Technology to combat money laundering

Monday 11.08.2014 Christian Walter
Christian Walter

Christian Walter ist Geschäftsführer und Redaktionsleiter von swiss made software. Bis Ende 2010 arbeitete er als Fachjournalist für das ICT-Magazin Netzwoche, publizierte zuletzt aber auch im Swiss IT Magazin, der Computerworld sowie inside-it.

Regulations in the financial sector are becoming increasingly complex. No wonder even regulators have to rely more and more on advanced IT solutions to avoid getting lost in the legal jungle.

Creative thinking in airy environments: Helbling’s engineers at work.

A two-stage concept

The VQF commissioned the engineering services provider Helbling to a twostage concept for the modernization of its somewhat outdated IT solution. The first step was to centralize the external services in a customer portal. This was followed by replacing the more than ten year-old back-end application. This required optimization, expansion and new implementation of internal processes and functions of the old application using modern technologies. The new development not only supports seamless cross-media work, meaning work across all media without any paper or duplication. Also, this protects all data against unauthorized access by logical and physical separation of the two applications.

Protection against intruders

This security optimization is especially important since the VQF is charged with performing regular audits of its members. Sanctions can be imposed if irregularities are detected. They may range from administrative measures through contract penalties or withdrawal of membership to extensive arbitration or Swiss Federal Court proceedings. Therefore, under no circumstances may the sensitive VQF data be exposed to external access. But, to return to the customer portal: This tool now provides the entire VQF customer base—no less than 1500 members with more than 10000 relevant contacts— with electronic access to their respective profile data. They can now enter changes to the company statement- of-purpose, business address, or new board member appointments directly in the portal themselves. Previously these things had to be done by mail. Since the VQF has a veto right regarding certain changes, this strongly simplifies its obligatory supervision duties.

Efficiency increased considerably by including a process for the agreement of audit dates in the customer portal. Instead of having to arrange these dates by phone or email, they can now be entered digitally 24/7. The system also supports the auditors: If an audit date is approaching, all documents required are made available to the auditor in advance. Once the job is done, the auditor can even enter the working hours spent digitally, ensuring consistent and proper invoicing.

Responding to legal changes
The administration of training programs, which are another core responsibility of the VQF, was simplified by a further module. Financial intermediaries are legally obliged to keep their knowledge of changes in the law current by participating in training courses and seminars. Both members and non-members can now register for courses in the customer portal. This even includes the electronic course documents.

The VQF itself also has to give account of its activities and reports to the Swiss Financial Market Supervisory Authority (FINMA). Once a year, it presents a declaration to FINMA in the form of an extensive set of statistics showing the number of changes, new and resigning members, sanctions, arbitration procedures, expulsions and similar events. The declaration used to take several days to complete; now the application generates it automatically in a matter of minutes. This is an important component of the new back-end which was created during the second stage of the project.

Since this VQF declaration is based on the reports submitted annually by members, it was important to keep the application  sufficiently flexible to permit dynamic adjustment of the input masks by the VQF without any need for reprogramming. Legal changes often require changes in the questions to be answered by members. The customer portal supports administration of these questions without any changes to the software both in the user interface and in document creation.

Invoice automation

The back-end is also connected to the accounting system. Invoices for the changes and training programs mentioned above can now be created automatically and transferred directly to the customer service application, successfully automating yet another formerly manual process. Large software projects like this naturally entail certain risks. Especially during the last ten years, the old application had been extended repeatedly — unfortunately without any documentation.

Data quality, too, was inadequate, which presented a major challenge for data migration. To guarantee the required investment security for the VQF, a cost ceiling was agreed on. Helbling was able to guarantee this cost limit because it had sufficient specialized expertise from similar projects. Other factors were also central to the success of the project, in particular customer proximity, domain know-how as well as affinity in terms of language and culture. Technically, the solution was implemented on the JavaEE platform, and only open source components were used.

Both the customer portal and the backend system were received very positively by VQF members and employees. The end-to-end solution has improved transparency and created a better overview for both members and employees. At the same time, the work expended on repetitive tasks was reduced dramatically, and many process steps are now automated. The customer portal was implemented in just six months and has been live since December 2012. The back-end application was completed in eight months and has been in operation since August 2013. Both systems were delivered as scheduled and on-budget.