Checking the Lists

Monitoring antiterrorism watch lists and meeting regulatory requirements has been a challenge for insurers, including Baloise Holding (Basel, Switzerland; US$47.1 billion in total assets). "We had no automated processes," says Peter Kalberer, group compliance officer for Baloise, which provides life and nonlife products through its subsidiaries. "Throughout our operations in six countries we manually searched our databases whenever a regulator updated its blacklist," he adds, noting, "Results were inexact because we couldn't effectively search for spelling variations or other complex characteristics that could uncover a match."

In late 2003 Kalberer turned to Baloise's professional services partner, Ernst & Young, (New York), to leverage E&Y's experience in the banking sector. "Ernst & Young was familiar with the technologies and the vendors," he says.

E&Y identified 20 potential vendors, which were pared down to four in spring 2004. Of those, Norkom Technologies (Dublin, Ireland) offered the most-holistic anti-money laundering (AML) solution at an affordable cost, Kalberer contends. "Systems used by larger, global companies, were price prohibitive," he says. "Of the options in our range, only Norkom had ... a complete audit-ready solution. Others provided name-matching technology, but not the compliance component. We wanted plug and play."

Before inking a deal, Baloise requested a three-month pilot. The Sun Microsystems' (Santa Clara, Calif.) Sun Fire V440 powering Baloise's Oracle (Redwood Shores, Calif.) database was sufficient for running the Norkom AML software, so no other hardware or software investments were required, Kalberer notes.

Drawing a sample of customers, partners and suppliers from its database, Baloise used the pilot to establish the proper alert level. "You must verify and document every alert," explains Kalberer. "If you generate too many false positives, it's very time-consuming."

After the pilot, Norkom representatives completed the installation in about a week, providing hands-on training to IT personnel in the process. Since scripts written by Baloise would automatically pull data from the company's records and aggregate the information in a file to be fed into the AML application, a large part of the installation involved determining what information was needed from the database and how IT would extract it, Kalberer says. By April 2005 the corporate headquarters was fully deployed.

Kalberer's team then presented Baloise entities outside of Switzerland with the opportunity to tap the Norkom AML solution. "Uploading data to headquarters for centralized matching and analysis offered cost efficiencies due to group licensing from both Norkom and Oracle," he explains.

In early 2006, Baloise conducted internally developed one-day training seminars that covered new AML policies and procedures as well as the software. "Overall, the implementation was quite smooth," Kalberer says. "We were fully implemented by February 2006." Baloise upgraded to version 5.5 of the solution in January 2007.

Although overall automation gains have been largely offset by the staffing required to process additional alerts, reducing head count wasn't the goal, says Kalberer. "Before Norkom, we couldn't perform robust similarity matching," he says. "Now, with the same level of staffing, we're confident that we have no relationships with any entities on the antiterrorism watch lists."

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio