Case Study

Major Bank Addresses Regulatory Restrictions with Comprehensive Client Risk Management

Anonymized Case Study

Impact summary

  • Increased accuracy of client risk ratings.
  • Enhanced flexibility for further methodology customizations.
  • Improved operations with alert trigger automations.

The challenge

Overhauling a compliance risk management program

A Fortune 500 U.S. bank faced a cease-and-desist order over alleged deficiencies in its anti-money-laundering controls, requiring an overhaul of its compliance risk management program. To address regulator concerns, the bank needed a new client risk scoring methodology that would provide a more accurate understanding of individual client risk as well as overall risk exposure.

The existing client risk rating methodology was unable to adapt easily to changes in scoring decision logic or risk factors, limiting the bank’s ability to customize or enhance the risk rating model for greater accuracy. The bank needed a technology partner to support the new configurable and comprehensive methodology across clients and accounts on a singular platform that could draw upon siloed source systems. The new risk rating platform would need integration with the bank’s case management system to enable programmatic alerts to initiate enhanced due diligence (EDD) on high- risk clients. The platform had to make client risk rating data accessible to risk managers and investigators to inform downstream risk assessment processes.

The approach

A comprehensive new client risk rating methodology

The bank submitted plans to regulators detailing a comprehensive new client risk rating methodology to improve overall risk scoring accuracy. Enigma was selected as its technology partner to implement the methodology through a new risk rating engine and platform after demonstrating the capabilities to develop and iterate rapidly.

Enigma first addressed the bank’s siloed systems which limited its ability to put all of the data for risk, to good use. The team mapped the bank’s fragmented data (client and account) from sources across the enterprise, and constructed pipelines that would integrate the disparate data into the new engine. From there, Enigma programmed the risk engine according to a series of prescribed complex rules and decision trees that assess risk based on a range of client and account-related characteristics. For long term adaptability, the highly-configurable risk engine, calibrated to the bank’s new risk assessment methodology, could be further customized to changes to scoring decision tree logic or additional underlying risk factors. Now, the engine sits within a new platform, integrated with the bank’s case management system. This alignment enables programmatic alerting triggers based on high risk ratings.

The platform also streams the risk scoring output into Enigma Dossier™, an application that visually contextualizes entities, their attributes, and their relationships. Enigma Dossier makes client risk data more accessible to the bank’s Financial Intelligence Unit and line of business risk managers. They gain secure access to detailed information for every account and related client, including rich context, risk ratings, and contributing risk factors.

The solution

An accurate and flexible customer risk assessment strategy

The new risk engine now powers an accurate, holistic, and flexible customer risk assessment strategy. As a result, the bank is well positioned to demonstrate to regulators a newly comprehensive and customizable client risk rating methodology, along with a vastly improved understanding of its overall own risk exposure.

Now, the bank assesses client risk exposure fully and accurately and also possesses the capabilities to advance future client risk management and due diligence initiatives.