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Regulatory Compliance: Quick response to market moves

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DIASOFT - Mikhail KryuchkovBy Mikhail Kryuchkov, Director Global Markets, Diasoft


Anti-Money Laundering remains to be one of the key challenges for every financial institution across the globe. And it becomes more and more challenging to be in line with increasing legislation, international and regional ones that require them to follow the route of suspicious transactions, find connections and define the source of illegal money.

According to US Department of State, as the global GDP has increased in the last two decades, so too has the magnitude of all-source money laundering. As soon as businesses believe that their clients, counterparties and beneficiaries can`t be involved into illicit activities, the occurrence of financial crimes becomes increasingly evident. 

Global legislation 

Gartner fairly notices that the anti-money-laundering compliance is an ever-shifting target for the financial services community worldwide. Money laundering can occur everywhere in the world, so measures for identification, prevention and reporting of suspicious transactions becomes critical for every financial institution no matter which regulatory legislation it follows. 

The global initiatives for increasing control over financial operations have been one of the hottest topics for decades, as criminals masterly hide the illegal nature of their transactions by introducing them as legal funds. Money laundering becomes more challenging, so the global legislation is actively evolving over the years and it has become mandatory for financial institutions undertaking the efforts in order to detect and prevent suspicious transactions globally. 

The growing role of AML 

According to KPMG, AML has never been higher on senior management’s agenda, with regulatory fines now running into billions of dollars, regulatory action becoming genuinely license threatening, and threats of criminal prosecution against banks and individuals. Financial institutions are facing an ever-tightening and constantly changing regulatory environment, failure to comply with which can result in fines and inclusion on the problem list. It affects the bottom-line and causes damage to the reputation, goodwill, and economic viability of a financial institution. Continuing to lack AML functionality can result in lost partnerships and customers, the most financial institution can refuse to interact with the a bank, it sometimes can even lead to revoked license.  

The AML perception has changed significantly through the years – it transformed from the separate function to a complex solution covering various operations like risk, tax and legal. It becomes increasingly challenging for modern institutions to maintain the status of AML-compliant organization – it is not far enough nowadays to be partly compliant with current regulations, strong AML processes across the entire organization are obligatory for all global financial institutions. 

What financial institutions must do now to respond to evolving regulations 

With numerous new regulations being introduced to the market on ongoing basis across the world, financial institutions should have enough flexibility to quickly implement these significant changes to further respond to far-reaching global AML regulations. 

Only the most flexible and technologically advanced companies will easily adjust to the new regulations and turn new challenges into business advantages. Changing processes quicker than ever in response to market challenges and control bodies’ requirements has become essential for gaining competitive advantages. Banks need instruments to ensure the high level of security. 

This ends the era of rigid banking solutions built on irresponsive legacy technologies. Today, the banks should focus on short-term ROI SOA projects allowing them to easily respond to changing market and regulatory demands, and dramatically improve customer experience. That is what Diasoft calls agile technologies for the new era of banking and that is how we develop our solutions. 

Screen Your Customer! Technology by Diasoft 

One of the key elements for successful functioning of financial organization in terms of Anti-Money Laundering – is identification of customers, their counterparties and beneficiaries. In other words, we are talking about screening of the customer. 

High quality of customer identification serves as a starting point for assessment of risks connected with banking transactions and other operations. It should be emphasized that Anti-Money Laundering procedures are important not only due to recommendations by FATF, Moneyval and current legislation that all banks follow like a formal requirement of regulator. Here should be considered the real risks of financial organizations. Neglecting the importance of such a screening procedure, enterprises are getting exposed to reputational, operational and legal risks that in turn can lead to significant financial loses. 

Anti-Money Laundering compliance is a cornerstone of Diasoft solutions.  Following the market demand and idea of Gartner, stating that AML compliance efforts will continue to shift focus toward improving “know your customer” capabilities and technologies, Diasoft introduced to the market its new Screen Your Customer! service. 

The new cloud service from Diasoft helps credit and financial institutions identify customers, their counterparties and beneficiaries in accordance with FATF recommendations. It ensures automatic verification of clients against flexibly configured rules, and in case of identification of a suspicious person automatically generates notifications for the State Control Bodies without the need to allocate additional human resources for the collection of required data. 

Screen Your Customer! service capabilities include: screening of customers, their counterparties and beneficiaries with respect to their involvement in terrorist and extremist activities, against Public Officials (PO) and Politically Exposed Persons (PEPs) lists, and personal lists of financial institutions that can be uploaded to the system. The technology provides strong analytical support for every decision within the credit and financial institution, and assists to the prevention of financial crimes, ensuring the success and stable financial position for them. 

The way to success 

Additionally, Diasoft offers to its customers its cutting-edge FLEXTERA Anti-Money Laundering (AML) solution that provides an advanced tools for preventing money laundering and terrorists financing. These tools ensure automatic verification of clients and payment documents against flexibly configured rules and schemes. In case of identification of a suspicious transaction, they are automatically reported to authorities. Component-based and SOA-compliant architecture of FLEXTERA AML provides its customers with flexibility to quickly adapt to ever-changing global regulations. 

The functional scope of FLEXTERA Anti-Money Laundering covers carrying out of client data and financial transactions online monitoring in accordance with regulatory requirements when entering client documents/data and opening accounts; detecting suspicious and unusual transactions; monitoring and registering transactions subject to regulatory controlling; detecting high risk transactions; monitoring beneficiaries; keeping record of customer profiles and registering declined transactions and sending notifications to supervisory bodies. 


This year Diasoft successfully launched in production its new Screen Your Customer! service in SDM-Bank. 

Cloud service, developed by Diasoft specialists based on Dow Jones database and deployed on our site, allowed the Bank to reduce its reputational and operational risks. Currently the “Screen you customer!” service is an integral part of SDM-Bank IT landscape and is successfully used in AML business processes of the Bank, – says Oleg Ilukhin, CIO, SDM-Bank Oleg Ilukhin, CIO, SDM-Bank

Being one of the largest financial software developers in Russia and Eastern Europe, Diasoft serves more than 360 financial organizations across the globe, including Sberbank, Deutsche Bank, Societe Generale, Raiffeisen Bank, UniCredit Bank, Unistream, ISBANK, VIB, China Construction Bank, Allianz and others. 

Using the most advanced technologies to create our software products, we have become one of the first companies having implemented SOA-principles in the banking solutions. 

Diasoft’s FLEXTERA is a multi-awarded solution, positioned in the “Leaders” quadrant of the Gartner Magic Quadrant for International Retail Core Banking, recognized as a finalist of the IBM Beacon Award 2013 (the Best solution for Banking), and named the best retail banking solution in Russia among other accolades. 

FLEXTERA became the first financial solution in Eastern Europe certified to comply with IBM Banking Industry Framework standards that once again proves that compliance with Anti-Money Laundering regulations is a cornerstone of Diasoft solutions.  

The visionary approach to the development of FLEXTERA allowed us to create a system that will ensure a good reputation for our customers, their security, long successful development and adaptation to the emerging market requirements, developing business environment and the ever-changing regulatory controls.


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1 comment

Paige August 20, 2014 - 1:29 pm

The growing number of reasonably well-known money laundering incidents over the last few years really helps to illustrate not only how difficult AML compliance really is but also how software such as Diasoft’s can really make a very genuine impact on the security and long-term survival of a company.


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