Virtusa / Banking and Financial Services / Risk & Compliance
Intelligent technology to handle your risk and compliance needs

In the coming years, more thorough banking regulations will be implemented. Banks have to prepare for an increase in these incoming qualitative and quantitative compliance requirements. These requirements include retaining high-quality data for internal and regulatory reporting, capital planning and stress testing processes, new market risk methods (FRTB),  modeling risk-management frameworks, and detailed real-time surveillance. To manage these extensive compliance requirements, banks need to adopt technology solutions that enable intelligent and automated handling of regulation-related processes.

Our Solutions

AML Model Validation Framework

Validate that AML model is performing in compliance with OCC 11-12 and meeting defined business objectives

AML Model Validation Framework

Regulators worldwide are implementing guidelines and measures to prevent illegitimate transfer of money. With huge penalties being slapped on financial institutions for Anti-Money Laundering (AML) non-compliance, banks are being forced to tighten their approach towards AML Model validation. Virtusa AML model validation framework assesses the banks compliance with the OCC regulatory guidance and establishes a framework to confirm that your business process model is performing in line with defined AML business objectives. Virtusa helps clients handle AML and other compliance risks by not just implementing requirements, but also by testing operations’ models to quantify and verify the ability to adequately and efficiently mitigate risk.

Our value proposition:

  1. Improved AML Risk Management by minimizing and mitigating risk within the AML program
  2. Satisfying regulatory expectations and requirements for the soundness of models in use within the AML program
  3. Effective & improved Customer Due Diligence (CDD) & Enhanced Due Diligence (EDD) processes
  4. Increased model productivity and efficiency, which in turn improves the quality of AML audit observations as well as improves business decisions.
  5. Cost effective over the long term by helping banks avoid fines and penalties imposed by regulators due to gaps in AML programs.

Financial Crime Center of Excellence (COE)

Minimize reputational risk and avoid monetary penalties

Financial Crime Center of Excellence (COE)

As regulators launch new rules to tighten controls globally, banks and financial institutions are aligning their IT systems as well as processes to minimize reputational risk and regulatory penalties. Virtusa’s Financial Crime COE focuses automating compliance processes so that your bank can meet the regulatory expectations while staying cost competitive. We have extensive industry knowledge and resources to provide an array of services from gap analysis, consulting, implementation to end-to-end integration.

Our Value Proposition:

  1. Professionals with deep domain knoweldge and technical expertise in AML compliance (KYC/CDD/EDD, Sanction Screening and SAM) as well as Trade compliance (Market Manipulation and Abuse).
  2. A host of checklists and frameworks, which help automate compliance processes and bring cost efficiencies thereby minimizing reputational risks and regulatory penalties.
  3. Applying RPA to automated the AML manual process and apply machine learning to improve on false positives.
  4. Expertise in leading compliance products including Actimize, Mantas and SAS.

As a case in point, Virtusa co-created the compliance solution for enhanced Due Diligence & U.S. sanctions screening for a Tier 1 global bank.

FCC Analytics

Deploying sophisticated analytics solutions to prevent fraud

FCC Analytics

Regulators are implementing mechanisms that are helping strengthen the financial ecosystem while at the same time reduce fraud. As a result, financial institutions are applying FCC analytics modeling techniques including text mining, sentiment analytics, social network analysis, behavioral modeling to detect suspicious activities and perform link analysis. Virtusa’s analytics framework is enabled by the application of machine learning in a hybrid mode to identify and analyze unusual activities from historical data. This helps in better decision making leading to a reduction in false positive and increasing the productivity of true alerts.

 Our Value Proposition:

  1. Enable holistic communication surveillance by applying Data Lake and Machine Learning techniques to detect market manipulation and abuse activities in near real time.
  2. Deployment of statistical model-based tools to monitor, analyze, and act on the data based on trade behavior pattern recognition enabling real-time decision making.
  3. Go beyond traditional rule based surveillance to identity anomalous behavior by applying financial crime analytics on transactional and market data.

Virtusa is in conversation with various financial institutions to apply analytics for becoming more efficient and productive in their financial crime compliance.

Validation of Transaction Monitoring & Filtering Solutions

Better compliance with DFS guidelines to help fight money laundering & terrorism

Validation of Transaction Monitoring & Filtering Solutions

Under the new DFS regulation (final rule 504), Financial Institutions (FIs) are required to review their transaction-monitoring and filtering programs to ensure that they are reasonably designed to comply with risk-based safeguards. Virtusa’s framework helps FIs to get certified with DFS on an annual basis, validate AML risk assessment programs and red flag money laundering transactions. Virtusa provides end-to-end pre-and post-implementation and data validation. It also has a robust methodology for alert investigation and SAR filing, ongoing analysis, governance and vendor selection.

Our Value Proposition:

  1. Appropriately matches the BSA/AML risks to the financial institution’s businesses, products, services and customers/counterparties.
  2. On-going analysis to assess the logic and performance of the:
    1. Technologies and tools for matching names as well as accounts
    2. OFAC sanctions list and the threshold settings to see if they continue to map to the risks of the financial institution.
  3. Validation of the integrity and quality of data to ensure that accurate and complete data flows through the transaction monitoring and filtering program.

Virtusa is in conversations with multiple clients to apply this framework to be compliant with the NYDFS regulation in 2018.

AML Risk Assessment Framework

Framework for implementing the risk-based approach as part of the AML program in banking and other industries.

AML Risk Assessment Framework

As regulators tighten AML compliance globally, banks and financial institutions (FIs) are revisting their client relationships and client acceptance processes. Virtusa has developed a framework to implement a risk-based approach towards AML compliance programs. The framework adopts best practices and guidelines from the FATF recommendations, Wolfsberg principals, EU Fourth Directive and BSA/AML Risk assessment guidance. The essential components of the framework to identify the risk rating are, customer, geographic, product & services and delivery channels.

Our Value Proposition:

  1. Abilty to identify low, medium or high risk customers and appropriate mapping of red flags for population groups of customers.
  2. Application of relevant risk factors to specific models, based on relative risk weights and resulting score contributions.
  3. Enable FIs to evaluate the strengths and weaknesses of their complaince efforts, define enterprise-wide and customer-level risk models, and gain a solid business perspective during the implementation of AML software solutions.

Model Risk Repository

Integrated system for governance of models to mitigate model risk

Model Risk Repository

Models were developed in silos without an enterprise-level governance, leading to inconsistencies in data-quality, quantitative methodologies, model uses and validation processes. As a result, banking and financial services firms have felt the need for a comprehensive model risk repository. Virtusa’s model risk repository framework helps banks establish a centralized system to manage all their internal risk models and harmonize governance. The framework provides the bank with an inventory of models along with the proper model assumptions, documentation policies and infrastructure to ensure sound model risk management.

Our Value Proposition:

  1. Reduction in the manual efforts required to appropriately manage inventory, documentation, and communication, as well as monitor changes and audit firm wide models.
  2. Ensure clear oversight throughout the bank’s model risk life cycle, including well-controlled model development, implementation and policy.
  3. Centralized capability to manage and track core processes as well as workflows throughout the Model Life Cycle.

As a case in point, Virtusa has built model risk repository for a Tier 1 global bank.

Regulatory Reporting Workbench

Enabling better governance processes for end-to-end regulatory reporting

Regulatory Reporting Workbench

Banks and financial institutions are facing multiple challenges due to the increasing complexity of regulations being rolled out globally. While regulators are now focused on internal controls and process governance, issues with data quality and the limitations of manual processes are forcing banks to spend huge efforts in generating reports. Along with the correctness of the numbers, the Fed and EBA also monitor the bank’s risk management practices – internal controls, governance, management oversight and accountability. Virtusa’s Regulatory Reporting Workbench is an overarching solution that helps banks streamline the entire regulatory reporting process without disturbing their existing infrastructure. The solution integrates with the bank’s current state architecture and provides complete control over the regulatory reporting process, provides orchestration and governance of risk and finance reporting lifecycle from the data source to the regulatory reports.

Our Value Proposition:

  1. Flexible workflows to connect all stakeholders with the ability to add new systems, processes and user-roles.
  2. Blends with the existing banks landscape and runs across as back bone of regulatory reporting process including end-2-end rules framework, model and scenario management, results analysis, dashboards, workflows and Audit trails.
  3. Strong partnership with Pega on which the POC platform has been built.

As a case in point, Virtusa enhanced reporting process automation, which led to a 35% saving of efforts and time for a Tier 1 US Bank.

 

Risk Monitoring with In-Built Analytics

Gain enterprise-wide visibility of risk for better decision making

Risk Monitoring with In-Built Analytics

Banks are realizing the importance of data beyond simple risk data compliance. Instead, they are seeking ways to use this data strategically by leveraging advanced analytics and digitization in order to support business growth. The growth of analytics technology, lower costs of storage and processing, and need for near real-time risk monitoring will continue to boost the potential of risk analytics and decision making. This trend has been recognized by multiple functional areas within the bank including credit, trading, risk management, scoring and internal ratings among others. Virtusa deploys customized risk monitoring solutions after ascertaining the required risk measures and their appropriate dimensions. Our deep capabilities in decision science and hands-on experience across all areas of risk management, makes it possible to measure, quantify, and deploy predictive risk models.

Our Value Proposition:

  1. Conceptualize risk visualization across multiple areas of financial risk management and an exhaustive reference library of dashboards.
  2. Existing library of visualizations covering market risk and credit risk for both corporate as well as retail businesses.
  3. Near real time risk dashboards with integrated analytics and decisioning tools that enable CROs with a deeper vision into risk across the bank.

As a case in point, Virtusa enabled market risk monitoring in near real-time for a Tier 1 investment bank, which improved bandwidth of operations by 10% and reduced the time to generate reports by 50%.

 

Scenario Manager

Create, manage and distribute scenarios for analysis and stress testing

Scenario Manager

With the global economic meltdown, regulators have put stringent mechanisms in place to ensure a repeat of 2009 crises does not happen. They are demanding that financial institutions implement more transparent, repeatable, and auditable stress testing processes that integrate data, models, and reports. The Virtusa scenario manager framework allows banks to facilitate end-to-end organization-wide stress testing and capital planning exercises. The framework gives banks the ability to analyze a variety of scenarios that can occur as a result of ever-increasing market volatility and changing regulatory expectations.

Our Value Proposition:

  1. The integrated regulatory reporting and business intelligence capabilities offer a report submission service and key business strategy reporting functionality.
  2. A rich library of risk factors for multiple stress testing processes and systems.
  3. Meets internal and regulatory requirements of the bank for scenario analysis using a single platform.

As a case in point, Virtusa created a Scenario Manager for a Tier 1 US Bank for sensitivity analysis, scenario analysis and stress testing thereby reducing the average scenario creation time from 3 weeks to 4 days.

Data Lineage Solution

Achieve better compliance with BCBS239

Data Lineage Solution

BCBS 239 has set a standard for regulators globally and thus D-SIBs and other non-G-SIBs have sought to conform as well. More frequent regulatory targeted reviews also are expected, such as ECB’s thematic review of BCBS 239 compliance for G-SIBs. As a result, banks are required to diagnose and examine their data and reporting architecture, capabilities and governance weakness by conducting enterprise, risk and business-wide gap assessments. Through data lineage, organizations can trace sources of specific business data, which enables them to track errors and apply steadier data governance protocols. Virtusa’s Data Lineage solution provides a framework to create a lineage across the lifecycle from transactions to reporting – tracking it across the banks various lines of business.  It concentrates on four themes running through the BCBS239 principles that require focus – completeness, timeliness, accuracy and adaptability.

Our Value Proposition:

  1. Virtusa’s Data Lineage Solution supports a variety of databases -Teradata, MySQL and Oracle as well as ETLs including – MF JCLs, Informatica and Datastage.
  2. Ability to capture Data Lineage and Object Lineage, automatic comparison and validation as well as connectivity to any GraphDB or visualization tools for reporting.
  3. The solution can save both time and money by identifying the origination of data in reports and the systems where poor quality data exists.

As a case in point, Virtusa re-engineered the risk data for compliance with BCBS 239 for a Tier 1 investment bank. For one risk measure, Virtusa helped the client eliminate more than 100 EUCs and achieve complete STP into a single computational engine for that measure.

Risk Model Validation

Gain greater confidence about the effectiveness of your risk management processes

Risk Model Validation

Risk, pricing and other related models, whether analytical or numerical, are crucial to the success of any financial institution. With the current regulatory and competitive market scenario, banks need to keep on developing and updating adequate and proper models. Further, these models should be continuously validated and tested to manage model risk within business complexity and regulatory scrutiny, and ensure clear oversight. Virtusa Model Validation Framework provides comprehensive testing and technical services to assist with regulatory compliance issues. With our structured approach to model testing including all components in the model lifecycle, we enable our clients to focus clearly and mitigate model risk – enabling better and timelier decisions.

Our value proposition:

  1. Model governance framework comprises of model documentation, policies and procedures.
  2. Validation of model assumptions ensuring treatment for stale assumptions, observable references and taking care of consistency and relevance.
  3. Processing checks that include core model logic, calculation / processing as well as internal integrity.