1. Yellow Hammer™ Risk Management Solutions1

2. Yellow Hammer Risk Management
Yellow Hammer Fraud:
Detection of fraud within the following modules:
On Us
ACH
POS
ATM
DEP
EFT Module:
Real Time Monitoring
Pin and Signature Based Transactions
After-Hours Monitoring
Yellow Hammer BSA:
Enterprise Wide BSA Solution 2

3. Technology JAVA Version 5 Client / Server Integration
Microsoft Windows Server 2003 Platform
Microsoft SQL Server 2005 Database
Integration
Standardized Data Import Format
Core
Teller
Wire Transfer
Other Business Lines
Web Service Components
Integration is a key to the way this product works. Integration has to do with the systems ability to collect information on an automated basis from various sources. We integrate through two different ways: First is the Standardized Data Import Format. This has to do with collecting financial information on your member from other applications that may be processed outside of the core system. For example, if your institution offers insurance or brokerage services that are processed by a third party, through the standardized data import format, the layout of the data that will be needed to complete the profile of the member can be provided to the third party and that information can be added on a scheduled basis in to YH BSA.
Web Service components – Provide Touch Points to areas of the bank to help facilitate collection of information when it is needed, such as, in the area of the MSR and Teller, where due diligence information is necessary to collect, the web service components interact with the New Accounts system to collect the necessary information on the member at the source during the new accounts process.

4. Benefits Reduce Compliance Risk
Consistently Apply BSA Policy & Procedures
Accurately Assess Client Risk
Enforce Structured BSA Review Workflow
Facilitate Management / Board Oversight
Yellow Hammer Fraud / EFT Integration
Turnkey Implementation
Complete Enterprise BSA Compliance Solution
Reduce Compliance Risk – Of all the benefits associated with this product, the most obvious, is to reduce the overall risk of the bank in an ever changing & evolving BSA landscape. We hope to provide a best of breed solution that will meet not only today’s requirements, but those of the future as well.
We also hope to apply BSA Policy & Procedures consistantly over the client base. For those banks with current BSA programs, we will automate many of the procedures that are currently done manually. For those banks that do not have a firm grasp of the BSA requirements, the product will assist and guide the bank into performing the necessary procedures to be in compliance.
Accurately Assess Client Risk – We will also allow the bank to accurately assess client risk, whether it is a new or existing client, the bank will be able to rank them from top to bottom in a risk model based upon a number of components that are outlined in the BSA Compliance Quidelines.
Enforce Structured BSA Review Workflow – The product will also force a structured review of Risk Ranking, Transaction Monitoring, as well as, any due diligence efforts that are required to ensure the bank is following up on those required items.
Facilitate Management/Board Oversight – We will also assist in the transparency of your BSA solution all the way through senior management all the way up to your board of directors. That way everyone is informed of what efforts the bank is putting forth, the current status of those efforts and where the bank stands in relationship to the banks BSA Policy and Procedures at any given time.
Yellow Hammer Fraud/EFT Integration – For those existing customers of YH Fraud/EFT there will be integration into both of those current products to leverage the risk model that is already established there and include that information into the risk ranking component of the client. The system will also tie those areas together from a Case Management and Suspicious Activity Reporting standpoint. Once again, the system will be fully integrated to allow information to flow from one system to another will minimal effort. If you are a current user of the YH AML System the BSA Redi System will be a complete replacement for that system. We will be happy to assist the bank in looking at the benefits of both systems and help them determine which one is the best system for the banks current demands.
Turnkey Implementation – By turnkey we mean that this product will carry value the day the system is implemented in the bank. This is unlike most all the other BSA Products that are currently available on the market that require the bank to have the system running for weeks or months before there they can get any meaningful information to the bank.
Complete Enterprise BSA Compliance Solution – In summary, probably the most important point is that we are providing a Complete BSA Solution. A couple of key points to point out is that we are taking on all aspects of the banks BSA needs, not just focusing on transaction monitoring, or CIP or just SAR reporting. Also that this is an Enterpise-wide Solution that encompasses going beyond the Core Banking offerings to areas like Insurance, Brokerage, Trust that will give the bank a consolidated view of the banks enterprise. This goes even beyond tracking client relationships across multiple banks in a holding company environment.

5. Yellow Hammer BSA System Components
CUSTOMER DUE
DILIGENCE
RISK RATING
REPORTING
TRANSACTION
MONITORING
ACTION
WORKFLOW
EMPLOYEE
TRAINING
Member Due Diligence - When we look at the components of the product that make up the system, lets first start at the new customer side of the bank. We will look at the Customer Information gathering and Customer Due Diligence area. Most banks are gathering some customer ID information at the new accounts desk. However, in most cases it either does not go anywhere and remains in a manual system or the bank must re-key the information to it’s BSA product. BSA Redi will not only automate the capture of that information, but also make it available for monitoring of that information in transaction analysis and risk rating of the client.
Risk Rating – There are two areas of risk rating within the BSA Redi system. First, is the area where we have no prior experience with the client and they are new with the bank. In that area we are gathering information and automatically risk rating the client after the new account opening process. For the existing client, we are going to be looking at transactional information, product information etc. We will talk more about that in the product presentation screens.
Transaction Monitoring – From a transaction monitoring standpoint, BSA Redi will provide a very robust transaction monitoring system not only allowing for a static analysis, like a number of occurrences of a particular transaction over time, but the system will allow you to do a dynamic analysis where we are using some advanced statistical measures that will allow you to focus upon those clients/accounts that bear the greatest risk. In addition to that, we also provide the capability to segregate your customers/accounts into peer groups. This peer group analysis will give you much more power to isolate your customers into relevant groups. For example, you might look at personal vs business because that activity can be so dramatically different you might want to analyze the information differently.
EDD –In the instance when we have identified a client or account that warrants some additional due diligence or investigation, the BSA Redi system will provide a mechanism for tracking those additional efforts, like gathering additional financial information, taking pictures of signs to ensure that they are really a business, doing a site visit for a business to verify that the information is accurate. The system will automatically set up tracking standards set by the bank to ensure that the information is gathered on a timely basis.
Case Management – BSA Redi will also provide a consolidated and integrated Case Management System regardless of the source of the case. Regardless if you have discovered a potential money launderer or a kiter in the YH Fraud system and need to set up a case from a possible teller that is embezzling within the bank, you can set up a case within the system that will reside in a single location.
SAR Management – In the event that the bank has to file a SAR, BSA Redi will allow the bank to file either electronically under the new guidelines or on a paper document. The system moves information from the transaction analysis area to case management and then finally to the SAR System to minimize re-keying of any information.
Employee Training – Employee Training is an area of BSA where, more than likely, the bank will be criticized because of lack of structured and documented training programs in place. BSA Redi will provide a structure for the bank to create an educational program that might have a testing mechanism at the end to confirm the employee has a good understanding of the process that they need to perform. Then to provide a consolidated report of all the training activities that took place in the bank with the results as well.
Reporting – BSA Redi recognizes the need to provide comprehensive reporting on various aspects of the bank to either examiners, upper management and the board of directors. The system will have a flexible mechanism that will all the bank to provide that kind of specialized reporting for all areas of the bank.
Last but not least is probably the most important function in the entire system, Action Workflow. As you can see, the Action Workflow System touches each area of the product and sets up an event and a date tickler that the event needs to be completed (next).
Action Workflow – One final thing that will be provided through BSA Redi is the ability of tying all these area together with an Action Workflow System. If there is an action that is required to be performed, for example, if a customer is ranked very high in risk and an officers followup is required by the bank to confirm the validity of the information. The system will provide tracking of those actions that needed to be performed within a very flexible format created by the bank. Most all BSA systems on the market may point out issues within the Client base, but none of them track what is being done by the bank to ensure that the information is accurate and reported accordingly in BSA.
ENHANCED DUE
DILIGENCE
SAR
MANAGEMENT
CASE
MANAGEMENT

6. Client & Account Due Diligence
Lets talk about Client and Account Due Diligence.

7. Client & Account Due Diligence
Fast, Intuitive Data Capture at Account Opening
Seamless Platform Integration via Web Service
Flexible Question Tree
Parameter Driven Responses
Risk Assignment for all Responses
Client & Account Due Diligence – This is an area where more often than not, if a bank is capturing Due Diligence information, the information is either not being used appropriately or there are multiple manual steps to re-enter the information into a BSA System. BSA Redi provides a seemless, integrated and intelligent way to gather that information. Through integrating the system via a Web Service into the banks exisiting Platform System, such as Streamline, Argo, or other non-JHA solutions, the CSR is prompted with questions to ask at the appropriate time.

8. CIP/CDD/EDD
Once the Account Level due diligence is collected the system automatically displays the Member Due Diligence screens.

9. CIP/CDD/EDD
Is the Member an Individual or an Organization. If the answer is Organization, then the MSR is prompted to classify the Member based upon the NAICS List of Codes provided by the government. As you all know, these codes help differentiate what is a considered a “High Risk” Member vs one that may not be. Such as Lawyers, Accountants, Convenience Stores, Jewelry Stores, Pawn shops, etc. (Next)

10. CIP/CDD/EDD
This item is usually done in the back office because it is too difficult to figure out the proper code that should be placed on the account. That is why we have put all the NAICS (North American Industry Classification System) codes right on the screen (next)

11. CIP/CDD/EDD
The MSR can page through all the codes or they can merely key in a search word in the search field at the top of the screen. (next)

12. CIP/CDD/EDD
The search field narrows the search down to only those names that have that term in the description. Merely double click on the item and the information is added to the due diligence screen.

13. CIP/CDD/EDD
Do the own or operate any ATM’s at your business. If the answer is yes than the system prompts for how many ATMs do you have today.

14. CIP/CDD/EDD
If the answer is Yes, the system prompts for how many ATMS? (next)

15. CIP/CDD/EDD
We have developed approx. 15 pages of questions that you can use or change depending upon you preferences. The system is very flexible.

16. CIP/CDD/EDD
Now we are using another example, but this time it is geared for more of a specific business oriented CU. Is this an individual or an organization. If the answer an individual (next)

17. CIP/CDD/EDD
Than what is his employment status? (next)

18. CIP/CDD/EDD
From here the MSR can select from a predefined list or the CU can add options that would pertain to their type of CU. In this case we are selecting employed. (next)

19. Transaction Monitoring
Now lets look at Transaction Monitoring (next)

20. BSA/AML Engine Peer Group Analysis Analysis Types Static Analysis
Dynamic Analysis (Standard Deviation)
Analysis Types
Customer
Cash
ACH
Wire Transfers
Loan Payments
Internal Transfers
Monetary Instrument Log
Non-Customer
What we are going to go over now is how we can do different Transaction Analysis’s. As mentioned before, we can set up Peer Groups and do both static and dynamic analysis’s. We can look at Cash, ACH, etc. and if the CU does business with non Members for Money Orders, Cashiers Checks, etc. We can also track those transactions as well. Most CU only allow members to cash checks drawn their Members accounts. They also don’t allow non-members to send wires or purchase Cashiers Checks and Money orders. If they did, the system can track the non-member acitivity if the teller system captures info on the Non-Member.

21. BSA Redi System Components
Analysis Definitions
Peer Groups
Transaction Monitoring
Once again, we are showing how we can create new analysis definitions and apply them to what ever peer group we may have created previously and do our transaction monitoring. The key is that you don’t have recreate these each time, once I have created a peer group or an analysis definition, I can run this with different peer groups of definitions if I choose to. (next)
Worklists

22. Transaction Monitoring
Worklist Review
Now, lets take a look at Transaction Monitoring Worklist Review. (next)

23. Monthly Review Process
What I am going to do now is actually run an analysis on a specific peer group that I have previously set up in the system. In this case I have selected a Personal Wire Transfer Activity. What that means is that my peer group is all personal accounts that are doing any type of wire transfer transactions in my member base. Notice the symbols on the left hand side of the screen. The triangle means that I am running an Account level analysis with no Aggregation. The Circle means that I am doing a Member Analysis and Aggregating all their accounts under the member. Therefore, if the member has 5 or 6 different accounts with my institution, then the system will search all their accounts for any wire activity and display them in the final analysis. (next)

24. Monthly Review Process
Here are the results from my analysis. If you will notice, we have displayed all Personal Accounts that had any wire activity on their account and ranked them from the most deviant members that are doing wires activity to the least amount of activity. You can see that Brook Musacchia is the most deviant member with the largest amount of wire activity in all my personal accounts. To understand why she is the most deviant, I merely select the Categories Tab below and see why she is the most deviant.
We can see that in the Foreign Wire in Amount Category that the average for the entire group of Foreign Wires in was just $1.59 and the standard deviation for that group was just In other words I don’t have a lot of personal accounts receiving foreign wires. However, Brook Musacchia received a foreign wire for $54,025 making her the most deviant member in that category. As you can see, if you were to add up all the deviance figures in that column they would total I also want to point out that the system uses color coding to show the severity of the item. Bright Red means most severe and I should look at it more closely. The more Maroon color red means less severe, down to black meaning even less severe to grey, meaning don’t worry about it.
Here is where the system really stands out from other systems that are available on the market. That is in our ability to research information and make a determination what is actually happening to the members account. Most systems do not provide near the capability of reviewing the members information and forces the BSA person to go back and forth between multiple products to get the same information.
Now that we know that Brook is the most deviant user of wires. The question is what is she doing with that and do I need to be concerned. In order to research it, I merely select the Transactions Tab (next)

25. Monthly Review Process
And all of Brooks transactions that were used in the analysis are displayed on the screen. Notice that we are doing a Member oriented analysis and it shows all of the accounts and transactions that are under this members control. Now, because we are only looking for wires on Brooks accounts, I can go to my filter (next)

26. Monthly Review Process
And just select the wires option that will just show what wires Brook has done on any of her accounts. (next)

27. Monthly Review Process
As you can see, only on of Brooks accounts had any wire activity on it. This also a good place to show you some of the nice features in the system that allow the user to see additional information without ever leaving the main console screen. For example (next)

28. Monthly Review Process
I may want to see other information on the screen or change what fields are displayed on the screen. I can do that by merely clicking on a specific field and either display it or hide it on the screen. This allows the user to see exactly what they need for the analysis. Because there is only so much real estate available on any particular screen, I may not be able to get other information that I feel is necessary for the review of Brooks account. So if I just move my curser over the Account field (next)

29. Monthly Review Process
With the Hovering capability of Windows the information on Brooks account is displayed on the screen without my Hot Keying back and forth between systems. Another example would be if I only have the Brief Description displayed on the screen and I really want to know the full description that will help me better understand where the wire came from (next)

30. Monthly Review Process
I just take the mouse and hover over the Brief Description field and it will display the full description that was received from my wire system. This helps me understand where the wire came from and possibly who might have sent it giving me even more information about what is happening with this wire. If I want to get a summary of all the different types of transactions in Brooks accounts I can select on the summary E located to the left of Brooks name on the screen (next)

31. Monthly Review Process
By selecting this option it will show all the different transaction that Brook has done on all her accounts with regards to both Dollars and Numbers of transactions that were performed for this analysis timeframe. The system also graphs the information because sometimes pictures help the user see information better than just numbers on the screen. By selecting the Tree View Icon immediately to the left of the Summary E (next)

32. Monthly Review Process
The system displays all of the transactions that were included for the analysis in the Total box. If I want to view the transactions by month, I can double click on the total box and it will display all of the months. If I want to see the individual days that the member did transactions on, I can double click on the month and the system displays the total transaction was completed on a members account. If I want to see the detail of each transaction I can click on the day that I want to see and the system displays all the transactions for that specific day on the screen. This kind of research capability is unique to the Yellow Hammer BSA system and provides extensive tools that can be found in no other system in the industry.
Once I have thoroughly reviewed Brooks accounts and transactions, I then have to change the member status on the list. There are four options that I can perform. These options are represented by the four Icons located in the upper left corner of the screen (next)

33. Work-List Actions Reviewed Escalate Approve Open Case
The eye glasses mean that I have researched the information and everything looks fine and I don’t believe there was anything suspicious on the account. I will mark it with the eye glasses and that means that everything is OK with the account. I can use the red arrow to escalate the item to someone of greater authority if I want to as well. For example, lets say I am a BSA Analyst and I come across a Directors Account that is doing some really suspicious activity. This could be a real Hot Potatoe for me as an lowly analyst, so I might want to escalate it to someone of greater authority than just me. I would finish every item on the list and just leave that last one. I would select the escalate option and it would then transfer the list to my next level of authority and then it would be their responsibility to do something with it. The system allows for multiple security levels to be set forcing things up the ladder to higher and higher levels for approval.
The next option is the Approve function. This is somewhat like an exemption, but not really. Let’s say I am doing an analysis of all personal accounts doing cash deposits each month and one member always appears at the very top of the list as the most deviant account because they do deposits of $30,000 each month. After researching what is happening with the account I realize that that is just how they get paid and there is nothing unusual about the transaction. I can set an approval level for this account at $30,000 plus an additional % on this account. When I run the analysis again, the member won’t appear as the most deviant until they go over $30,000 plus the additional % that I have set. However, if they ever go over that additional % they will once again appear on this analysis as the most deviant.
If after researching an account and I have determined that the member is doing some very suspicious activity, I may want to open a case on the member and track those activities. I can do so by merely clicking on the suitcase Icon and setting up a case. (next)

34. Yellow Hammer BSA
Bill Nicholson