U.S. patent application number 13/326509 was filed with the patent office on 2012-11-08 for automated political risk management.
Invention is credited to David Lawrence.
Application Number | 20120284186 13/326509 |
Document ID | / |
Family ID | 25095029 |
Filed Date | 2012-11-08 |
United States Patent
Application |
20120284186 |
Kind Code |
A1 |
Lawrence; David |
November 8, 2012 |
Automated Political Risk Management
Abstract
A risk management method and system for facilitating analysis
and quantification of risk associated with politically exposed
persons is disclosed. A computerized political risk management
system maintains a database relating individuals to politically
sensitive positions and world events. A rating system is used to
assess risk based upon criteria such as a position held, historical
data and/or interpretation of world events. The system can generate
a risk quotient or other rating based upon a weighted algorithm
applied to the criteria. The risk quotient is indicative of risk
associated with an account. Actions commensurate with a risk
quotient can be presented to an institution to help the institution
properly manage risk associated with a politically exposed person.
A log or other stored history can be created such that utilization
of the system can mitigate adverse effects relating to a
problematic account.
Inventors: |
Lawrence; David; (New York,
NY) |
Family ID: |
25095029 |
Appl. No.: |
13/326509 |
Filed: |
December 15, 2011 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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12698896 |
Feb 2, 2010 |
8099357 |
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13326509 |
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11672373 |
Feb 7, 2007 |
7711637 |
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12698896 |
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09772427 |
Jan 30, 2001 |
7181428 |
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11672373 |
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Current U.S.
Class: |
705/44 ;
705/39 |
Current CPC
Class: |
G06Q 20/403 20130101;
G06Q 40/00 20130101; G06Q 10/067 20130101; G06Q 20/04 20130101;
G06Q 40/08 20130101; G06Q 40/025 20130101; G06Q 20/4016
20130101 |
Class at
Publication: |
705/44 ;
705/39 |
International
Class: |
G06Q 40/00 20120101
G06Q040/00 |
Claims
1. (canceled)
2. A processor-implemented method for managing risk comprising:
receiving, periodically, data relating to a politically exposed
account holder of a financial institution, the data affecting the
political exposure of the account holder; receiving information
relating to a financial transaction involving the politically
exposed account holder; structuring the data and the information
according to political risk quotient criteria; calculating, via a
processor, a political risk quotient for the financial transaction
based on the structured data and information; and generating a
suggested action related to the financial transaction based on the
political risk quotient for the financial transaction.
3. The processor-implemented method of claim 2, wherein the
political risk quotient is generated in real-time.
4. The processor-implemented method of claim 2, further comprising:
creating a record comprising the political risk quotient and
actions taken; and providing the record to a compliance entity.
5. The processor-implemented method of claim 2, further comprising
calculating a mean political risk quotient associated with the
financial institution through an analysis of a plurality of
political risk quotients; and determining a level of risk
associated with the financial institution based on the mean
political risk quotient.
6. The processor-implemented method of claim 2, wherein the
suggested action is one of: generating an alert, blocking
acceptance of the transaction, creating a report, and notifying a
compliance department.
7. The processor-implemented method of claim 6, wherein the
suggested action comprises blocking acceptance of the transaction
when the political risk quotient reaches or exceeds a predetermined
political risk quotient threshold.
8. The processor-implemented method of claim 2, wherein the
political risk criteria comprises a position held by the account
holder, a country in which the position is held, how long the
position has been held, a strength of the position, a veracity of
previous dealings with person from the country, and a propensity of
people in similar positions to engage in unlawful or unethical
transactions.
9. The processor-implemented method of claim 2, further comprising
calculating an average political risk quotient associated with the
financial institution through an analysis of a plurality of
political risk quotients; determining a level of risk associated
with the financial institution based on the average political risk
quotient; and applying a rating for the financial institution based
on the level of risk associated with the financial institution.
10. The processor-implemented method of claim 2, wherein the
structured data and information comprises a plurality of political
risk categories, and wherein the political risk quotient is further
calculated based on weights applied to each of the plurality of
political risk categories.
11. The processor-implemented method of claim 2, wherein generating
the suggested action related to the financial transaction further
comprises comparing the political risk quotient with a risk
quotient threshold to determine the suggested action related to the
financial transaction.
12. A system for managing risk comprising: a memory; a processor
disposed in communication with the memory, and configured to issue
a plurality of processing instructions stored in the memory,
wherein the processor issued instructions to: receive,
periodically, data relating to a politically exposed account holder
of a financial institution, the data affecting the political
exposure of the account holder; receive information relating to a
financial transaction involving the politically exposed account
holder; structure the data and the information according to
political risk quotient criteria; calculate a political risk
quotient for the financial transaction based on the structured data
and information; and generate a suggested action related to the
financial transaction based on the political risk quotient for the
financial transaction.
13. The system of claim 12, wherein the processor issues
instructions to: calculate an average political risk quotient
associated with the financial institution through an analysis of a
plurality of political risk quotients; and determine a level of
risk associated with the financial institution based on the average
political risk quotient.
14. The system of claim 12, wherein the instruction to generate the
suggested action related to the financial transaction further
comprises instructions to compare the political risk quotient with
a risk quotient threshold to determine the suggested action related
to the financial transaction.
15. The system of claim 12, wherein the processor issues
instructions to: store the political risk quotient for the
financial transaction and actions taken; and create a record
comprising the political risk quotient and actions taken.
16. A processor-implemented method for managing risk, the method
comprising: receiving structured financial transaction data
relating to at least one financial transaction, the financial
transaction data structured according to political risk criteria;
calculating, via a processor, a political risk quotient for each of
the at least one financial transactions based on the structured
financial transaction data; calculating an overall political risk
quotient associated with a financial institution through an
analysis of the political risk quotients; generating one or more
reports related to the political risk quotient associated with the
financial institution.
17. The processor implemented method of claim 16, further
comprising: generating, based on the overall political risk
quotient associated with the financial institution, a suggested
action regarding the financial institution.
18. The processor implemented method of claim 16, wherein the
structured data comprises a plurality of political risk categories,
and wherein the political risk quotient calculated for each of the
at least one financial transactions is further calculated based on
weights applied to each of the plurality of political risk
categories.
19. The processor-implemented method of claim 16, further
comprising presenting the one or more reports to a compliance
entity.
20. The processor-implemented method of claim 16, wherein the one
or more reports comprise an aggregation of the political risk
quotients, a mean of the political risk quotients, and an average
of the political risk quotients.
21. The processor-implemented method of claim 16, wherein the
financial transaction data includes data identifying a participant
in a financial transaction, wherein the method further comprises
determining that the participant is a politically identified person
based on the status of the participant.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] This application is a continuation of, and claims benefit of
and priority to U.S. patent application Ser. No. 09/772,427
entitled "Automated Political Risk Management" filed Jan. 30,
2001.
BACKGROUND
[0002] This invention relates generally to a method and system for
facilitating the identification, investigation, assessment and
management of legal, regulatory financial and reputational risks
("risks"). In particular, the present invention relates to a
computerized system and method for banks and non-bank financial
institutions to manage risks associated with maintaining investment
accounts for a politically identified person (PIP).
[0003] Risk associated with maintaining an investment account can
include factors associated with financial risk, legal risk,
regulatory risk and reputational risk. Financial risk includes
factors indicative of monetary costs that the financial institution
may be exposed to as a result of opening a particular account
and/or transacting business with a particular client. Monetary
costs can be related to fines, forfeitures, cost to defend an
adverse position, or other related potential sources of expense.
Regulatory risk includes factors that may cause the financial
institution to be in violation of rules put forth by a regulatory
agency such as the Securities and Exchange Commission (SEC).
Reputational risk relates to harm that a financial institution may
suffer regarding its professional standing in the industry. A
financial institution can suffer from being associated with a
situation that may be interpreted as contrary to an image of
honesty and forthrightness.
[0004] Risk associated with an account for a PIP can be greatly
increased due to the nature of a position held by the PIP along
with the power and knowledge associated with that position. PIPs
can include an elected official, a bureaucrat, a political
appointee, a World Bank Official, a military person, or other
individual associated with a sovereign power or international
organization. In addition, a PIP can be a person who holds a
position in the private sector wherein the position is associated
with politically sensitive influences. As part of due diligence
associated with managing financial accounts, it is imperative for a
financial institution to "Know their Customer" including such
attributes as a position held by the customer and the magnitude of
risk associated with that position.
[0005] Compliance officers and other financial institution
personnel typically have few resources available to assist them
with the identification of present or potential risks associated
with a particular investment or trading account associated with a
PIP. Risk can be multifaceted and far reaching. The amount of
information that needs to be considered to evaluate whether an
individual is a PIP, and whether a particular PIP poses a
significant risk, is substantial, if not overwhelming. A
multi-agency working group drawn from the U.S. Justice and Treasury
Departments and various federal agencies issued guidelines to meet
the perceived threat arising from the transmission of the proceeds
of foreign political corruption to U.S. financial institutions.
These guidelines are designed to counsel banks, broker-dealers, and
other financial institutions on their obligations with regard to
funds that appear to be related to the theft of sovereign assets by
foreign political leaders. The guidelines follow in the wake of
embarrassing disclosures relating to the transmission of funds to
U.S. financial institutions by a long list of foreign leaders
including the Marcos family of the Philippines, Raul Salinas of
Mexico, and General Abacha of Nigeria.
[0006] However, financial institutions do not have available a
mechanism which can provide real time assistance to assess a risk
factor associated with a PIP, or otherwise qualitatively manage
such risk. In the event of investment problems, it is often
difficult to quantify to regulatory bodies, shareholders,
newspapers and/or other interested parties, the diligence exercised
by the financial institution to properly identify and respond to
risk factors. Absent a means to quantify good business practices
and diligent efforts to contain risk, a financial institution may
appear to be negligent in some respect.
[0007] While the guidelines offered by the U.S. federal government
are only advisory and therefore not a law, rule or regulation,
according to the guidelines, deficiencies in a financial
institution's anti-money laundering controls may prompt a regulator
to require that the guidance be integrated into the institutions
policies and procedures.
[0008] What is needed is a method and system to assist with risk
management and due diligence related to financial accounts
associated with a PIP. A new method and system should anticipate
offering guidance to personnel who interact with clients and help
the personnel identify PIP. In addition, it should be situated to
convey risk information to a compliance department and be able to
demonstrate to regulators that a financial institution has met
standards relating to risk containment.
SUMMARY
[0009] Accordingly, the present invention provides a risk
management method and system for facilitating analysis and
quantification of risk associated with politically exposed persons.
An automated political risk management system maintains a database
relating individuals to politically sensitive positions and world
events. A rating system is used to assess risk based upon criteria
such as a position held, historical data and/or interpretation of
world events. The system can generate a risk quotient or other
rating based upon a weighted algorithm applied to the criteria,
wherein the risk quotient is indicative of risk associated with an
account. The quotient can be monitored on a periodic basis, during
the course of transactions, upon account opening or on demand.
Actions commensurate with a risk quotient can be presented to a
financial institution to help the institution properly manage risk
associated with a PIP.
[0010] A log or other stored history can be created such that
utilization of the system can mitigate adverse effects relating to
a problematic account. Mitigation can be accomplished by
demonstrating to regulatory bodies, shareholders, news media and
other interested parties that corporate governance is being
addressed through tangible risk management processes. An
implementing institution may include, for example, a bank, a
trading institution, an insurance company, a credit card issuer, a
trading exchange, a government regulator or a law enforcement
agency.
[0011] In another aspect, a computer system for providing risk
management relating to opening accounts can include a computer
server that is accessible with a network access device via a
communications network and executable software stored on the server
which is executable on demand via the network access device. The
software can be operative with the server to receive information
relating to risk factors and formulate a risk quotient or other
rating. In addition, where applicable, risk can be aggregated, such
as by rating, and transferred.
[0012] The present invention includes a computer-implemented method
for managing risk related to financial transactions involving a
politically identified person, the method includes receiving
information relating to political exposure associated with a person
involved in a financial transaction and structuring the information
received according to political exposure risk quotient criteria. A
risk quotient is calculated using the structured information. A
suggested action responsive to the risk quotient or the information
received can also be generated.
[0013] Typically the suggested actions will be directed towards
reducing risk relating to an account associated with a politically
exposed person, although actions can be directed towards law
enforcement or other directives also. In one embodiment, the action
can include refusing to open an account or perform a transaction.
Another action may involve notifying an authority, such as the
police.
[0014] The information received can be gathered electronically or
manually and can include the identity of a politically identified
person and the person's relationship to an account holder. The
information received can also include the identity of a secrecy
jurisdiction.
[0015] In another aspect, the information received can be stored,
as can the risk quotient and the suggested action, and utilized to
generate a diligence report. The diligence report can include
information received relating to political exposure and actions
taken responsive to the risk quotient.
[0016] Still another aspect can include aggregating risk quotients
relating to a financial institution to assess a level of
politically identified risk to which the financial institution is
exposed. An average risk quotient associated with a transaction can
also be calculated.
[0017] Other embodiments include a computerized system for managing
risk associated with a financial account, computer executable
program code residing on a computer-readable medium, a computer
data signal embodied in a digital data stream, or a method of
interacting with a network access device. Various features and
embodiments are further described in the following figures,
drawings and claims.
DESCRIPTION OF THE DRAWINGS
[0018] FIG. 1 illustrates a block diagram which can embody this
invention.
[0019] FIG. 2 illustrates a network on computer systems that can
embody an enhanced online sales risk management system.
[0020] FIG. 3 illustrate a flow of exemplary steps that can be
executed in practicing PIP risk management.
[0021] FIG. 4 illustrates an exemplary graphical user interface
useful for gathering information according to the present
invention.
[0022] FIG. 5 illustrates an exemplary graphical user interface
useful for presenting reports related to political exposure of a
PIP.
DETAILED DESCRIPTION
[0023] The present invention includes a computerized method and
system for managing risk associated with financial accounts that
are held by a politically identified person (PIP). A computerized
system stores information in a database or other data storing
structure and relates the information to individuals with political
exposure resulting from sensitive positions and/or world events. A
rating system is used to assess risk based upon criteria, such as,
a position held, historical data and/or interpretation of world
events. A risk quotient or other rating can be generated to readily
indicate a level of risk associated with a PIP. The risk quotient
can be based upon a weighted algorithm applied to the criteria.
Compliance personnel from a financial institution, or other person,
can monitor the risk quotient on demand in real time, on account
opening, or on a periodic basis. Actions commensurate with a risk
quotient can be presented to a financial institution to help the
institution properly manage risk associated with a PIP.
[0024] Referring now to FIG. 1 a block diagram of one embodiment of
the present invention is illustrated. A compliance entity 101, such
as a financial institution representative, a regulatory official, a
security person or other person, or even a programmable robot,
supplies information into a PIP system 102 for risk management. The
information can be responsive to a predetermined set of questions
and input with a computer input device or the information can be
gathered electronically, such as through a newsfeed, database,
Internet search, or other data source 106. In one embodiment, a
compliance entity 101 can view questions on a graphical user
interface (GUI) and in turn ask a transaction participant 107
appropriate questions during an account opening interview, or the
transaction participant 107 can input the information directly into
the PIP system 102.
[0025] A decision by a financial institution concerning whether to
pursue a financial transaction can be dependent upon many factors.
A multitude and diversity of risks related to the factors may need
to be identified and evaluated. In addition, the weight and
commercial implications of the factors and associated risks can be
interrelated. The present invention can provide a consistent and
uniform method for business, legal, compliance credit and other
personnel of financial institutions to identify and assess risks
associated with a transaction. A PIP system 102 allows investment
activity risks to be identified, correlated and quantified by
financial institutions thereby assessing legal, regulatory,
financial and reputational exposure.
[0026] Financial institutions are often closely regulated. As a
result financial institutions are exposed to significant risks from
their obligations of compliance with the law and to prevent, detect
and, at times, report potential violations of laws, regulations and
industry rules ("laws"). These risks include, but are not limited
to, the duty to disclose material information, and to prevent and
possibly report: fraud, money laundering, foreign corrupt
practices, bribery, embargoes and sanctions. Through a series of
structured questions and weighting of information received as
answers, financial institutions can structure a risk exposure and
receive suggested responses to a specific risk scenario.
[0027] A financial institution can integrate a PIP system 102 as
part of legal and regulatory oversight for various due diligence
and "know your customer" obligations imposed by regulatory
authorities. The PIP system 102 can facilitate detection and
reporting of potential violations of law as well as address the
"suitability" of a financial transaction and/or the assessment of
sophistication of a customer. Similarly, the PIP system 102 can
support a financial institution's effort to meet requirements
regarding the maintenance of accurate books and records relating to
their financial transactions and affirmative duty to disclose
material issues affecting an investor's decisions.
[0028] An institution that may implement, or make use of the
present invention can include an investment bank, a merchant bank,
a commercial bank, a security firm, an asset management company, a
hedge fund, a mutual fund, a credit rating agency, a security
exchange and bourse, an institutional or individual investor, an
auditing firm, a law firm, or other institution who may be involved
with financial transactions. Similarly, financial investments can
include investment and merchant banking, public an private
financing, commodities and a securities trading, commercial and
consumer lending, asset management, rating of corporations and
securities, public and private equity investment, public and
private fixed income investment, listing to companies on a
securities exchange and bourse, employee screening, auditing of
corporate or other entities, legal opinions relating to a corporate
or other entity, or other business related transactions.
[0029] A log or other stored history can be created such that
utilization of the system can mitigate adverse effects relating to
a problematic account. Mitigation can be accomplished by
demonstrating to regulatory bodies, shareholders, news media and
other interested parties that corporate governance is being
addressed through tangible risk management processes. An
implementing institution may include, for example, a bank, a
trading institution, an insurance company, a credit card issuer, a
trading exchange, a government regulator or a law enforcement
agency.
[0030] Information relating to financial, legal, regulatory and/or
reputational risk is received into a computer system. The computer
system applies an algorithm that weights the input information and
calculates a risk quotient or similar rating. The risk quotient can
include a scaled numeric or alpha-numeric value.
[0031] If an account reaches or exceeds a risk quotient threshold,
the system responds with a predetermined action. Actions can
include, for example, generating an alert, blocking acceptance of a
transaction, creating a report, notifying a compliance department,
or other appropriate response. In addition, the system can create a
structured history relating to a new account that can demonstrate
due diligence and proper corporate governance. Reporting can be
generated from the structured history.
[0032] In the case of an automated account opening, such as for
example, opening an online account, questions can be presented to
the account opener by a programmable robot via a GUI. Questions can
relate to a particular type of account, a particular type of
client, types of investment, or other criteria. Other prompts or
questions can aid a financial institution ascertain the identity of
the account holder and the account's beneficial owner. If there is
information indicating that a proposed account is beneficially
owned by a PIP, the financial institution may not wish to open an
account if it is unable to determine the identity of the PIP and
his or her relationship to the account holder. The PIP system 102
can identify "secrecy jurisdictions" for the financial institution
and advise a financial institution to require PIPs from such
jurisdictions to provide an identification and source of wealth
information. In addition, the PIP system 102 may suggest that the
financial institution require a PIP to waive local law secrecy
protections and aid the financial institutions in determining
whether a legitimate reason exists for a secrecy request.
[0033] A secrecy jurisdiction can include any sovereign state that
affords statutory, common law, or other protection to information
pertinent to regulatory issues. In addition, a financial
institution, a PIP system 102 provider, or other party can be
allowed to add jurisdictions of concern to a list of secrecy
jurisdictions.
[0034] A PIP system 102 can also assist a financial institution to
obtain adequate documentation to identify the PIP and help the
institution assess a PIP's business reputation. The PIP system 102
can document the PIP's purpose for opening the account and the
PIP's anticipated account activity. It can also make a
determination as to whether the PIP has a legitimate reason, such
as legitimate business or investment activity, for wanting an
account in a jurisdiction, such as the United States.
[0035] The PIP system 102 can also provide questions, historical
data, world events information and other targeted information to
facilitate a determination regarding a PIP's sources of wealth and
of the particular funds involved with an account or transaction in
consideration. In addition, the PIP system 102 can measure account
activity against a PIP's official salary and other sources of
wealth and report on discrepancies.
[0036] Questions or prompts proffered by the PIP system 102 can
also depend from previous answers. Information received in response
to the questions can be input into the PIP system 102 from which it
can be utilized for real time PIP risk assessment and generation of
a PIP risk quotient 103.
[0037] The PIP risk assessment and PIP risk quotient 103 can
subsequently be made available by the PIP system 102 to a
compliance entity 101. In one embodiment, the PIP risk quotient can
be made available in real time. A real time assessment can allow
the PIP system 102 to provide a suggested action which can be taken
to address a particular risk quotient. The PIP system 102 can also
take into consideration the input information in order to generate
a suggested action. A suggested action may include, for example,
limiting the scope of transactions entered into, discontinuing any
transactions with affected participants, notifying authorities, or
other appropriate actions.
[0038] The PIP system 102 can quantify risk due diligence 104 by
capturing and storing a record of the information received and
actions taken relating to a PIP account. Once quantified, the due
diligence data can be utilized for presentation to regulatory
bodies, shareholders, news media and/or other interested parties to
mitigate adverse effects relating to a problematic account. The
data can demonstrate that corporate governance is being addressed
through tangible risk management processes.
[0039] The PIP system 102 can also aggregate risk quotients 105 to
assess the level of PIP risk being tolerated by the institution.
Other calculations, such as, for example, the sum, mean, average,
or other calculation can be made by the PIP system 102 to further
analyze PIP risk at a financial institution. If desired, a rating
can be applied to an institution according to the amount for PIP
risk tolerated by the institution.
[0040] Referring now to FIG. 2, a network diagram illustrating one
embodiment of the present invention is shown. An automated PIP
system can include a computerized PIP system 210 accessible via a
distributed network 201 such as the Internet, or a private network.
A client 220-222, regulatory entity 226, compliance entity 223,
account opening personnel 224, corporate compliance personnel 228
or other party interested in PIP risk management, can use a
computerized system or network access device 204-208 to receive,
input, transmit or view information processed in the PIP system
210. A protocol, such as the transmission control protocol internet
protocol (TCP/IP) can be utilized to provide consistency and
reliability.
[0041] Each network access device can include a processor, memory
and a user input device, such as a keyboard and/or mouse, and a
user output device, such as a display screen and/or printer. The
network access devices 204-208 can communicate with the PIP system
210 to access data stored at the PIP system 210. The network access
device 204-208 may interact with the PIP system 210 as if the PIP
system 210 was a single entity in the network 200. However, the PIP
system 210 may include multiple processing and database
sub-systems, such as cooperative or redundant processing and/or
database servers, that can be geographically dispersed throughout
the network 201. In some implementations, groups of network access
devices 204-208 may communicate with PIP system 210 through a local
area network.
[0042] The PIP system 210 includes one or more databases 202
storing data relating to PIP risk management. The PIP system 210
may interact with and/or gather data from a client 220-222,
compliance entity 223, account opening personnel 224, regulatory
entity 226, corporate compliance personnel 228, or other person who
is operating a network access device 204-208. Data gathered from an
operator may be structured according to risk criteria and utilized
to calculate a PIP risk quotient.
[0043] Typically a user will access the PIP system 210 using client
software executed at a network access device 204-208. The client
software may include a generic hypertext markup language (HTML)
browser, such as Netscape Navigator or Microsoft Internet Explorer,
(a "WEB browser"). The client software may also be a proprietary
browser, and/or other host access software. In some cases, an
executable program, such as a Java.TM.. program, may be downloaded
from the PIP system 210 to the client computer and executed at the
client network access device or computer as part of the PIP system
software. Other implementations include proprietary software
installed from a computer readable medium, such as a CD ROM. The
invention may therefore be implemented in digital electronic
circuitry, computer hardware, firmware, software, or in
combinations of the above. Apparatus of the invention may be
implemented in a computer program product tangibly embodied in a
machine-readable storage device for execution by a programmable
processor; and method steps of the invention may be performed by a
programmable processor executing a program of instructions to
perform functions of the invention by operating on input data and
generating output.
[0044] Referring now to FIG. 3, managing risk associated with
financial transactions with political exposure can begin with
opening a dialogue with an PIP system 310. Typically, the dialogue
would be opened by presenting a GUI to a network access device
accessible by a person or an electronic feed that will enter
information relating to the account holder. The GUI will be capable
of accepting data input via a network access device. An example of
a GUI would include a series of questions relating to a client
holding an account. Alternatively, information can be received
directly into fields of a database, such as from a commercial data
source. Questions can be fielded during a transaction, while
updating account information, during an account opening interview,
or at any other opportunity to gather information.
[0045] Alternatively, a dialogue can also be opened with a source
of electronic data such as an external database, messaging system,
news feed, government agency, or other automated data provider. In
either case, the dialogue will enable the PIP system 102 to receive
data relating to an account holder who may be politically exposed
311. Information can be received on an ongoing basis such that if
new events occur in the world which affect the political exposure
of an account holder, the PIP risk can be adjusted accordingly. In
addition to the types of information listed previously that be
indicative of high risk, the financial institution or compliance
entity can receive information that relates to requests to involve
a financial institution that is not accustomed to foreign account
activity; requests for secrecy or exceptions to Bank Secrecy Act
requirements, routing through a secrecy jurisdiction, or missing
wire transfer information; unusual and unexplained fund or
transaction activity, such as fund flow through several
jurisdictions or financial institutions, use of a government-owned
bank, excessive funds or wire transfers, rapid increase or decrease
of funds or asset value not attributable to the market value of
investments, high value deposits or withdrawals, wires of the same
amount of funds into and out of the account, and frequent zeroing
of account balance; and large currency or bearer transactions, or
structuring of transactions below reporting thresholds. Other
information can include activities the PIP is involved in,
associates of the PIP, governmental changes, or other related
events.
[0046] Sources of information can include, for example,
publications issued by Treasury's Financial Crimes Enforcement
Network ("FinCEN"), the State Department, the CIA, the General
Accounting Office, Congress, the Financial Action Task Force
("FATF"), various international financial institutions (such as the
World Bank and the International Monetary Fund), the United
Nations, other government and non-government organizations,
internet websites, news feeds, commercial databases, or other
information sources.
[0047] The PIP system 210 can structure the information received
according to defined PIP risk quotient criteria 312. For example,
information received can be associated with criteria including a
position held by the account holder, the country in which the
position is held, how long the position has been held, the strength
of the position, the veracity of previous dealings with persons
from that country, the propensity of people in similar positions to
execute unlawful or unethical transactions, the type of account or
other criteria.
[0048] Types of accounts to be opened may include, for example: an
individual account, a public company domiciled in a G-7 country or
Hong Kong, a public company not domiciled in a G-7 country or Hong
Kong, a corporate account regulated by a G-7 agency or a corporate
account regulated by a non G-7 government agency, a private company
or partnership, a holding company, an intermediary managed account
such as a money manager or hedge fund, a trust or foundation, or
other type of legal entity.
[0049] The PIP system 210 can receive the information and structure
it according to predefined criteria or receive it in a
pre-structured format. Receiving the information in a
pre-structured format allows the PIP system 210 to proceed with
calculating a risk quotient 313 without having to further structure
the information. Information that cannot be easily structured can
also be received and archived in order to facilitate a manual
qualitative evaluation.
[0050] A PIP risk quotient can be calculated 313 by weighting the
information received according to its importance in determining the
likelihood of illegal or unethical dealings. Calculating a PIP risk
quotient can be accomplished by assigning a numerical value to each
field of information, wherein the numerical value is representative
of the risk associated with a particular piece of information. For
example, it may be determined one case that a government official
from a G-7 country trading equities in a public company from a G-7
country poses minimal risk. Therefore this information from the
first case is assigned a low numerical value, or even a negative
numerical value. In a second case, a high ranking government
official from an unstable third world country transacting in a
corporate holding company may be viewed as indicative of a high
risk. In another case, information conveying this high risk may be
assigned a high numerical value. In addition, a weight can be
assigned to a PIP risk category to which the information is
assigned. Therefore a designated country may receive a higher
weight than the position held, or vice versa. A Risk Quotient can
be calculated by multiplying a weighted numerical value of the
specific information times the category weighting.
[0051] For example, information received may indicate an account
holder is a high ranking finance official from a G7 country. The
ownership structure of a company the account holder wishes to
transact is a public entity. A public entity may receive a
numerical value of -5 because it is a relatively low risk ownership
structure. In addition, this information may be included in a
Company Profile category, wherein the Company Profile is assigned a
category weighting of 3. Therefore, the net score for this
ownership structure is -5 times 3 or -15. Similarly the account
holder being a high ranking official from a G-7 country may also
receive a low number such as 1. The PIP risk quotient for the
account holder would be 1 times 3, or 3. All scores within the
Company Profile can be summed to calculate a PIP risk quotient. In
this case the PIP risk quotient is -15+3 which equals -12,
indicating a low risk. Weighted risk scores from all associated
categories can be summed to calculate a total Risk Quotient.
[0052] A suggested action can be generated that is responsive to
the Risk Quotient 314. For example, in response to a high risk
score a suggested action may be to not proceed with a transaction,
or even to notify an authority. In response to a low risk score,
the PIP system 210 may respond by completing transactions as usual.
Intermediate scores may respond by suggesting that additional
information be gathered, that transactions for this account be
monitored, or other interim measures.
[0053] The PIP system 210 can also store, or otherwise archive PIP
data and proceedings. For example the PIP system 210 can store
information received, a Risk Quotient generated, and also the
suggested actions to be taken 315. This information can be useful
to quantify corporate governance and diligent efforts to address
high risk situations. Accordingly, reports quantifying PIP risk
management procedures, executed due diligence, corporate governance
or other matters can be generated 316.
[0054] Referring now to FIG. 4, an exemplary GUI for receiving
information related to PIP risk management is illustrated 400. The
GUI can include areas prompting for information, such as in the
form of a key word or a question 413. Areas can also be included
for an appropriate response 414. The area for an appropriate
response 414 can, for example, receive text, allow a selection from
choices proffered, or otherwise receive data into the computerized
PIP system 102. A programmable user interactive device, such as a
checkbox, X field, yes/no filed or other device can be utilized to
indicate an answer, or otherwise input information. A category
weighting 410 can also be indicated on the GUI. Typically the
weighting will be predetermined. However, if desired the weighting
can be modified by a user such that a weighting value, such as a
numerical value, will be utilized to calculate a risk quotient. The
receiving information GUI 400 can also include areas for displaying
a response value 411 and a response score for the inquiry 412.
[0055] Referring now to FIG. 5, an exemplary GUI for presenting
reports or suggested actions related to PIP risk management is
illustrated 500. The GUI for presenting reports 500 can include
geographic areas of a user interface containing risk management
procedures 501, including those procedures specifically followed in
relation to a particular PIP. Other areas can include a list of
electronic or hardcopy reports available concerning risk management
efforts undertaken 502. Another area can include a list of risk
quotients and./or calculations concerning the risk quotient, such
as the average risk quotient for the financial institution, or the
mean risk quotient 503. Still another area can contain information
descriptive of a particular account holder or PIP 504.
[0056] A number of embodiments of the present invention have been
described. Nevertheless, it will be understood that various
modifications may be made without departing from the spirit and
scope of the invention. For example, network access devices 204-208
can comprise a personal computer executing an operating system such
as Microsoft Windows.TM., Unix.TM., or Apple Mac OS.TM., as well as
software applications, such as a JAVA program or a web browser.
Network access devices 204-208 can also be a terminal device, a
palm-type computer, mobile WEB access device, a TV WEB browser or
other device that can adhere to a point-to-point or network
communication protocol such as the Internet protocol. Computers and
network access devices can include a processor, RAM and/or ROM
memory, a display capability, an input device and hard disk or
other relatively permanent storage. Accordingly, other embodiments
are within the scope of the following claims.
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