investment, large sums Of money being entered from this employee which is more then he or she has ever entered previously.

Large numbers of individuals depositing into the same one account also brings attention to the account, and from there on brings attention to the client who formed the account with the bank. The depositing of large amounts of money onto cash safes, at night, so that the person depositing the money does not have to deal with any of the staff that works at the bank or financial institute. The main global policy making body that controls the framework for anti- laundering is the Hannibal Action Task Force or FATE-.

They develop and research any threats and also get companies to update their systems according to their data that was picked up through the research, The FAT F develop and promote international policies to wage war against the large problem of illicit funds being laundered, The PATE makes constant reviews and recommendations; originally hey had 40 recommendations which were updated in 2003 and continue to be updated to make it relevant and reflect to the increasing sophistication of the launderers and then make increased requirements for all financial systems are needed to combat them Systems are based on these guidelines set by the PATE, and all Of the research that they have done in the field of the financial transactions.

These findings have made a difference in the production Of the software Which protects the computer systems of all the many companies and organizations that might have been under the threat of illegal occurrences. These more accurate programs further halt the money laundering that may have happened or is happening in a company. The laundering that might have happened in the past can be traced and the proper authorities will be informed. Money laundering being such a global problem has all financial institutions and banks around all working together. Information is shared and systems are constantly updated. In some cases the information that has been shared even makes the users to a particular system pay more attention to the certain aspect of the system.

These systems are an especially important factor in the discovery f money launderers and in essence larger criminal activity that is occurring around, domestic and global, Criminal organizations can also be found through tracing the hints given off by these anti-money laundering systems. There are many different systems all based off of these same requirements, CEO of Mantas; Simon Moss even described the people involved with money laundering operations as being “C probably better business people then we are”, from the assumption that every time a new security recommendation comes out the launderers are already on their way to finding another medium to launder he money. The money launderers always change what they do, keeping nothing a constant.

He later also says about the money launderers, that they “Shave assets at their disposal that essentially skim the financial institution, by being able to enter the market, say, in Asia, and exit the financial institution in Europe or in the IL. S. , or enter through a private banking relationship in one geography, but then exit through a brokerage relationship in another . Mantas has become possibly the set standard when comes to Anti-Money Laundering or ML Briefly, Mantas is a system which is easy to use and stays insistent with the information it receives. Some of the benefits reported from using this system include: comprehensive scenario coverage, advanced alert generation and workflow, customized thresholds and risk scoring, and enterprise-wide compliance .

As told on the official Mantas Anti-Money Laundering site; Comprehensive Scenario Coverage, where the clients realize greater protection with the Mantas system and faster time to compliance with Mantas’ industry-proven scenario libraries that provide comprehensive coverage of money laundering behaviors. These behaviors are known from past money laundering investigations, which ere entered into the library. Advanced Alert Generation and Workflow, is a patented analysis technique that detects key behaviors of interest which indicate money laundering, a good example of this is the connections and relationships between different accounts. The alerts also provide a plethora of business data and historical information relevant to the accounts, and finishes by securing a resolution.

The Customized Thresholds and Risk Scoring enables the financial institutions to shorten the investigation times and better manage risks to the system itself. In addition the user can also change the weightings for individuals r businesses to scrutinize activities because of certain suspicions. Enterprise. Wide Compliance, Mantas Anti-Money Laundering systems support all types of businesses in different geographical locations, with the same effectiveness throughout. The Solution Mantas offers a wide range of services, tools, and applications to more than 5,000 professionals worldwide to improve their businesses. Mantas was originally designed for the largest and most sophisticated financial institutions, but is now used by many smaller institutions as well.

All of Mantas’ services and applications ay be found in one package called the “Mantas Behavior Detection Platform” This platform serves as a foundation for an ever increasing set of business assurance applications. A firm or business may decide that they do not need the extra functions and applications that are in the platform; Mantas understands this and offers most of their products in separate forms as well. An example of a few of the other small products that Mantas offers includes: Mantas Loss Prevention, Mantas ONE, Mantas Advance, Mantas Select, Mantas Broker Compliance, Mantas Trading Compliance, Mantas Mutual Fund Compliance, Mantas Client Assurance, Mantas Case Management and Mantas Anti-Money Laundering.

The “Mantas Behavior Detection Platform” was a fifteen year long project that includes all Of the tools and applications that Mantas has to Offer. Every application is different and affects various aspects of the corporation or firm. During wartime, especially the war on terror, institutions have to become more aware of fraud and money laundering. The Mantas Anti-Money Laundering application helps regulators clamp down on loopholes in the systems that hackers, crackers, and even terrorists might abuse, This application is combined tit the entire behavior detection platform and is used to monitor accounts, customers, and correspondents across business systems for suspicious activities and possible money laundering.

Mantas’ platform takes a look into hidden relationships between accounts to find possible money laundering activity, These relationships are the key for how money laundering operates, and the platform will automatically highlight these relationships, Analysts will be alerted to the detected behaviors and they will be provided with the entire context of the business data and historical information o help them find a solution. The Mantas platform is very intelligent and is capable of being used internationally. The platform supports different market structures, monitoring across global markets and can accommodate characteristics of different exchanges and currencies. The platform is also configurable to meet the specific business requirements from each company.

Big corporations may have some personal requirements that include: discreet compliance jurisdictions, varying secrecy laws, and operational constraints. Money laundering typically operates across national boundaries and Mantas’ yester is capable of monitoring global operations that criminals may run. The Mantas system is derived from their use of “behavior detection technology,” (Pictured Above) This relatively new system is how Mantas is capable of detecting money laundering before, or as it actually happens. The technology allover companies to detect wrongdoing by finding suspicious patterns to behavior buried and hidden within all volumes to data. Criminals who use computers for money laundering crimes leave behind an electronic trail of data.

This data reveals the story of their fraud by recording many critical events. Poor example, deposits, withdrawals, wire transfers, account openings, changes in power of attorney, trades, orders and quotes can all be recorded and logged. Criminals often use separate entities to carry out their schemes, establishing accounts under different names using a variety of financial products such as insurance policies or securities, and employing different traders All of this data is captured and stored and analysts can backtrack to find out exactly how and when these events took place. Mantas helps distinguish the order in which the events took place, and this helps decide of the behavior is fraudulent or innocent.

According to Mantas-corn: “The key to behavior detection technology is its ability to identify suspicious events and entities that build over time, separate them from normal everyday events, and then to zero in on the wrongdoers. Without this sophisticated technology, is likely that many suspicious behaviors Will go undetected for long periods Of time or not be uncovered at all. ” There are many challenges that the behavior detection system must face. For instance, the chief challenge is the sheer volume of data that must be examined. The suspicious behavior in question almost always is composed of many events ND entities. Any single transaction in isolation may look normal, but it is only when the transactions are linked to all the other relevant transactions that it becomes suspicious.

For example, a trade by itself looks normal, but in the context to other trades it may become apparent that it is part to a market manipulation scheme, A hank account by itself looks normal, but when that saran account is linked to other accounts, a money laundering ring might be shown. The CEO of Mantas, Simon Moss explains more about the challenges in an interview by saying: “Regardless of size, banks face four challenges. Cultural – ML is seen in many institutions as a problem to be solved at the business unit or geography level. This is a fundamental mistake. Money laundering is a cross-geography, cross-branch and cross-business challenge. Regulatory – The lack of data and uniformity across the market will always lead to systemic weaknesses.

Training and Process – Technology is irrelevant if processes are not implemented and followed. Once these three challenges are addressed, a technology decision can be made. The result is better selection Of a solution, better ROI and better compliance. ‘ The system is so advanced that it is capable of finding suspicious events and entities that are buried in between millions of legitimate events and entities. It uses “relationship examination” between the events to find strange activity. The intelligent behavior detection system is able to choose which relationships to examine and which to filter out. This behavior system is forced to play a game of “cat and mouse” with criminals.

Once a criminal is caught by the system, they are forced to try a more sophisticated approach. In the same way, the Mantas system is forced to upgrade and update to find new measures to protection. First generation detection solutions have been part of the financial community for a long time. These solutions work by establishing a fixed rules-based threshold by analyzing how certain established usage scenarios comply within the Most financial institutions will establish a threshold based on a set of monetary value for each transaction, flagging any transaction over a certain level. There are three main areas where first generation systems had problems.

The first area is when transactions are below defined thresholds. This means that the system was unable to detect money laundering schemes f smaller amounts that may come in under an established threshold limit. An example Of this would be a criminal making several smaller deposits into several accounts instead of large deposits. The second area where problems arose was false positives. These are transactions over a set limit that are marked as suspicious but that do not represent any existing identified risk. These transactions caused Old systems to take focus Off Other transactions that might be a true money laundering risk. The third area is behavior profiling.

This is defined as the process where current industry information is used to profile and infirm certain patterns of suspicious laundering activity. An example of this would be comparing an electronic store to others in the industry. For example, all electronic stores’ sales usually drop during the spring but the system picked up one store that stayed the same and this became suspicious. This was not a very sophisticated method and federal regulations demanded more in depth and sophisticated information systems that are able to generate greater knowledge of the customer or user. Mantas has improved on the shortcomings associated with the first generation anti-money laundering systems.

The Mantas Anti-Money Laundering System has the ability to uncover suspicious financial activities by identifying the specific individuals or organizations that may be involved. This new system is able to learn and adapt, comprehending new money laundering schemes as they arise. The system takes an enterprise-wide approach, determining every transaction that is unusual as opposed to looking for a specific pattern or behavior while analyzing both the client profile and the transactions undertaken by the financial firm. Mantas’ system is made up Of four basic risk assessment components that ensure full disclosure and reporting necessary for compliance with the federal statutes. First the system looks at Client Risk Assessment.

This relates to accessing a wide variety of detailed information relating to the customer’s account. This is typically collected at the time the account is opened. Mantas’ system looks at every type of analytical activities that are part of the client’s profile. For example, the system will list all names of other individuals that are affiliated with the account, it will list high risk countries that are associated with the account, it will list the channels that are used by the account holder and actions of the branch office and it will also list business relationships that are associated with the account. Secondly, the new system will look at Transaction Risk Measurement.

This is when the system views transactions that are determined to be of a higher risk and can vary from organization to organization based on their lines and type of business. Poor example, the risks associated with transactions from a bank would be different from those associated with an insurance agency or a securities firm. These transactions fall into three categories: fund related behaviors, transaction elated behaviors, and miscellaneous behaviors. Fund related behaviors include transactions that generate receipts into the firm or payments made by the firm. Transaction related behaviors relate to behaviors where transaction values fall above specified limits and are apart from established internal guidelines that can pose higher levels of suspicious activity and risk of money laundering.

Miscellaneous behaviors refer to frequent changes in an account and activities that show movement of funds without a corresponding trade and the deposit of excess money into an account. The third component of the Mantas Anti. Money Laundering system is the behavior detection technology. Mantas has an entire platform of programs dedicated to this field, but it is also a big part in their ML system. This component manages the complex behavior that is commonly associated with money laundering schemes. This technology allows the firm or corporation to find suspicious patterns of behavior that may he hidden in between large volumes of financial data.

The main key to this technology is the ability to identity/ suspicious events and entities that are built over time; this is what separates them from normal every day events and transactions. The behavior detection technology consists of four main components: scenarios, thresholds, alerts, and look back periods. Scenarios are a combination of rules and conditions which define the transaction pattern that is being detected. Thresholds are triggers that inform officials to potential scenarios. Alerts are the discovery of actual fraud Alerts go off when there is a match of potential money laundering fraud. A look back period is a length of time monitored for a scenario in each run of the detection process.

The time that is logged is usually dependent on the type of behavior that is being monitored. The last component of Mantas’ system is Workflow and Reporting Tools. These tools aid financial institutions in the workflow and reporting process. They consist of case management, record keeping, and reporting. Case management provides an alert analysis workflow that is integrated with basic compliance reporting tools. Alerts that are generated from the Mantas Anti-Money Laundering System are pushed into these tools for further investigation. Most of the time, companies of firms alter these case management systems to be unique to their own standards.

Record keeping is the ability to remain in compliance tit federal laws that require the institutions to preserve their records for specific periods of time. This software allows scanning, imaging, indexing and electronic storage of the physical transaction documents, The software allows easy accessibility and retrieval tooth information. These documents are usually used to assist a money laundering investigation, The reporting features is an add-on feature for both the transaction monitoring and watch list filtering solutions that generate suspicious activity reports, and current transaction reports. Federal regulators typically use these to make customized reports during an investigation.

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