SMARAGD FPD IT-based system for the - cellent finance solutions AG

07/2010 

ANTI-FINANCE-CRIME SUITE 

by Cellent Finance Solutions AG 

SMARAGD 

Successful solutions to 

fight financial crime



Crim 

The challenge 

of financial crime 

2 

The obligation. Financial crime has many faces. 

No matter if it‘s money laundering, financing terrorism or 

insider trading – Financial crime poses a serious threat for 

our society and for the international financial systems. Financial 

institutions are abused - most of the time without 

their knowledge - as mediators for illegal transactions or 

business deals. 

It is a special obligation, to protect financial institutions 

and therefore the entire financial system against financial 

abuse. Intelligent IT systems support the financial institutes 

in their fight against financial fraud.

e Contents 

© Cellent Finance Solutions AG 

All rights reserved. The contents of this document from Cellent Finance Solutions AG are 

protected by copyright. Texts and graphics may not be used or reproduced, either in whole or in 

part, without previous written authorizations from Cellent Finance Solutions AG. 



1. The financial crime challenge 

2. Overview of the SMARAGD 

product snite 

■ SMARAGD MDS 

Post Transaction Monitoring, 

Anti-Money-Laundering 

■ SMARAGD TCM 

Watch List Filtering, financial 

sanctions, customer screening 

and combating of terrorism financing 

■ SMARAGD CRS 

IT-based Risk assessment 

■ SMARAGD FPD 

Detection of financial fraud 

3. Internationality 

4. Experience in fighting financial crime 

3



SMARA 

Financial Crime 

The financial crime challenge 

Legal provisions 

The national and international money laundering regulations 

have undergone a phase of radical changes and 

tightening. 

Ever more frequent and comprehensive sanctions 

against infringements of legal provisions, especially by 

the U.S. American authorities, have increased the sustained 

pressure to enforce national and international money 

laundering regulations. 

4 

■ Directives of the European Union from 1991, 

2001, 2002 and the 3. EU-money laundering 

guideline of the EU commission from 2005 and 

2006 

■ General instructions for account opening and 

customer identification from February 2003 

■ Consolidated KYC (KnowYourCustomer) risk 

management from October 2004 

■ FATF (Financial Action Task Force), forty + nine 

recommendations, report on money laundering 

typologies 

■ USA PATRIOT Act and Bank Secrecy Act 

Innovation and further development 

The SMARAGD product series is being continuously 

further developed to meet the international requirements. 

Thus, permanently protecting the investments of our 

customers.



GDAnti-Finance Crime Suite 

SMARAGD – convincing facts 

■ SMARAGD it is being utilized successfully 

nationally and internationally by over 750 

institutions 

■ Our long-term international experience ensures 

short implementation times 

■ Several innovative functions that help ease the 

work process within your organization 

■ SWIFT certification of the payment 

component S/MGS 

■ Identification of Politically Exposed Persons 

„PEP“ 

■ Since it is completely configurable, organizations 

can promptly adjust their parameters to altered 

money laundering behaviors 

■ The effectiveness and functionality of 

SMARAGD is confirmed by leading auditing 

firms 

■ It offers customers the highest degree of 

security for the compliance with legal 

requirements 

■ Seven of the 10 largest banks in Germany utilize 

SMARAGD worldwide 

■ Deployed in more than 40 countries 

The SMARAGD product snite consists 

of modules with different 

functions for combating financial 

Crime: 

SMARAGD MDS 

■ Anti-Money-Laundering in financial 

institutions 

■ Fulfillment of the international legal 

requirements 

■ Risk based approach and 

KnowYourCustomer-policy 

SMARAGD TCM 

■ Watch list filtering 

■ Checking of the customer base against 

institution specific, national or international 

sanctions 

■ Combating the of terrorism financing 

■ Customer screening 

SMARAGD CRS 

■ Risk assessment regardingfinancial crim 

■ Risk assessment of the current customer 

and product base 

■ Risk oriented procedure for the definition of 

Countermeasures 

SMARAGD FPD 

■ Identification of financial fraud in banks and 

insurance companies 

■ Customer and business specific rule code 

■ Short and long-term analysis to identify 

financial fraud 

5



SMARA 

MDS 

Tackling money laundering 

and financial fraud 

Intelligent IT system for the analysis and defense Top Business Edition 

against money laundering in financial institutions 

The internationally employed, MDS fulfills the legal 

requirements regarding the preventive measures against 

money laundering and financial fraud. 

Adaption to the institution specific threat situation 

Known money laundering and fraud patterns are stored 

in the system and can be flexibly adapted to the internal 

threat analysis of the institution. The financial institution is 

supported by the national and international experience of 

Cellent Finance Solutions. Currently there are up to 200 

money laundering and fraud typologies stored in 

the system. 

Money laundering scenarios 

Money laundering scenarios, fraud typologies and indicators 

can be freely configured within the system. They 

are adaptable to new typologies at anytime - without any 

program alterations - solely through the configuration. 

To perform this, comfortable and easy to use dialogs are 

available to the user. 

Profiling: dynamic money laundering detection 

The detection of money laundering activities is performed 

dynamically, based on business profiles. These are 

automatically updated on a daily basis. Through this, the 

system learns to detect money laundering activities, if the 

business behavior changes. 

MDS also takes into account the complex network 

structures of customer and account relations during the 

analysis. 

Simulation system 

The rule code must be continuously adapted to new 

threat situations. The organization can perform this task 

very effectively and simply with the simulation system. 

All new settings are automatically checked by the system 

and projected to the expected results of the productive 

system. The optimization steps can be repeated as often 

as desired. The user then approves the best setting and 

the simulation system automatically conveys the settings 

into the productive system. 

Changes to the scenario or indicator model are logged 

in an audit-proof way and therefore completely fulfill the 

requirements of the audit 

6 

The Top Business Edition is multi-organisation capable 

and supports these organizational structures of international 

financial institutions. Advanced functions such as the 

gray zone database, data views and reference profiles 

also a components of this addition, next to the simulation 

system which includes the random testing and projection 

features. 

The threshold value generator supports the user in the 

optimization and best possible setting of indicators and 

threshold values. With SMARAGD MDS you are therefore 

able to achieve a high hit rate and keep the „false 

positive rate“ to a minimum. 

Small Business Edition 

The Small Business Edition is designed primarily for 

small and medium-sized institutions and for foreign subsidiaries 

of international companies. Predefined settings 

enable a quick alignment with the institution‘s specific 

threat situation and thus allow for a very short commissioning 

time. 

MDS overview 

MDS incorporates all business activities as well as customer 

and relationship structures of an institution into the 

money laundering analysis process. A special feature of

GD 

SMARAGD MDS is that all discrepancies detected by the 

system are allocated to a customer. This customer view 

greatly eases the analysis work for the user. 

Innovations 

MDS has been continuously expanded and further 

developed since its introduction in the year 2000. The 

following MDS innovations continue to strengthen its 

success: 

■ Simulation system 

► Monitoring for alterations of the scenarios 

through dynamic random data testing 

■ Early warning system 

► A „rolling“ detection of money laundering and 

fraud behavior 

■ Threshold value generator 

► Prognoses of the results, after an alignment of 

threshold values and the selection of the optimal 

threshold values 

■ Know Your Customer with the customer 

profile module 

► Automatic detection of a customer‘s business 

profile for the money laundering and fraud 

detection 



What can MDS perform? 

MDS 

■ Predefined rules and typologies for common 

money laundering and fraud scenarios 

■ Rule code with more than 200 indicators, 

which can be adapted to new threat 

situations through the compliance 

organization. 

■ Early warning system through a daily and 

continuous monitoring 

■ Configurable automatic profile creation for 

all customers and accounts, to identify 

unexpected and unusual business activities 

■ Multi-Organisation capability 

■ Analysis and monitoring of networks 

■ Classification and monitoring of high-risk 

customers 

■ System-Side support for the threshold value 

determination 

■ Role and authorization-based concepts, 

that also take the cooperation of a 

centralized compliance and decentralized 

customer areas into account 

■ Audit-Proof documentation of all processes 

for internal and external audits 

■ Short and long-term analyses 

7



SMARA 

TCM 

Watch list filtering, financial sanctions and 

combating the of terrorism financing 

Early breackdetection 

Low false-positive-rate 

To ensure the embargo monitoring and to prevent terrorism 

financing TCM checks financial transactions and 

customer data for infringements against institution specific, 

national or international regulations. 

8 

■ Embargo filtering of transactions 

(SEPA, SWIFT and non-SWIFT) 

■ Indentification of “bad guys” in the customer 

database (customer screening) 

■ Identifying PEPs (politically exposed persons) 

By implementing TCM economical damages for the financial 

institution can be avoided. International payments 

with a terrorist background and/or that violate EU, US or 

UN requirements or laws can be prevented. 

Daily updated watch lists 

The European Union, the OFAC (Office of Foreign Assets 

Control) and other authorities publish watch lists 

and make them available to financial institutions. If there 

is an alteration in the list, the data files are checked on a 

daily basis with the help of an automatic update mechanism. 

A significant and indispensable characteristic of TCM is 

the checking of name similarities using the undefined 

search logic (fuzzy-logic). 

■ Phonetic similarities, particularly due to various 

spellings in various languages considered are 

considered 

■ Spelling errors do not prevent the detection 

■ Phrases and permutations are taken into 

consideration 

■ Monitoring of documentary bussiness transactions, for ■ Differentiation of the similarity assessment for 

example trading credits, securities 

transactions 

free-text fields 

■ Online webcheck to reject unwanted customers 

The similarity search can be parametrized so that it can 

be quickly adjusted in case of increased security requirements. 

Checking of SEPA, SWIFT and non-SWIFT 

transactions 

TCM monitors transactions, that are relayed to the financial 

institution through the SWIFT-network. TCM performs 

a complete checking of the embargo-relevant SWIFTmessages: 

■ Customer transactions (payments and cheques) 

■ Inter-bank transfers 

■ Treasury, currancy trading, money 

markets and derivatives 

■ Collections and money orders 

■ Securities transactions 

■ Precious metals and cash letters 

■ Documentary credits and guarantees 

Insolvency-filter 

Complex transactions in banks are automated and completed 

nowadays, while taking into account a great deal 

of additional internal and external information. This largely 

poses the risk that payments are made, even though

GD 

the addressee is already in financial difficulty or is even 

close to insolvency. 

These payments can be stopped with the „insolvencyfilter“ 

and thus prevented. 

Identifying PEPs (politically exposed persons) 

With the SMARAGD PEP component, politically exposed 

persons can be identified through the 

intelligent similarity search (fuzzy-logic). The checking 

strategies are configurable, to take into account the heterogenic 

data quality of the PEP lists. 

Innovations 

TCM supports the requirements of the EU regulation 1781 

(on information on teh payer axxounpany transfer of 

funds). SMARAGD TCM detects infringements 

against this guideline and informs the compliance organization 

about the violation. If necessary these transaction 

can be stopped from being processed any further. 



What does TCM perform? 

TCM 

■ Complete checking of all transactions for 

embargo breaches 

■ Highly optimized customer base checking for 

embargo infringements („bad guy“) with 

similarity search, also suited for mass data 

processing (>10 million partners) 

■ Utilization of all relevant external and internal 

watch lists for the embargo 

monitoring, including PEP lists (Politically 

Exposed Persons) 

■ Simplified and quick partner checking with 

the online webcheck to reject unwanted 

customers/partners 

■ Auditing security through a complete logging 

of all relevant events and processes 

■ Case processing for embargo infringements 

with workflow 

■ Flexible maintenance and expansion of the 

checking rule code through the specialist 

Compliance department 

9



SMARA 

CRS 

Risk management based on 

a IT-driven Risk analysis 

Corporate wide risk assessment 

Risk oriented procedure for the definition of measures 

CRS documents the group-wide risk analysis, by 

recording, categorizing and evaluating all threats of fraud, 

such as money laundering, terrorist financing, corruption 

and economic crime. Analyses support the implementation 

of countermeasures, and the action corresponding to the 

threat is also recorded in CRS. 

Risk structuring 

Core of risk analysis is the structuring of all types of risk 

present in the Institute, such as customer and product 

risks, and risks allocated to different industries, geographies, 

processes and transactions. 

The risk assessment is performed with the help of predefined 

centralized indicators. Through this an individual, 

but yet uniform, objective and justified risk assessment 

can be obtained for the respective institution. 

This procedure fulfills the legislative audit requirements 

and the requirements of audit firms regarding transparency 

and traceability. 

Risk assessment of the current customer 

and product base 

A substantial benefit of CRS is the correlation of assessed 

potential risks with the actual customer base and 

the marketed products. This results in various evaluation 

and analysis capabilities, that can extend from the economically 

independent unit, to business areas, and all the 

way up to the corporate level. Temporal trends 

are also transparent. 

10 

All risk areas are allocated to measures, whose quality is 

derived from the respective degree of risk. The complete 

documentation of the currently utilized or planned measures 

in CRS for the second part of the risk analysis. 

Risk-based approach through frequency distribution 

This innovative function of SMARAGD CRS determines 

a frequency distribution of the industry branch risk in an 

economically independent unit. 

In a graphical representation of the degree and frequency 

of the risk, the risk distribution is made transparent 

(heat maps). Through this, the institution can immediately 

notice the main areas of risk. 

In addition to individual evaluation of risk dimensions, the 

distribution of the total customer risk as the aggregation 

of all customer risk dimensions is of greatest interest, and 

is also displayed by the system. 

A further evaluation function is the combination of product 

risks with the customer risks that arise through the 

product usage by each individual customer. 

Summary of the relevant functions: 

■ Objective determination of the risk situation 

within the company 

■ Separated display according to money 

laundering, terrorism financing and fraud 

■ Risk model is preconfigured and flexibly 

adaptable 

■ Freely definable risk dimensions 

■ Multiple evaluation options for the customer and 

product risks 

■ Preparation of the number-data as the basis for 

a threat analysis 

■ Assessments of new customers (CDD/KYC)

GD CRS 

Innovations 

SMARAGD CRS was designed in cooperation with leading 

audit firms and numerous major German banks. 

■ Risk Based Approach 

► In addition to documentation of the risk 

situation of the financial institution, the impact of 

each risk combination based on the transactions 

will be actively identified. 

■ Customer Due Diligence 

► dynamic risk classification of a customer, 

structured according to the customer type, for 

example private customer, business customer, 

correspondence bank etc. 

This module can be used both for the 

continuous risk assessment as well as for the 

risk classification during the customer 

acceptance process. 



What does CRS perform? 

■ Description of all customer, product and 

other risks 

■ Differentiation between money laundering, 

terrorism financing and fraud 

■ Corporate unified evaluation of all risks 

■ Separation of potential risks and actual risks 

■ Risk analyses and evaluations on all 

organizational levels 

■ Documentation and controlling of 

countermeasures 

■ Implementation of the indicator model in 

SMARAGD MDS. 

11



SMARA 

FPD IT-based system for the 

detection of financial fraud 

Financial fraud within banks has many facets and can cial institutions that detects and prevents all types of 

sometimes only be detected after the fraud has been 

committed. According to UN estimations approximately 

5% of the real social product is accrued through financial 

and economic crimes. 

Companies are obligated to implement measures to 

prevent financial fraud. This must be done preventively, 

which means a detection of the fraud for short-term analysis. 

On the other hand this must be performed during 

normal operation, which means immediately prevent any 

further business actions after the detection of a fraud 

attempt. 

Detection of financial fraud 

12 

■ Identification of complex fraud scenarios with 

time series analyses 

■ Daily checking of business activities for fraud 

suspicion 

■ Stopping of suspicious transactions based on 

complex fraud patterns 

■ Identification of frauds and the customer base or 

as business partners 

■ Exposure of corruption and internal fraud 

financial fraud. The application is comprised of two components 

that are combined in a professional way. 

■ Fraud detection 

The methods and procedures for the detection 

of conspicuous business conduct will be used 

together with the processing of historical data 

of customers, accounts and transactions 

(fraud-detection). 

■ Fraud prevention 

Prevention of fraudulent business through the 

online monitoring of transactions 

(fraud-prevention). 

Fraud-Detection 

■ Daily accurate monitoring of customers, 

accounts and transactions for fraudulent 

behavior 

■ Detection of fraudulent behavior based on 

predefined behavior patterns 

■ Creation of customer and account profiles, that 

described the business behavior of each 

individual customer 

Fraud-Prevention 

In Fraud-Prevention the payment is monitored in real 

time for a predefined set of risk factors, such as the payment 

amount or involved risk countries. 

If during a payment significant deviations are detected 

which can indicate a financial fraud, the payment will be 

stopped. Subsequently this transaction will be analyzed 

by the case processing department. 

■ Online checking of payment transactions based 

on customer profiles due to a fraud suspicion 

■ Stopping and evaluation of online transactions 

with fraud suspicion 

SMARAGD FPD contains intelligent rule codes as well Case processing 

as scenarios and indicator models, which are adjustable The screening results are antomatically and audit-securely taken 

by the staff of the Compliance Department. over in the application, where they can be processed in a work- 

The SMARAGD FPD is the all-in-one solutio n for finan- flow. Case data is a relived and can be used in subsequent

GD FPD 

Innovations 

researches. 

Examples for fraud patterns: 

■ Detection of fraud and unwanted business 

partners in the customer base 

■ Monitoring of risk payments, such as 

- risky business partners 

- risky countries 

- risky business types 

■ Account looting through stolen/forged account 

authorizations (phishing) 

■ Capital collection points for illegal money or 

illegal usage 

■ Financial agents for camouflaging illegal money 

■ Corruption 

■ Direct debit fraud 

■ Misuse of dormant accounts 



SMARAGD FPD combines the methods of long-term 

analysis of abnormal movements of funds with the methods 

of online transaction monitoring for the prevention 

of fraudulent financial transactions. 

What does FPD perform? 

With SMARAGD FPD fraudulent behavior of customers, 

business partners and staff can be detected 

through a long or short-term analysis. The fraud 

scenarios are configurable and can be modified or 

supplemented at any time by the specialist department. 

13

14 



SMARAGD 

Internationality 

SMARAGD is �eployed in more than 40 countries 

The SMARAGD product suite has established itself 

internationally as an IT system to combat financial crime 

in financial institutions. Our customers 

benefit from our knowledge and the experience that we 

have gained through numerous consultings, during the 

implementation of money laundering solutions and the 

combating of terrorism financing. 

International scenario and indicator model to combat 

money laundering 

The core of combating fraud in financial institutions 

is a comprehensive model with more than 200 scenarios, 

which are used for money-laundering detection. The 

knowledge of specific factors regarding individual countries 

has also been integrated. 

International rule code for combating the terrorism 

financing 

For the monitoring of financial transactions, TCM offers 

a comprehensive rule code for the detailed monitoring 

of SEPA, EBA and SWIFT-message types. All types of 

financial business transactions - including the checking 

of documentary credit transactions, treasury etc. - are 

contained therein. 

Internationally oriented financial institutions 

SMARAGD is deployed at internationally operating institutions, 

including the wordl's largest banks, and their respective 

foreign brauckes. It is used in important financial centers 

such as London, Luxembourg, Zürich, Frankfurt, Moskau, 

Tokyo and Singapore. 

What does SMARAGD international 

perform? 

■ Corporate enabled applications with a depiction 

of all kinds of corporate structures 

■ Multilanguage capability 

■ Multi-organisation capability 

■ International scenario/indicator model 

and rule code 

■ SWIFT certified 

■ Employed internationally in more 

than 40 countries 

■ Worldwide hot line 

■ International consulting



knowledge in 

combating financial crime 

SuiteExpert 

Cellent ■ Finance Leasing Solutions companies 

AG is a leading provider in the 

field of IT-based money laundering, terrorist financing 

combating as well as embargo and financial sanctions 

monitoring for the financial industry. The SMARAGD 

product family is employed at 750 financial institutions, in 

more than 40 countries. In Germany, seven of the ten 

largest banks use SMARAGD solutions to fight financial 

crime. 

Cellent Finance Solutions offers a high degree of 

professional and technological know-how. Our knowledge 

advantage is the result of a close cooperation with the 

financial community as well as with the leading technology 

providerand software manufacturers. 

The Cellent Finance Solutions AG with headquarters 

in Stuttgart is a 100 % subsidiary of the Landesbank 

Baden-Württemberg (LBBW). 

Application fields of SMARAGD: 

■ Retail banks 

■ Direct banks/online banks 

■ Data centres 

■ Federal State Central Banks 

■ National banks 

■ International financial institutions 

■ Securities-services provider 

■ Insurance companies 

■ Online gambling 

SMARAGD – the leading solution in 

the fight against fraud 

SMARAGD is scalable and used by globally operating 

major institutions as well as in small and middle sized 

banks. 

15



Cellent FS Imprint 

Cellent Finance Solutions AG 

Calwer Str. 33 

D-70173 Stuttgart / Germany 

+49 (0)711 222 992 900 

+49 (0)711 222 992 899 

Visit our Website: 

www.cellent-fs.de 

Further Information: 

info@cellent-fs.de 



16

SMARAGD FPD IT-based system for the - cellent finance solutions AG

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