BACKGROUND: Northern Trust Corporation is a Chicago-based multi-bank holding company with locations in Illinois, Florida, New York, Arizona, California, Texas, Georgia, Washington, Colorado, Canada, London, Hong Kong, Singapore and the Cayman Islands. With a focus on selected market niches, Northern Trust provides superior financial services for individuals, corporations, institutions and organizations worldwide.
PLATFORMS: UNIX Sun Solaris 2.7. Also available on HP, AIX, Windows 95/98/NT and MVS.
PROBLEM SOLVED: With multiple lines of business, Northern needed a way to identify potential records matching the U.S. Treasury's Office of Foreign Assets Control (OFAC) list. Northern needed an automated solution that could be applied consistently across all of our offices. Innovative Systems OFAC Compliance Solution provides a repeatable, proven, flexible way of comparing clients to the entity names on the OFAC list. This solution also allows an OFAC officer to see which names are "hitting" and then make his/her own determination as to whether further review is warranted. It also provides a better audit trail of due diligence.
PRODUCT FUNCTIONALITY: The U.S. Treasury is organized into two major components: offices and bureaus. One of its offices, OFAC, administers and enforces economic and trade sanctions against targeted foreign countries, terrorism-sponsoring organizations and international narcotics traffickers, based on U.S. foreign policy and national security goals. OFAC maintains a list, called the Specially Designated Nationals (SDN) List. This list is comprised of entities (individuals, organizations and vessels). Banks and other financial institutions are expected to be OFAC-compliant. In short, they are not to do business with any named individual or company maintained by OFAC on the SDN list or blocked country list. Northern is using the OFAC Solution to match against its customer database to ensure that we do not establish accounts with entities listed on the SDN list. There are significant monetary penalties for doing so. By itself, this solution is not the only OFAC- compliance processing that Northern performs. It provides an additional measure of safety.
STRENGTHS: Flexible matching is accomplished through heuristic "ranks" which can be customized to determine automatic or review matches. Ranks can be added or removed as needed to meet Northern's business rule needs. If desired, ranks can also be "wild- carded" to perform name-only or address-only matching. Using significant words (as opposed to surnames and first/middle names) allows for matching individuals in either last/first or first/last order. ISI provides all of the reformatting, data cleansing and maintenance of incremental list changes and has enhanced the initial OFAC list to be optimized to their matching technology. ISI's OFAC Solution is a licensable module, but OFAC processing can also be outsourced to Innovative Systems (ISI) on a service basis.
WEAKNESSES: The current release of the product does not support "persistent no match." With a "persistent no-match" feature, once you have determined that a "hit" was actually a "negative hit," you don't really need to see that matched pair again. The next release will support this capability. The flexibility of wildcarding ranks carries with it the possibility of "over-matching." The next release will introduce a GUI review tool to manually inspect match families of ranks that may contribute to over- matching.
SELECTION CRITERIA: The major reason for selecting this product is that it is based on the ISI CorpMatch tool, which Northern had already purchased and installed. The established, existing relationship with ISI was a significant contributing factor as well.
DELIVERABLES: There are two major deliverables. The first is an updated OFAC master file, with addresses and alternate names included. ISI will supply an updated list anytime OFAC updates the SDN list. The second deliverable is the Family Composition Report, produced from the CorpMatch procedures. This report is routed to our OFAC Compliance Officer after each execution.
VENDOR SUPPORT: ISI has over 30 years of experience handling names and addresses. Northern worked closely with ISI for the development of this product and is its first user. Several of the suggestions offered for improvements were either incorporated into the current release or have been targeted for the next release of the product.
DOCUMENTATION: Documentation is a brief document describing major procedures and data. ISI is working to make the documentation available in a .pdf format which is consistent with their other product offerings.
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