Risk Management
Best Practices: Case Study

Know Your Customer -- BB&T implements customer due diligence solution from Actimize to assess customer risk.

Nancy Feig
1 June 2007
Bank Systems + Technology
After Federal Deposit Insurance Corp. (FDIC) examiners encouraged BB&T to monitor its high-risk customers more closely, Winston Salem, N.C.-based BB&T knew it had to take action. "They commented how we were not distinguishing due diligence requirements between clients, services and products," says Marc Geeting, BB&T's SVP and Bank Secrecy Act (BSA) officer.

BB&T responded to the FDIC in January 2005 and began to address the regulator's findings, Geeting relates. By May, the bank had gathered its requirements and identified about a dozen possible vendors.

BB&T ($121.7 billion in assets) had hoped to find a single vendor that could provide risk scoring and list checking, and enhance its customer identification program (CIP). (The USA Patriot Act requires banks to establish a CIP program to verify the identity of each customer.) But no single product provided all three functions, according to Geeting. So in January 2006, the bank sent out separate RFPs for each of the three functions.

Because the solution offered more of the desired functionality than any other available option, Geeting says, BB&T chose New York-based Actimize's Customer Due Diligence (CDD) product for risk scoring and list-checking logic. "We found the Actimize CDD solution provided the most complete end-to-end, risk-based due diligence capabilities to meet our requirements," he contends. "The Actimize CDD solution is designed to support a risk-based approach to fulfilling BSA and AML regulatory expectations across our enterprise."

To round out its customer-risk solution, BB&T uses World-Check (London), which supplies lists of heightened-risk individuals and businesses; LexisNexis (Miamisburg, Ohio) for public records data and search functionality; and Fircosoft (Paris) for watch-list filtering, adds Rosemary Strause, VP and risk-based client due diligence manager, BB&T, who notes that Actimize has partnered with Fircosoft to provide the logic to process the World-Check data within its CDD product. "Actimize houses client data, such as results from the CIP [and] results from risk scoring and list checking," she explains. "Actimize is the central hub of the solution."

BB&T relied on Actimize partner IBM (Armonk, N.Y.) for the project integration. "We decided against a big-bang implementation and went with a rolling-thunder implementation," Geeting notes. The bank had multiple go-live dates, beginning in December 2006. Actimize conducted workshops with all the stakeholders in the bank to explain the data requirements for risk scoring and CIP. Actimize and BB&T jointly worked to identify, map and extract the required customer data from various bank systems, including BB&T's onboarding applications.

After the configured solution passed the user-acceptance testing process, the first functionality implemented by BB&T was the risk scoring of clients in batches, according to Strause. "Every client we intended to risk-rate has been risk-rated," she says.

The bank then rolled out the on-demand list-checking functionality, which includes real-time information gathering and alerts. For example, when a client comes into the bank, specific information about that client is transmitted to Actimize. If the client is on a watch list, an alert is triggered in BB&T's back office.

Because the rollout was conducted in stages, so was the training, explains Geeting, who refers to it as "just in time training." "We broke the training up into the pieces and parts that were relevant," he says. Actimize provided a train-the-trainer session, and then the BB&T trainers disseminated the information throughout the bank, Geeting adds.

BB&T's employees, particularly the BSA/ALM group, have appreciated the system's ease of use, Geeting notes. And although the FDIC won't review the system until June, the regulator has been engaged throughout the implementation process, he says.