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Truth Technologies Incorporated has developed a set of products that uses information technology to increase the safety and freedoms of individuals and businesses involved in financial transactions. The main product is Sentinel. Sentinel is based on the unique application of powerful technologies that have been extended for commercial use and is specifically tailored to assist the financial community in reducing fraud and meeting the requirements of the US Patriot Act.
Sentinel assesses the risk of an account holder participating in money laundering, fraud or criminal activity. This check can be done before or after an account is opened. The account holder (herein after referred to as "the Applicant") is checked against a set of government and private data sources. Identifying information about the applicant is compared against these data sources to determine if the Applicant poses a high risk of being involved in fraud, crime or terrorism. A risk level of "High", "Medium" or "Low" is then assigned for each data source check. Details about why an applicant received a particular risk level for a given data source are available for review. This aids the Compliance Officer in the final decision regarding the total risk of an applicant.
Sentinel assesses the risk associated with an applicant. However, the risk assessment process is not limited to the account holder; instead, the process is broadened to assess the risk associated with those which share a relationship with the account holder. For example, individuals may have a higher risk because of their employer, or because of the persons that control that employer are deemed to be high risk. This form of risk assessment is holistic. It is akin to an analyst building a 'network diagram', one that describes the relationships between entities and gives a truer picture of risk than checking just the applicant's data alone.
Sentinel Data Sources
The Truth Technologies Incorporated software, Money Laundering and Fraud Detection System ( Sentinel), was specifically designed to assist community banks in reducing fraud by complying with the amendments put forth in the USA Patriot Act. Sentinel focuses on the idea of "know your customer" and has the functions of a Customer Identification Program. It allows financial institutions to input client information and assess the risk of an account holder participating in money laundering, fraud or criminal activity. This check can be done before or after an account is opened. The customer is checked against a set of government and private data sources. Identifying information about the customer is compared against these data sources to determine if the Applicant poses a high risk of being involved in fraud, crime or terrorism. Details about why an individual received a particular risk level for a given data source are available in Appendix A. This aids the Compliance Officer in the final decision regarding the overall risk of a client.
The Patriot Act states that the CIP must contain risk-based procedures for verifying the information that the bank obtains within a reasonable period of time after the account is opened. The financial institution must compare the obtained client information with the documents suggested in the Patriot Act and/or any other documents provided that they allow the bank to establish that it has reasonable belief that it knows the true identity of the customer. Sentinel checks the acquired client information on several U.S. and International data sources, which include: Office of Foreign Assets Control lists; U.S. Social Security Numbers list (Issued Numbers); Social Security Master Death File (Revoked Numbers); United States Postal Service Zip+4 Master File; World Bank Listing of Ineligible Firms; U.S. Department of Commerce Denied Persons List; Politically Exposed Persons; FBI Most Wanted Terrorists; and Non-Cooperative Countries and Territories. The following chart shows a sample of US data sources that perform both the identity checks and the watch list checks.
These information sources enable financial institutions to verify the identity of an individual for financial services. Sentinel also assess the risk associated with those who share a relationship with the account holder. For example, individuals may have a higher risk because of their employer, or because of the persons that control that employer are deemed to be high risk.
The Patriot Act specifically states that a bank must have procedures for determining whether the customer appears on any list of known or suspected terrorists or terrorist organizations provided to the bank by a federal government agency. To comply with this requirement, Sentinel checks that individual attempting to open account does not have the same name as a Person on the FBI's Most Wanted Fugitive or Terrorist list. In addition, applicant names and addresses are checked against the Office of Foreign Asset Control list to ensure that the person is not a specially designated national or terrorist and applicant and company country are checked against the sanctions program.
The Patriot Act requires that a bank should employ reasonable efforts to identify accounts maintained by for senior foreign government or public officials as well as their immediate family and/or close associates. In response to this requirement, Sentinel checks that the individual opening an account does not have the same name as a politically exposed person on the Central Intelligence Agency's Online Directory of Chiefs of State and Cabinet Members of Foreign Governments.
The Patriot Act states that firms should pay particular attention to those accounts located or incorporated in certain countries or regions identified by recognized international organizations, multilateral expert groups, or in governmental or industry publications. These places are seen to be non-cooperative with international anti-money laundering principles or procedures or having inadequate anti-money laundering measures. Sentinel verifies that the individual or company opening an account does not reside in a country on the Non-Cooperative Countries and Territories list in order to comply with the requirement.
For each data source, Sentinel assigns a risk level of "High", "Medium" or "Low" depending on the results of the check. Therefore, by comparing the client information with the above documents, a bank using Sentinel can make a strong statement on the identity of the client and determine the risk that the individual may pose. The data sources used not only allows Sentinel to comply with the Patriot Act criterion in determining a client's identity and risk level but also assists banks in reducing the chance of money laundering and fraud.
In addition to carrying out the identification procedures, the Patriot Act requires banks to maintain records on how it verified an individual's identity and determined risk levels. Sentinel assists banks in complying with this requirement because the systems saves all of the entered client information and the details of the risk assessment on each customer as well as the details about why an applicant received a particular risk level for a given data source. All of the information is available for review through the "Review Assessment" function of the system.
The Patriot Act requires that all financial institutions fill out Suspicious Activity Reports (SAR) and should therefore, have procedures for detecting and, as required, reporting suspicious activity. Sentinel makes it easy for banks to comply with this requirement as it contains an online version of the SAR, which can easily be filled out, saved, and printed so that it can be sent to the Treasury Department's Financial Central. The system also includes the Currency Transaction Report (CTR).
Noncompliance with the requirements set forth in the Patriot Act will result in stiff penalties levied on the offending financial institution in the form of significant monetary fines and criminal liability. Civil and criminal penalties, in some cases, can range between not less than twice the amount of the transaction and not more than $1 million dollars for any one violation by any financial institution. Penalties may also include complete forfeiture of accounts and property involved in prohibited and regulated transactions. In addition, penalties for non-compliance are $25 000 per day. Criminal charges may also be imposed on institutions that fail to put in place procedures designed to ensure compliance with the act. In addition to fines and criminal action, noncompliance can also result in irreparable loss of reputation.
Needless to say, the penalties resulting from noncompliance can prove to be a very expensive risk. As a result, use of Sentinel by community banks can assist them in taking steps to comply with the new rules outlined in the Patriot Act and avoid these stiff penalties. Furthermore, the fact that Sentinel is an automated system will save banks precious time, which would otherwise be used for the checking of the data sources on a daily basis for updated names and related information by the employees. The system will also eliminate the human error inherent in a manual checking procedure. In addition to compliance, the avoidance of fines and criminal charges, and efficiency, the Sentinel is an integral tool for community banks in money laundering prevention, in general, which will save them from great monetary losses due to fraudulent activities by their clients.