Open Password – Dienstag,

den 8. Mai 2018

# 362

 

Management of Risk & Compliance – Sanctions Compliance – OFAC – Dow Jones Risk & Compliance – Eric A. Sohn – EU Consolidated List – USA – European Union – 50 Percent Rule – HIS FairPlay – Regulators – McGraw-Hill – Game-based Learning – Korean Times – Pro Quest – deGruyter – Global Library and Information Science – Ismail Abdullahi – New Cataloging – Caroline Fuchs – Christine M. Angel – Lernwelt Öffentliche Bibliothek – Richard Stang – Konrad Umlauf – BAK – Roboterisierung – Bibliotheken – Tanja Estler-Ziegler – Frank Seeliger

 

International Corner

Management of Risk
& Compliance

Sanctions Compliance:
Good, Fast or Cheap (Pick Two)

Redaktionelle Anmerkung: Das Office for Foreign Assets Control (OFAC, Amt für die Kontrolle von Auslandsvermögen) ist für die Durchsetzung von Handels- und weiteren wirtschaftlichen Sanktionen zuständig, die die amerikanische Regierung aus außen- oder sicherheitspolitischen Gründen gegen Staaten, Organisationen und Individuen verhängt hat. Gegen Unternehmen, auch ausländische, die sich nicht an die Sanktionslisten von OFAC oder vergleichbaren Behörden in anderen Ländern halten, können hohe Strafen verhängt warden. In seinem exklusiven Beitrag für Open Password erinnert der Direktor von Dow Jones Risk & Compliance an gesetzliche Bestimmungen in der Bundesrepublik, die eine Compliance binnen 48 Stunden nach dem Update einer Sanktionsliste verlangen. Welche Strategien der Informationsbeschaffung sind hier zu fahren? Um ein Ergebnis des exklusiven Beitrages von Eric A. Sohn vorwegzunehmen: Speed kills. 

By Eric A. Sohn, CAMS, director of business product, Dow Jones Risk & Compliance, New York, NY, USA, eric.sohn@dowjones.com

Sanctions compliance lists change frequently – the EU Consolidated List was updated over 10 times in the month of February 2018 alone. The guidance on how fast a firm must, or should, update its sanctions lists vary significantly. There are German laws, for example, that mandate that all changes be incorporated within 48 hours. On the other hand, the only guidance that the Office of Foreign Assets Control (OFAC) in the United States provides is that the time elapsed between the publication of a new or updated listing, and activity such as a new account opening or business transaction that should have been denied, is but one of a number of factors considered when OFAC decides whether or not to penalize the firm, and how large the penalty should be. 

If one is not constrained by regulation, however, the question remains: is faster inherently better, or can regulatory data, such as sanctions listings, be made more effective by taking steps that require additional time and effort?

________________________________________________________________________

But First: Good, neither Fast nor Cheap

________________________________________________________________________

Firstly, this is somewhat of a trick question in the United States and European Union. In both the EU and US, there is a requirement to not only take action against those listed in regulation and published lists, but to also do the same for any organization owned and/or controlled by those explicitly designated by regulators. This “50 Percent Rule,” as it is known colloquially, cannot be complied with as quickly as updating records published by regulators. This is partly because OFAC’s guidance is recursive; once a firm is considered as sanctioned under the 50 Percent Rule, one must then see what firms it has an ownership stake in, applying the same standard, until the chain of ownership exhausts itself. As these firms operate globally (firms identified through this sort of research are located in over 170 countries), the local knowledge of where one can identify ownership data, and the local language knowledge required to understand those sources, make this effort time and staff-intensive.

 

________________________________________________________________________

Why Choose Good over Fast?

________________________________________________________________________

However, even for sanctions targets identified explicitly by regulators, there is value in an effort that extends beyond cut-and-paste. For starters, regulators make mistakes; correcting their errors minimizes both false positives and false negatives. The North Korean cargo vessel Pi Ryu Gang, for instance, was first listed in 2014 by OFAC and, to this day, is listed as “Pi Ruy Gang,” a name that does not match the data maintained by ship registries such as IHS FairPlay. And, not infrequently, regulators correct errors in their initially-published listings. If one compares the listings in the Official Journal of the European Union (technically, the official source) to the data files published by the EU, for example, one will find differences.

There is also value in enhancing the data as published by regulators. Having more data on hand makes decision-making faster (from not having to access additional data sources to resolve cases whose match status is unclear) and more defensible to regulators and other outside parties. For example, some designated individuals and organizations may have also appeared in media outlets regarding the same conduct. Such news stories may identify information not present in regulatory listings, such as middle names, dates of birth and alternate name spellings. Additionally, additional research from public sources may add to the value of a listing and help to identify attempts to evade detection. For example, using marine registries can identify information about the parties who own and operate cargo vessels, as well as previously-used names, IMO numbers and radio call signs.

Finally, consolidating information across all data sources in use saves time every time a potential match is made, and leads to better decisions being made, as previously mentioned. If a firm attempts to comply with multiple sanctions regimes, ensuring that the sanctions listing from one regulator is reviewed even when the target’s name appears on some other regulator’s listing minimizes the likelihood that a match to a sanctioned person is bypassed by searching too narrowly. Additionally, if the identifying information is common to multiple regulatory regimes, it takes less time to review one, more detailed, consolidated listing, than reviewing multiple shorter regulator-specific ones. For example, a Big Four accounting firm estimated approximately five years ago that consolidation of information resulted in a reduction in the number of listings to review in excess of 41 percent.

But why should one care about one regulator’s data when trying to comply with another’s regulations? Because of regulatory expectations, firms are liable not only for information they actually know, but also for that which they should know. The larger and more sophisticated an organization is, the more it is expected to know – and that includes the data from the regulators in every legal jurisdiction in which they do business, or to which they have regulatory exposure.

 

________________________________________________________________________

Why Choose Fast over Good?

________________________________________________________________________

One might be concerned, of course, by the legal jeopardy which one faces by delaying sanctions lists updates, even in the absence of an explicit regulatory requirement. As an actuarial matter, however, the added liability is likely outweighed by the operational efficiency gains. For example, a good working model for sanctions screening is that approximately 10% of records screened in a given period stop for review, absent any system tuning. Of those, only a tiny fraction represent actual matches. Some years ago, the New York branch of a large European bank reported that, using exact matching technologies, the ratio of false positives to true matches was one thousand to one. Additionally, when fuzzy logic (which is what major regulators recommend, if not outright mandate) was applied, that ratio degrades further; in the case of the European bank, there were 5000 false positives for every true match.

So, as a matter of probability, a firm would need to process between five and twenty-five hundred transactions that mention one of the names that were most recently added or changed in the latest update to have a reasonable expectation of a true match. Similarly, one would need to match a similar range of static data records, such as customer or supplier records, to similarly “miss out” on a timely identification of a sanctioned party. In fact, the risk for static data screening is actually lower, as there is no actual regulatory liability from parties with which no business is conducted during the window during which the list update is deferred in order to produce better quality list data.

________________________________________________________________________

Which to Choose

________________________________________________________________________

Choosing to update sanctions data sooner rather than later, sacrificing data quality, is certainly the safe choice. While the long-term additional operational costs will pile up, although they are hard to quantify, the likelihood of a regulatory enforcement action due to not updating lists in a prompt matter will remain negligible.

However, sacrificing speed somewhat for data quality is, for all but the highest-risk firms, business lines and customer segments, the wiser choice. The operational savings clearly outweigh the regulatory exposure avoided by choosing Fast over Good. Additionally, because better data, especially that derived from consolidating information from multiple data sources, leads to better decisions, it is in regulators’ best interests to promote Good over Fast. One reason they should advocate this is that they will receive fewer defensive referrals (i.e. people referring cases in order to not miss something rather than actually being sure of the regulatory exposure), saving their time and effort. Additionally, they will while also receive more referrals of a higher quality by firms being able to leverage the additional information that the regulator didn’t explicitly provide to make the right decision about a potential match in the first place.

For all but the highest risk compliance operations, utilizing better data slightly later trumps using standard data sooner. To paraphrase an American expression, speed kills (your bottom line).

Provider´s Corner

McGraw-Hill: Expansion in game-based learning. Learning science company McGraw-Hill Education announced the addition of more than 50 game-based learning simulations and scenario-based learning activities to digital course materials for use this fall in Principles of Economics, Introduction to Business, Principles of Marketing and College Success courses. McGraw-Hill Education plans to launch hundreds more across course areas in 2019.

ProQuest: With Korean Times. Sixty years’ worth of content from The Korea Times is now available through ProQuest, thanks to a new partnership with the newspaper’s publisher. Using the ProQuest platform, users can browse, read cover-to-cover, or search full digitized issues of the paper – including images – from 1956 to 2016.

Quelle: Outsell

De Gruyter

Neuerscheinungen

Global Library and Information Science – IFLA Publications 174. This 2nd edition of the highly successful Global Library and Information Science presents an up-to-date review of international librarianship and library science through insightful and well written chapters contributed by experts and scholars from all regions of the world. The role of public, academic, special, school libraries, as well as library and information science education are presented from the early development to the present time. Its lively, readable approach will help the reader to understand librarianship in Africa, Asia, Australia and New Zealand, Europe, Latin America and the Caribbean, and North America. Edited by Ismail Abdullahi, Professor of Global Library and Information Science, this book is a must-read by library science students and teachers, librarians, and anyone interested in Global Librarianship.

Caroline Fuchs, Christine M. Angel (eds.), Organization, Representation and Description through the Digital Age. Cataloging standards practiced within the traditional library, archive and museum environments are not interoperable for the retrieval of objects within the shared online environment. Within today’s information environments, library, archive and museum professionals are becoming aware that all information objects can be linked together. In this way, information professionals have the opportunity to collaborate and share data together with the shard online cataloging environment, the end result being improved retrieval effectiveness. But the adaptation has been slow: Libraries, archives and museums are still operating within their own community-specific cataloging practices.

This book provides a historical perspective of the evolution of linking devices within the library, archive, and museums environments, and captures current cataloging practices in these fields. It offers suggestions for moving beyond community-specific cataloging principles and thus has the potential of becoming a springboard for further conversation and the sharing of ideas.

Richard Stang, Konrad Umlauf, Lernwelt Öffentliche Bibliothek. Öffentliche Bibliotheken erhalten eine immer größere Relevanz als Lernort. Sowohl inhaltliche Angebote als auch räumliche Strukturen bieten Lernenden vielfältige Nutzungsoptionen, die für Außenstehende allerdings oft nur schwer überschaubar sind. Dieser Band versucht die beiden Perspektiven Innensicht und Außensicht zu moderieren. Auf der einen Seite geht es darum, aktuelle Entwicklungen bezogen auf Konzeptionen der inhaltlichen Ausrichtung von Öffentlichen Bibliotheken als Lernwelt aufzuzeigen, Entwicklungen von Raumstrukturen in den Blick zu nehmen sowie Anforderungen an das Personal zu identifizieren. Auf der anderen Seite geht es darum, die Entwicklungen so darzustellen, dass sie für Diskurse in anderen Bildungsbereichen anschlussfähig sind.

BAK

Eroberung der Bibliotheken
durch menschenähnliche Roboter?

Lieber Herr Bredemeier,

wir möchten Sie herzlich einladen zum Vortrag

Erobern menschenähnliche Roboter Bibliotheken?

Referent: Dr. Frank Seeliger, Leiter der Hochschulbibliothek der TH Wildau

Wann: 15.05.2018, 17:30 Uhr
Wo: Jakob-und-Wilhelm-Grimm-Zentrum (UB) der Humboldt-Universität, 10099 Berlin, Geschwister-Scholl-Straße 1/3, Beratungsraum
Verkehrsanbindung: S- und U-Bahnhof Friedrichstraße

Roboter halten Einzug in Bibliotheken! Seit dem 28. März 2018 bietet ein humanoider Roboter vom Typ „Pepper“ an der Hochschulbibliothek der TH Wildau als Assistent standardisierte Bibliotheksführungen an und unterstützt Nutzerinnen und Nutzer. So kann er u.a. Besucherinnen und Besucher bei der selbstständigen Ausleihe durch direkte Interaktion unterstützen, über ein Touchscreen oder auch per Sprachverarbeitung.

Dabei hat sich der Bibliotheksservice seit den 90er Jahren durch Automatisierung und Digitalisierung schon stark verändert. Nutzer prüfen online, ob ihr Buch da ist, leihen selbständig Medien aus, und bewegen sich mit einer App durch die Räume der Informationseinrichtung. Ist der Einsatz von Robotern ein konsequenter Schritt in die Zukunft oder überzieht die Bibliothek ihre Möglichkeiten und folgt einem Hype?

Dr. Frank Seeliger stellt Einsatzorte menschenähnlicher Roboter von Köln bis Berlin vor und diskutiert zwei laufende Projekte in Wildau.

Im Anschluss gibt es die Möglichkeit, die sich ergebenden Fragen bei einem Snack und Getränken mit dem Vortragenden zu diskutieren.
Die Veranstaltung ist kostenlos. Bitte melden Sie sich trotzdem telefonisch (030-755 183 66) oder per Mail (bak[at]ub.tu-berlin.de) an.

Wir freuen uns auf Ihr Kommen.

Herzliche Grüße Tania Estler-Ziegler (Vorstandsvorsitzende),
Berliner Arbeitskreis Information (BAK), http://bak-information.de/

Anzeige

FAQ + Hilfe