<![CDATA[Viswambara Software Systems - Simple. Robust. Global. - Blog]]>Wed, 13 Dec 2017 10:56:00 -0500Weebly<![CDATA[Y and Z in Recruitment]]>Wed, 13 Dec 2017 09:43:59 GMThttp://viswambara.com/blog/y-and-z-in-recruitment
As we walked around at Personal Hungary HR exhibition and sneaked a peek at the presentations, it became crystal clear that the job market presence of Generation Y and Z is one of the most urgent matters for HR experts. Among the many lectures, Dr Dolli Mester’s presentation was particularly engaging. She was talking about how to synchronize the needs of different generations at a work environment and what kind of conflicts a HR professional faces in these situations.

​Parts of the lecture reinforced our belief that addressing challenges that come prior to someone joining a given workforce are as significant as the HR management that happens after. Inspired, we decided to devote a few articles to the processes that paves the way to team-integration: recruitment. We discuss questions including why we need to focus on the recruitment of generations Y and Z. What kind of generation-specific aspects need to be addressed if we want to gain the attention of the new generations? What kind of tools are available to help us?

In the first part we focus on the importance of recruiting from all generations.
To lay the foundation for this discussion, we introduce the four generations that are currently present at the job market.

From Baby Boom to Z

Members of each generation grew up in different sociocultural and technological environment; they were affected by diverse historic events in critical developmental phases; they were educated to separate norms; they shared exposure to certain impulses within their generation. So, in addition to the unique attributes of individuals there may be values and habits that appear common to a given generation. 

Baby Boomers

The Baby Boomers were born between 1949 and 1960, and even given their age, they are the most-experienced, still-active generation on the job market. This generation is known for loyalty towards the employer and the company. They value stability and security. A Baby Boomer has usually had the time and effort needed to learn the intricacies of their position.

They are used to classic hierarchy at work, they provide wise counsel to rookies and executive alike, and have had a proven track record as earnest mentors. In-person communication or an effective telephonic conversation is second nature to them. The inventions of the digital age were ushered in much later in their careers than the following generations, having them get used to entirely new ways of working that were very different from their second nature.

Generation X

Generation X, the children of the ‘60s and ‘70s are also known as “digital immigrants”. They met the great inventions of the digital age as teenagers or adults. They tended to great new technology with openness and enthusiasm. This means that they are comfortable with online communication (which is primarily e-mail in their case in a business environment) and the more traditional phone conversation as well, but they prefer personal communication, whenever possible. Internet might play an important role in their life, but it is rarely a must.

Career is important to them but they try to keep a good balance between work and private life. Generally, they are a determined, independent and focused generation. The subject of their loyalty is their profession, not necessarily the company. They are patient with the wait for results, they pay more attention to details and they are better at focusing on one task at a time than the following generations. Time management is also their strength and they look for the best, not the quickest solution. 

Generation Y

People born between 1980 and 1995 grew up with computers. They are Generation Y or the Millennials, who use digital technology as a natural skill. Accordingly, they tend to prefer online communication over phone calls.

​They truly believe in the concept of lifelong learning. They often have multiple qualifications and degrees, and they perceive well-structured workplace trainings as a prize rather than a must. They value freedom and flexibility in a working environment, yet, they crave for mentoring and feedback.

Generation Z

​Members of Generation Z – also known as the “digital natives” – were born between 1996 and 2007. They are the children of digital age: surrounded by computers, smartphones, IPads, and internet since their first day of life. They use the available technology without any difficulty, this is not a skill but a basic function for them. They aren’t too bashful about using informal online interfaces – like casual social media sites – to collect information or to discuss even business topics.  
Despite their adeptness at using communication tools, surveys show that communication in general is not the primary strength of this generation. Zs are rather bold, prone to quick decision making, especially strong at multitasking – but not so much at time management. Focus, precision, and patience can’t be listed as their typical forte. Similar to Generation Y, Generation Z thinks that constant feedback on their work and performance is essential, they often esteem teamwork.

Generation shift 

Even our quick introduction reflects that there are significant differences between the worldview and workstyle of generations. Many fear that these differences cause friction within a working team. Is it worth taking the risk to integrate new generations to the workplace as soon as possible?

We don’t need to wonder further than demographic data to see the answer clearly: definitely yes. Following the natural circle of life, older generations leave their active working phase behind, and the gap needs to be filled with the members of younger generations. The pace of the shift indeed matters.

According to JobsPikr’s estimations, Millennials will have a 75% share of the US job market within 5 years. We charted the tendencies in progress in a bit more detail based on the Hungarian job market thanks to the Hungarian Central Statistical Office (KSH).
Presently there are four active generation participating in the world of work: Baby Boomers and the generations marked with Latin letters: X, Y, and Z. Based on KSH’s statistics, more than half of the actively working (55%) was a member of Generation X in 2016. Ys gained a bigger (28%) share than Baby Boomers, who were represented only with 16%. Members of Generation Z – with maximum age of 20 – barely appeared among the actively working.

Based on the past ten years statistics on the age of actively working, we predicted the changes expectable in the near future. One of the most noticeable difference is the Baby Boomers’ almost complete disappearance from the job market: by 2020 only the 4% of active workers will belong to this generation, by 2025 this number will shrink to 1%.

In 2020, Generation X will still rule the job market (as a bit less than half of all actively working), but Generation Y will closely follow, and take the lead by 2025. Generation Z also needs to be accounted for: by 2020, Zs will outnumber Baby Boomers in the world of work, by 2025, they will reach the significant share of 17%.

Beyond Numbers

It is easy to see that the new generations cannot be avoided even in the short run even if we fear the conflicts that my rise due to the generation gap. But do we actually need to fear it?

To sum up Dr. Dolli Mester’s take on the subject at Personal Hungary, we need to be prepared to experience some friction within the working space. Baby Boomers, who believe in traditional hierarchy more than the younger ones, or even the members of Generation X may be startled by the bluntness of Generation Y and Z. According to the expert, tension often originates from the fact that the new generations dare to ask for conditions that the other generations might have desired but didn’t request, especially as fresh employees. Also, Generation Y and Z is not always enthusiastic about the often inflexible working hours that the more experienced colleges already adopted.

Still, the whole presentation boiled down to one significant conclusion: the outcome primarily depends on the viewpoint. With a positive attitude, members of different generations can not only understand, but complement and help each other in numerous ways.

If a company wants to have the best of human resources, it is worth recruiting employees from multiple age groups. This way, the potential in each generation adds up to the collective strength of the team. If an open and supportive work environment is created, employees with different background can help each other grow together.

Baby Boomers and Xs are perfect mentors for Generation Y and Z, who are craving for feedback and constant learning. Putting their patience and excellent communication skills into good use, Baby Boomers and members of Gen X can pass down their stable professional knowledge and the real tricks of business to the younger generations. They can create a supportive and protective atmosphere where Generation Y and Z can really bloom.

As far as technology is concerned, the “digital natives” can be a real asset to the team. With more and more workflows automatized or at least software assisted, the leading position of a company can hinge upon their utilization of available technology. Generation Y and Z – being surrounded by programs and internet from an early age – learn to use new solutions with ease, they naturally click through the functions, and even discover hidden potentials in the available tools. It might happen that they will help the more experienced colleges when the company decides on adopting a cutting-edge tool.
Besides, the younger generations, who value creative thinking above many qualities, may bring innovative ideas to the team. As they are less devoted to company hierarchy, they are more likely to dare to share their opinion even on their very first day at work. It usually requires the support of a whole team to take and idea to solution, though. During the actualization, the team can benefit from the Baby Boomer’s professional knowledge and precision and from Generation X’s critical thinking and communication skills. If all goes well, the generation who voted for lifelong learning will pick up the skillset and tactics necessary for execution during the process.

What Does It Mean for Recruiters?

More than 28% of the active workers are from Generation Y, and their share on the job market grows each year. To avoid the scarcity of applicants, and to be able to choose from the best candidates, recruiters must be prepared to address the Ys. Additionally, many innovative companies want to specifically target younger generations and integrate them to the team even as freshmen to enable the learning process that arches through generations. Consequently, top recruiters must be able to discover the top talents of generation Y and Z and attract their attention.

In our next article, you can read about the practices that help to recruit the promising Generation Y and Z.
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Additional sources: Wikipedia, HVG, Origo
<![CDATA[Lots Happened Since the first Demonstration of the Phonograph]]>Wed, 29 Nov 2017 13:21:13 GMThttp://viswambara.com/blog/lots-happened-since-the-first-demonstration-of-the-phonographThomas Edison demonstrated his phonograph for the first time on November 29, 1877. The audience perceived the invention as magic, leaving Edison with the nickname "The Wizard of Menlo Park." As sound recording gradually developed with the rise of the electrical, magnetic and finally the digital phase, technology become more and more precise and made copying and mass production easier. Each phase and invention revolutionized the music and film industry in its very own way. In the past decades technology has also learned to listen, not just to repeat: speech recognition was invented and put into commercial use. Now we can enjoy huge online databases of digital recordings, sound editing software and virtual assistants who understand almost all our words.

Take a glimpse at the past 140 years with our infographic.

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<![CDATA[Big Data in Historical Linguistics]]>Wed, 22 Nov 2017 15:33:29 GMThttp://viswambara.com/blog/big-data-in-historical-linguisticsRasmus Kristian Rask was born 230 years ago. The Danish linguist and philologist is especially known for his contributions to comparative historical linguistics. Methodology has changed and evolved since his extensive research on language history and language families, but the core of his studies and theories is still considered valid today.

Now, there are modern technological inventions that can help linguistic experts map language family trees, reconstruct protolanguages and deal with “Big Data”. We prepared a list to show why software tools are essential in historical linguistics research.
<![CDATA[Division of Labor in Recruitment: HR & ATS]]>Fri, 10 Nov 2017 10:55:02 GMThttp://viswambara.com/blog/division-of-labor-in-recruitment-hr-ats
For every company utilizing an Application Tracking System (ATS) to attract the best employee-candidates, there’s one that’s reluctant to adopt this technology. This might be due to misconceptions surrounding this category of software. It is indicated by a frequently asked, inherently imprecise question: Is the HR professional more adept at tracking talent, or is the ATS? This is like comparing eyes with glasses in a vision contest. Glasses don’t stand a chance without the eyes, but they do help eyes see better and sharper when needed. If you have a 20-20 vision, you may substitute glasses with binoculars or microscopes. The point remains the same: ATS is a tool that – while unable to execute the complex task of recruitment on its own – does help HR professionals “see” more clearly than ever before.
​While most aspects of the applicant selection process require human qualities and skills, there are some tasks in the long recruiting process where ATS performs without fatigue and can be an HR professional’s best mate. Let’s take a look at this perfect division of labor.

Understanding the needs and posting a job ad

HR professionals

​When we try to chart the qualities and qualifications needed to fulfill a position, we cannot do without an HR professional’s skillset. Ranking requirements as essential and negotiable calls for experience and complex comprehension. Additionally, only the HR professional can shape the long list of requirements, tasks, and benefits to an advertisement-form in a way that it remains informative and enticing for the right audience. In short, it is impossible to capture and align the needs of employers without an HR professional.


Barring one’s significant-other, it is given that software is superior to us mortal beings in the memory-retention department. Not even the most devoted professional can recall the wording of every job post or remember all the previous candidates enough to be reminded of a potential match for a future opening. An ATS can do that. The program saves all information related to a given position (such as the requirements, benefits, job description, etc.), so all details are reachable with a click if we search for an applicant to a position posted before. In some fortunate cases, we can even avoid the selection rigmarole by finding a direct-fit among previous applicants through an ATS feature such as database search or automated matching.

Even the best Applicant Tracking System is unable to understand people beyond data. However, it is useful if the ATS embodies this simple fact about candidates: they hate filling voluminous datasheets. To avoid losing valuable candidates the application process must be as simple and transparent as possible. That is why it is worth letting applicants upload their own, well-formatted CV instead of expecting them to type in data. It can also be beneficial to quicken registration with the possibility to connect with LinkedIn profiles.

Interviews and Selection


At this stage, it is easier to start with the benefits of the Applicant Tracking System. As we have mentioned in our article on the Internet of Things (IoT), software can process big data more easily than people. In case of a popular job-opening, hundreds of applications have to be looked over. It is also likely that a significant portion of the CVs are submitted based on the “I have nothing to lose” principle, even if the ad requires 5-10 years of experience instead of zero for a senior position with a reason. Or, to fill an architect position, it is essential to have a relevant university degree; in a Hungarian company that exports significantly to South America, linguistic skills in Portuguese or Spanish will be deemed essential for customer service positions.

For an HR professional, every “useless” CV means wasted time, and after the endless examples, even a risk to preserve a people-centric state of mind. Besides, spurious applications hinder the HR professionals in “remembering” the really valuable candidates. A sophisticated ATS can filter unproductive applications effortlessly, may even rank the rest based on the expected and preferred qualifications, experience and skills. All in all, professionals can focus on candidates who have a real chance to fulfill the job responsibilities.  

After the list is narrowed down, it is time to invite the top applicants to an interview. There is no ATS that can save you from the personal conversation, but run-of-the-mill tasks can be passed down to the software. ATS can double as an efficient organizer by interacting with the calendar application, to ascertain and compile the availability of all the colleagues necessary for the interviewing process. Nifty features such as automated text messages offer great convenience, especially when they can be customized for context.

HR professionals

Getting to know the candidates beyond data is attainable only with the help of an experienced HR professional, as the task involves human interaction, well-built strategy, perception, and even empathy. This is the stage where it can be discovered if the candidate fits the bill in full as opposed to only on paper. In addition to technical sessions, techniques such as behavioral interviewing are widely employed by professionals.  A final decision is the onus of the HR professional; the ATS can only serve as a dependable grunt.

After selection


The recruitment and selection process must be revised and optimized from time to time to match the swiftly changing market conditions. As a start, you need reliable, representative information on the number of applicants per job post, how many people made it to certain stages of the process, how much time the selection has taken, and many more. Just like data collection and analyses, statistics is the strength of programs, thus we can hand those tasks over to the ATS with ease. If the company uses additional HR-software, integration with ATS can also help you to receive feedback on the success of the picked candidate. One can also learn which strategy and recruiting stages lead to more beneficial choices.

HR professionals

​Numbers can be left to the ATS, but decisions made based on analyses remain a professional’s responsibility. Statistics are only able to shed light upon the weak points or highlight the strengths of the practices, or indicate potential market parameters with numbers. An experienced HR professional can judge based on the available data, the intricacies of where to amend practices and when.

As we walk through the entire recruitment process, it is easy to notice that an Applicant Tracking System can free up significant amounts of time for HR professionals by liberating them from drudgery and ensuing fatigue. An ATS is definitely not a competitor, but a quiet and trustful assistant of the hiring professional. Remember that optometric paraphernalia may not be needed for seeing, but are certainly indispensable for seeing further.

If you are interested in a customizable Applicant Tracking System, contact us. 
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<![CDATA[World Urbanism Day in Infographic]]>Wed, 08 Nov 2017 13:52:35 GMThttp://viswambara.com/blog/world-urbanism-day-in-infographicSince 1949, “World Urbanism Day” is held on November 8 thanks to Professor Carlos Maria della Paolera of the University of Buenos Aires.  The date also known as “World Town Planning Day” is devoted to promoting urban planning and design to create a more livable place for the growing population.

Figures show the urgency of turning towards sustainable cities, which can be achieved through conscious planning. According to the statistics of Smart City Hub, 55 percent of the global population leaves in city, and this number is expected to grow to 70 percent by 2050. In the meantime, urban areas cover merely the 4 percent of the land surface, but use 67 percent of energy and produce 70 percent of the greenhouse gases.

To create a livable and preservable environment in the overcrowded areas, planning and management were needed to be taken to the next level. Internet of Things has helped to take the next step, and achieve a new precision in management and monitoring. The smart city era has arrived in urban planning.

To celebrate “World Urbanism Day”, we collected some of the project of the pioneering smart cities worldwide. See our infographic for more.
<![CDATA[Lots Happened Since the Introduction of Android]]>Sun, 05 Nov 2017 04:00:00 GMThttp://viswambara.com/blog/lots-happened-since-the-introduction-of-androidThe Android platform was introduced on November 5, 2007. The popular operating system for mobile phones had several sweet releases since then ranging from Cupcake to Oreo. During its first decade, Android also managed to gain the largest share of the smartphone OS market. We celebrated its 10th birthday with an infographic that leads you through the major milestones.
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<![CDATA[From Regulation to Compliance: EU Member States]]>Mon, 18 Sep 2017 06:59:03 GMThttp://viswambara.com/blog/from-regulation-to-compliance-eu-member-statesPart 3
The never-ceasing crusade against money laundering has been a significant weapon in combating organized crime, terrorism, and tax evasion. The Panama Paper scandals of 2015 catalyzed numerous legislations and regulations such as the 4th EU directive on AML. Compliance with such initiatives relies on transaction monitoring, reporting, and recordkeeping binding banks and other type of financial institutions. Regulatory compliance increases the cost and complexity of operations for financial institutions, while non-compliance may result in extreme penalties. Our new series of articles aim to provide a guidance in the compliance-labyrinth, potential consequences and trends, and the software solutions with their benefits and challenges.

In our previous article, we gave a swift analysis of the 4th AML Directive of the EU concentrating on the obligation of the financial institutions and the growing urge to adopt cutting edge software solutions. Our present article focuses on the state adaptation of the directive along with other prospect changes.

Even though the 4th AML Directive of the EU provides ground for standards, it leaves room for member states to take appropriate actions. The adaptation of the new rules and approaches introduced by the directive is in progress in most states, but it can take quite diverse forms and some countries may expect more radical changes in AML legislation as the present compliance level is quite divergent as well.

Mutual Evaluation Reports

As EU relies more and more on the mutual evaluation reports of international AML bodies, the easiest way to predict the forthcoming steps for compliance with the directive by country is to take a look at FATCA and MONEYVAL country evaluations. The mentioned bodies assess countries in several rounds. The fourth round of mutual evaluations of FATF are in progress with the first evaluation published in 2014, and MONEYVAL has started its fifth round of evaluations in 2015. As we are at the beginning of the evaluation rounds, only some of the states have been assessed yet, namely Austria, Belgium, Denmark, Hungary, Italy, Spain, and Sweden. Our quick overview is limited to these countries as far as evaluation report based prospects are concerned.

General trends

All of the evaluated countries performed well regarding responsibilities of law enforcement and investigative authorities. Record keeping was also a strong field, with most of the countries being compliant, while Denmark and Hungary only largely compliant. Similarly, in reporting of suspicious transactions, six of the countries were fully compliant, while Italy had quite good results as well, but was only largely compliant as financial institutions were not explicitly required to report suspicious activities related to money laundering. The evaluated countries reached relatively good results in all points related to international cooperation.

The evaluation reports highlighted some general weak points as well. All countries should work on the application of preventive measures in general, as all of them were marked as “moderate.” Wire transfers need special attention in this respect. The same tendency is observable with terrorist financing preventive measures and financial sanctions. According to the reports, targeted financial sanctions should also be strengthened both in case of terrorist financing and proliferation.

Spain and Italy

In the overall assessment, Spain has performed the best, as it was entirely or largely compliant in most major points, followed by Italy, which was largely compliant in most of the aspects investigated. Spain is the only evaluated EU state that achieved “high” rating in financial intelligence, where the richness of the relevant central database was particularly prized. Additionally to the general weaknesses, the only area that needs more attention in Spain is the prevention of moving, rising and using funds of persons and entities involved in the proliferation of weapons of mass destruction; as in this respect the country performed only moderately.


In international cooperation Sweden is the winner. Nonetheless, clearer determination of beneficial ownership of legal persons and arrangements seem necessary based on the mutual evaluation report published in April 2017. The country performed moderately in many other aspects including preventive measures and supervision. The report also urges the implementation of more adequate IT tools for financial intelligence units. Based on the recommendations, a more risk-based approach is expected to emerge also effecting financial institutional compliance requirements.


Austria received serious criticism regarding financial intelligence and ML investigation and prosecution both of them being marked as “Low level of effectiveness.” Additionally, several other major points were evaluated as only moderately effective. For instance, money laundering and terrorist financing risks were only partially understood, therefore the appropriate domestic measures to combat money laundering and terrorist financing were not entirely sufficient at the time of the evaluation. Risk assessment in connection with politically exposed persons (PEPs) also received slight criticism, as enhanced customer due diligence measures did not apply to domestic PEPs (a point also emphasized by the 4th EU directive on AML).


Hungary and the freshly evaluated Denmark received the most recommendations among the seven evaluated countries. Hungary performed low in four crucial areas, namely understanding money laundering and terrorist financing risks, prevention of legal persons and arrangements from misuse, money laundering investigation and prosecution, and confiscation of proceeds and instrumentalities of crime. Many of the key recommendations influence financial institutions as well. Hungary is urged to encourage the stakeholders of the private sector for their own risk assessments on customers. Service providers should also update their databases related to financing of terrorism more swiftly. According to the report, the legislative should be tightened up with regard to the definition of beneficial owner, verification of beneficial owners, and procedures in respect of domestic PEPs in high-risk business situations.


The effectiveness of supervision and preventive measures was low in Denmark, with numerous other major points rated only as moderate. Accordingly, the list of the recommended priority actions is quite long, many of them effecting financial institutions as well. Denmark is urged to have a more solid risk-assessment procedure in which the private sector is also involved. Financial institutions are specifically required to prepare internal risk assessments. Compliance in general is also criticised, so the relevant authorities should strengthen AML/CFT obligations and supervision with more serious consequences in case of non-compliance. According to the report, the legislative framework should also be adjusted to address PEPs, beneficial owners, and higher-risk scenarios more seriously, which, in all probability, means additional monitoring and enhanced due diligence measures for banks in the foreseeable future. Most of these recommendations has already left a mark on the fresh legislative framework.

Changes in Legislation

The legislation of most of the evaluated countries has, in some extent, reacted to the recommendations in the mutual evaluation reports, but the major changes in the AML regulations are primarily connected to the 4th EU Directive. First, we take a look at the three member states that has received the weakest evaluation before we glimpse at the general picture.


In Financial Markets Anti-Money Laundering Act (FM-GwG – Finanzmarkt-Geldwäschegesetz), Austria has adopted the Customer Due Diligence requirements for financial institutions with same thresholds and instances as described in the directive. The act entering into force on January 1, 2017 also enables video-based customer identification. Enhanced due diligence obligations has also been extended to the domestic politically exposed persons in accordance with the EU Directive and the FATF recommendations, while the penalties for non-compliance have also been risen.


A new AML Act also entered into force in Denmark on June 26, 2017. The major change introduced by the act is switching from rule-based approach to risk-based approach in customer identification and transaction monitoring. This provides a more flexible system, where financial institutions and other obliged entities can concentrate their resources on areas that they and the national risk-assessment consider more exposed to ML hazards. These areas mainly include transaction and business relation monitoring and stricter identification processes regarding PEPs, atypical transactions and high-risk countries like Iran and North-Korea.


Based on the not-so-flattering MONEYVAL mutual evaluation report, it didn’t come as a great surprise that the new Hungarian AML law has reshaped the compliance system of the country. Similarly to Austria, Hungary also enabled electronic CDD in safe and previously audited channels. The specific requirements of the electronic identification process will be defined in additional acts. There will also be a central register of beneficial owners. The most challenging part of the new AML law is the implementation of the risk-based approach. Service providers shall prepare their internal rules for own risk-assessment synchronized with the national risk-assessment by September 30, 2017, but penalties regarding the shortcomings of the internal procedures can be expected only from January 1, 2018.  New CDD obligations are binding as well where, among other tasks, the customers’ identity and relevant data shall be revised and checked in every 5 year. Compared to the previous AML rules, the new legislation radically increases the responsibility as well as the administrational and monitoring burdens of the financial sector that requires quick software assistance. It is especially a must due to the stricter sanctioning system also introduced by the new AML law.

To-be-evaluated Member States

The member states who haven’t been assessed in the present evaluation round had and have to react to the 4th AML Directive of EU just as much as the already assessed states. Registration of the ultimate beneficial owners were introduced in numerous countries including France, Czech Republic, Finland, and Germany. The regulations also have shifted towards the risk-based approach. The German AML law also extends its scope to the gambling sector. Additionally to the general trend observable in the legislative changes EU-wild, Finland also puts great emphasis on the whistle-blowing channels of obliged entities. According to the new act, obliged entities shall establish independent and anonymous ways to report any breaches of the act with special attention to technical issues, preserving the privacy of the reporter, and data protection. While Finland focuses on secure ways of reporting, Czech AML law directs attentions towards the relatively new ways of payment as it is extended to cryptocurrencies such as Bitcoin. The new regulation requires the financial service providers to determine the identity of customers of virtual currency exchanges.

No doubt, the present take on AML necessitates innovative and robust software solutions. In most member states the existing banking software systems require way more adjustment than the modification of monitoring thresholds. One of the major challenges is to take a fully risk-based approach instead of the previous rule-based monitoring programs; and flawlessly adjust it to the workflow of the financial institutions.  Another major factor is to establish the proper channels for video and alternative digital customer identification and CDD. The systems also need to be prepared for the stricter treatment of cryptocurrencies. It is needless to mention, all solutions must be secured and highly protected.
If you need an AML-related software, check our services or contact us.
<![CDATA[From Regulation to Compliance: The 4th EU Directive on Anti-Money Laundering]]>Thu, 31 Aug 2017 11:57:13 GMThttp://viswambara.com/blog/from-regulation-to-compliance-the-4th-eu-directive-on-anti-money-launderingPart 2
The never-ceasing crusade against money laundering has been a significant weapon in combating organized crime, terrorism, and tax evasion. The Panama Paper scandals of 2015 catalyzed numerous legislation and regulations such as the 4th EU directive on AML. Compliance with such initiatives relies on transaction monitoring, reporting, and recordkeeping binding banks and other type of financial institutions. Regulatory compliance increases the cost and complexity of operations for financial institutions, while non-compliance may result in extreme penalties. Our new series of articles aim to provide a guidance in the compliance-labyrinth, potential consequences and trends, and the software solutions with their benefits and challenges.

In our previous article, we took a glimpse at the U.S. anti-money laundering labyrinth, while in our present article the 4th AML Directive of the EU is in the center of attention.​

Partly in response to the Panama Paper scandals, the Fourth Money Laundering Directive (EU) 2015/849 was passed by the European Parliament on May 20, 2015, and entered into force on June 26, 2017.  In addition to the primary aim of strengthening the rules against money-laundering, tax avoidance, and terrorist financing, the directive also highlights the significance of unified and standardized international initiatives. It still leaves a lot of room for state interpretation.  While this may be unavoidable to respect the sovereignty of the member states, it does not assist in the adoption of comprehensive software solutions that are applicable universally or at least EU-wide.

Towards standardization

Point (4) of the directive emphasizes the international nature of money laundering, calling for actions taken not only at a national level, but even beyond the European Union. This mainly means that the EU regulations, recommendations and directives including the 4th AML directive, should align with the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation adopted by the FATF in February 2012 (the ‘Revised FATF Recommendations’) as much as possible. One of the traces of the adoption of FATF Recommendations is the greater emphasis on tax-related crimes. Nonetheless, the directive is also careful to respect the often-divergent national definitions of what constitutes a ‘tax crime’.

The path towards international standards also means that mutual evaluation reports issued by FATF and similar international organizations such as MONEYVAL will have an even heavier weight within the EU as well. Their recommendations are expected to be swiftly adopted whenever possible.

Record keeping has also been fixed to 5 years. The customer due diligence thresholds have also been altered to any single or related transactions reaching or exceeding €15 000, while this threshold for gambling service providers is €2000 in case of a single transaction. Using cash payments of EUR 10 000 or more for goods trading is also subject of the Directive. The Directive also allows the member states to set lower thresholds. 

Changes and Challenges

The EU directive introduces promising principles as far as the burdens of financial institutions are concerned. Point (2) of the directive explains the crucial role of financial institutions in the fight against money laundering, but also adds that the regulatory environment should not impose “disproportionate compliance costs” on any company or business. Nevertheless, the unconcealed aim of the directive is to reinforce “the risk assessment obligation for banks, lawyers, and accountants;” to set “clear transparency requirements about beneficial ownership for companies;” and to strengthen “the sanctioning powers of competent authorities” – as it turns out not only from the directive itself, but the related press releases as well. This mainly manifests itself in changes in customer due diligence (CDD) rules, standardized monitoring thresholds, central state register of beneficial owners, and a risk-based approach in general.

Customer Due Diligence and Suspicious Activity Report

In accordance with the new directive, banks should apply CDD measures when a new business relationship is established, and when an occasional transaction or related transactions amount to €15 000 or more, there is a transfer of founds exceeding €1000. Regardless of the threshold, CDD measures are also required when suspicion of money laundering or terrorist financing emerges, or when there are any doubts about the reliability of the previous CDD. Additional CDD measures are required from credit institutions on beneficiaries of life insurance and other investment-related insurance policies.

For CDD the customer’s identity shall be verified based on documents or any other reliable, independent source. Additionally, the ownership and the control structure of the customer also needs to be clarified, and the beneficial owner’s identity shall be checked and confirmed in case of legal persons, trusts, companies, and foundations. To ensure the flowless verification of beneficial ownership, member states shall hold information on beneficial ownership in a central register that is accessible for financial institutions for CDD measures. 

Due to the risk-based approach of the Directive, in certain cases enhanced customer due diligence measures are also required from financial institutions. Higher risk-assessment is primarily related to third country institutions, natural persons or legal entities and politically exposed persons.

The Directive also encourages and requires financial institutions and their employees to file a suspicious activity report to the relevant financial intelligence unit. However, this article leaves plenty of room for interpretation for the member states.

Software Solutions and Data Sharing

The foregoing discussion suggests that compliance obligations haven’t been eased by the Directive. Thus, one question prevails: how can “disproportionate compliance costs” be avoided, while still adopting the highest standard of compliance?  The answer in short is encouraging advanced software solutions and data sharing.

Point (19) of the Directive states that “new technologies provide time-effective and cost-effective solutions to businesses and to customers and should therefore be taken into account when evaluating risk. The competent authorities and obliged entities should be proactive in combating new and innovative ways of money laundering.” Even without the regulatory promotion of innovative software solutions, it is easy to see that conducting effective customer due diligence, mitigating AML risk, and monitoring suspicious activities are hardly possible without a robust technological system in place.

To avoid repeated customer identification procedures, the Directive also allows banks and other entities subject to the Directive to use shared data for customer identification if the identification has been conducted by another institution. It is important to note that data sharing is presented not only as a convenience, but also as an obligation. To be able to respond swiftly to enquiries from financial intelligence units, institutions are expected to ensure a safe yet rapid channel for data sharing.

Privacy and Security

This is not the only instance, where the Directive mentions data security and privacy as a top priority.  While protection of customer data has always been important in the banking sector, the identity of the reporting individuals also needs special protection as even lives can be at stake. To store and share sensitive data in a way that resist cyber-attacks necessitates a solid software system. It is easy to be the prey of the hackers if there is any weak spot within the system, as it is shown by the unfortunate case of Italian UniCredit, where the accounts of approximately 400,000 customers were hacked. Inadequate measures taken to secure data may have legal consequences and will weaken the reputation of any bank or credit institution without doubt. Proper software-aided compliance is indispensable to prevent this from happening.
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<![CDATA[From Regulation to Compliance: The U.S. AML-Labyrinth]]>Wed, 23 Aug 2017 14:20:00 GMThttp://viswambara.com/blog/from-regulation-to-compliance-the-us-aml-labyrinthPart 1
The never-ceasing crusade against money laundering has been a significant weapon in combating organised crime, terrorism, and tax evasion. The Panama Paper scandals of 2015 catalyzed numerous legislation and regulations such as the 4th EU directive on AML. Compliance with such initiatives relies on transaction monitoring, reporting, and record-keeping binding banks and other type of financial institutions. Regulatory compliance increases the cost and complexity of operations for financial institutions, while non-compliance may result in extreme penalties. Our new series of articles aim to provide a guidance in the compliance-labyrinth, potential consequences and trends, and the software solutions with their benefits and challenges.

Let’s start with a quick overview of the legislative takes on the subject.

As the well-known proverb goes, there is nothing new under the sun. Money laundering is considered to be at least two thousand years old, being a common practice among ancient Chinese merchants, who were banned from several forms of trading. Strategies to launder illegal profit are present in a more complex, evolved form in modern times. Thus, at least since the Bank Secrecy Act of the 1970s, legal anti money laundering initiatives have been playing a significant role in the detection and prevention of organised crime. Nevertheless, the swiftly-adopting nature of financial crimes AML directives and laws also need to be constantly revised and strengthened.

The recent initiatives clearly articulate that the only effective possibility is to fight money laundering internationally. Several bodies – such as FATF and MONEYVAL – are present to supervise the effectivity of AML initiatives and foster international collaboration. The 4th Money Laundering Directive of the European Union, as well as the US AML overview for the 115th Congress, emphasizes the global nature of money laundering.

While this paves the way for unified laws, we are far from having uniform standards applicable to any country. Additionally, new methods for money laundering emerge as soon as the old ones become traceable. This means that financial institutions and many other organisations must comply to several, rapidly-changing directives, acts, and laws. This is hardly possible without quickly adjustable software solutions, but before we jump into the software assistance, let’s go through the major anti money laundering trends and requirements. Our present article focuses on the extensive U.S. legislation, while in the upcoming part we will take a glimpse at the EU policy and the recent AML directive.


One of the most influential forces in AML and compliance requirements is the relevant legislative of the USA. The list of the acts is long, ranging from the Bank Secrecy Act (BSA) to the Intelligence Reform and Terrorism Prevention Act with constant revisions. The bulk of the regulations comprises of the reporting and monitoring obligations of financial institutions.


Probably the most well-known reporting requirement is the Suspicious Activity Report (SAR) to be filed to the Treasury Department in case the financial institutions spot any transaction that might involve illegal activity. The act specifies reporting requirements for several types of institution including banks, casinos, insurance companies, and many more.

In addition to SAR, all financial institutions are obliged to file a Currency Transaction Report (CTR) if a transaction or a group of related transactions in a day exceed $10,000. Besides CTR, the import or export of more than $10,000 in monetary instruments necessitates a Currency or Monetary Instruments Report (CMIR). In contrast to CTR, CMIR reporting obligations apply not only to financial institutions but to individuals as well. Similarly, Foreign Bank and Financial Accounts Reporting (FBAR) also requires information provision from any US person and sets the same, $10,000 threshold, but in this case the subject of the report is any financial account located outside of the United States exceeding the “magical” amount.

Adding to the already-long list of BSA reporting, Financial Crimes Enforcement Network (FinCEN) also has the right to request Geographic Targeting Orders (GTOs) from domestic financial institutions or nonfinancial businesses. GTO is a special recordkeeping and reporting obligation that is in effect for a maximum of 180 days in order to assist investigations. The AML report for the 115th U.S. Congress highlights that GTOs are more and more often used to decrease trade-based money laundering (TBML) and drug trafficking-related money laundering.

Another upon-FinCEN-request report is the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA) reporting on accounts related to Iranian-linked financial institutions designated by the United States for sanctions. The USA Patriot Act also imposes additional reporting obligations to financial institutions known as Special Measures. It requires detailed record-keeping and reporting on the transactions related to such non-U.S. jurisdictions, financial institutions and international transactions that are considered as primary money laundering concern. The compliance with the sanctions of the Patriot Act – among other sanction programs against foreign countries, political regimes, and organized criminals – is supervised by the Office of Foreign Assets Control (OFAC).

Customer Due Diligence

Transaction monitoring and related reporting are not the only measures taken against money laundering. Another unavoidable pillar of financial crime detection and prevention is Customer Identification and Customer Due Diligence (CDD). Accordingly, FinCEN requires financial institutions to collect and verify certain customer data such as name and address. Each financial institution should include in their internal workflow a customer risk-assessment procedure as well. If the customer is suspected to rise a greater money laundering hazard, an Enhanced Due Diligence (EDD) should be conducted. This means additional research on the purpose of the account, source of customer funds, detailed information on the individuals with ownership or control of the account, banking references, and many more.

On May 11, 2016, an additional rule was issued on CDD with a two-year implementation period. By May 11, 2018, developing customer risk profiles and updating customer information on a risk basis should be adopted to the risk assessment procedures of financial institutions, synchronized with the ongoing monitoring and suspicious transaction reporting. Similarly to identifying and verifying the identity of account-holders, individual beneficial owners owning 25% or more of a legal entity and one individual in the management of the entity are required to go through an identification and verification procedure when opening a new account.

Possible Directions

While the overall December 2016 FATF mutual evaluation of the United States is positive, it highlights some critical issues that require special measures. The evaluation report draws attention to lower performance regarding beneficial ownership transparency. The USA has also received low ratings on Designated Non-Financial Business Professions (DNFBP) customer due diligence and other preventive measures, while DNFBP regulation and supervision are perceived to be weak in general.

Besides the above-mentioned weak spots that are likely to be addressed in upcoming initiatives, the AML overview for 115th Congress also highlights that actions need to be taken against the emerging new challenges as well, such as cyber-related financial crimes.

Software solutions assisting and enabling compliance must react quickly to these prospect changes. The approaching deadline of the implementation of the new CDD rules also requires special attention from both the financial institutions and the supporting software developers.

Financial Consequences

FinCEN, being the responsible organisation for BSA-supervision, has the authority to issue civil money penalties (CMP) in case of non-compliance. The compliance cost can be extremely high with all the software and workforce expenses, but they are still nowhere near the financial consequences of non-compliance. Since August 1, 2016 penalties for violating fund transfer record-keeping regulations can reach $19,787, while general civil penalty provision for willful violations of Bank Secrecy Act requirements range between $53,907 and $215,628. In the beginning of 2017 Merchants Bank of California received a total of $1 million CMP for willful violation of several BSA provisions, while Western Union Financial Services faced $184 million penalty and remedial actions for not implementing a sufficient, risk-based AML program, and failing to file timely SARs.

Nonetheless, purchasing and implementing an often costly off-the-shelf program is not always enough to avoid the exorbitant penalties. For instance, one of our customers was exposed to non-compliance risks as the program used for OFAC-compliance could not decode Chinese Telegraphic Code (CTC) in SWIFT messages. Custom adjustments can be used to perfect existing systems and keep them compliant to the swiftly changing legal environment.
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<![CDATA[Talking Fields and Messaging Cows May Save the World from Hunger]]>Tue, 25 Jul 2017 08:21:13 GMThttp://viswambara.com/blog/talking-fields-and-messaging-cows-may-save-the-world-from-hungerIf hearing the word “farm” still evokes the romantic image of endless fields providing an escape from technology and from constant internet connection, it is high time to reconstruct this picture. The Internet of Things started to reshape agriculture, which meant 30 million agricultural IoT devices installed in 2015, according to Business Insider.

This transformation could not arrive in a better time. The world population is expected to grow from 6.8 billion today to 9.1 billion by 2050 requiring significant growth in food production, says UN report. In addition to the increasing food demand, shrinkage of arable lands and increase in drought are also alarming problems caused by climate change. Needless to mention, with the rapid population growth, sustainable farming is more important than ever before. Considering these aspects, it might not seem to be an exaggeration that precision farming and smart agriculture are the key for survival.
The very first and essential step is to increase the yield per land by taking guessing and uncertainty out of the picture. This means planting exactly as many crops as the land can sustain, using as little water and fertilizer as feasible for the healthy and rich yield. To achieve the best results, several sensors monitor the soil constantly, transferring data to the cloud. After analyses a carefully chosen program can suggest actions to optimize growth, or even adjust water and chemical dosage without human interaction. Constant monitoring also ensures spotting infected crops just in time to prevent spreading, ensuring healthy and safe-to-consume harvest while minimizing loss. Data collection synchronized with weather forecasts also equips farmers with high-tech armory in the battle against extreme conditions.

As an additional advantage, most producers on the market advocate user-friendliness including mobile phone based farm control, probably as a sign of learning from past mistakes. For instance, CropX calculates the number of sensors necessary for effective soil monitoring with the help of digital maps. The sensors can be installed by the end-user while a GPS enabled mobile app tells where to place the gadgets for the best results. After scanning the QR-code on the sensors, they connect to the cloud “giving voice to your field,” as the CropX webpage suggests, telling when your crops demand water. Farmobile has rather decided to connect to your equipment via a little orange box, that sends you instant information about planting, fertilizing, and harvesting statistics allowing you to adjust your farming methodology for the most profitable result. OnFarm offers a common platform to all the data collected from several smart sensors and monitoring systems promising assistance to farmers displaying statistics on a customizable platform.

Not only the application possibilities, but the numbers are impressive as well. According to Business Insider, USA, the world leader in smart agriculture, produces 7,340 kg of cereal per hectare of farmland in contrast to the global average of 3,851 kg of cereal per hectare. OnFarm also reported an average 1.75% yield increase among the users. The significant rise in production rates is undoubtedly great news when additional 2.3 billion mouths need to be fed in 30 years. Besides, the results are also promising as far as environment protection is concerned. OnFarm also observed 8% reduction in water used for irrigation and a decrease in energy usage translating to a $7 to $13 cost drop per acre, not to mention the chemical use optimized to the necessary minimum.

In addition to having a fair share in saving the world, energy efficiency and yield growth can be converted into profit. RCR Wireless News has safer estimations than OnFarm in terms of average yield increase is concerned, but they also forecast impressive results. Even the more modest 15% expected growth in yield is calculated to be $5 to $100 profit increment per acre adding up to $5,000 to $100,000 gain on an average family-owned farm in the U.S.. In addition to the increased yield, optimized water, electricity and the fertilizer consumption reduces production costs; while the automatized data collection might ease labor expenses as well.

Nonetheless, a booming harvest with reduced costs is not always sufficient by itself to achieve the highest profit possible. Accurate forecasts about the expectable yield in the right time are worth gold on a sensitive market, as it is revealed in an interview with Arable founder, Adam Wolf. While working with one of the world’s largest berry producers, he observed that knowing what to expect is crucial on the field to adjust your marketing strategy; and such decisions are often made on “counting perhaps 50 berries,” and a “little bit of math;” not exactly a method that can be called precision farming. “If you counted more you should be marketing more, then they realize the week they harvest, ‘Oh no, we actually have 1.2 million tonnes in strawberries’ and you’re faced with either selling for pennies or leaving them in the field to rot” – Wolf summed up the hazards for ReadWrite. As a farmer, you need to know what is and will be happening on the field every moment not only for higher profit, but for food safety as well. This is more achievable than ever before due to all the remote data gathering possibilities and big data analyses.

The demand for information applies not only to crop producers, but animal farmers as well. Air quality, food and water supply can be constantly monitored and automatically controlled to ensure the best possible conditions for the animals. Livestock monitoring also facilitates the prevention of disease-spread; as symptoms can be spotted earlier, infected animals can be isolated and treated in time. IoT applications in animal farming range from poultry monitoring to optimizing oyster farm conditions. However, cows seem to enjoy the most popularity regarding IoT applications. They were even granted with smart wearables developed by companies such as eCow, and Anemon,  so they can send a message to the farmer when they are in heat, or a calf is about to be born. These crucial events can be predicted based on the movement of the animal, temperature, and tale position. The prophesy sent straight to your phone can save tremendous amount of money, time, and effort, as sustaining a healthy and sufficient cattle population with the increasing dairy needs is not a piece of cake.

Nonetheless, ensuring that the message is received in time is not always without challenges, either let the sender be your cow in heat or your land sensor begging for water and nutrition. One of the most notable hurdles of IoT application in the rural areas is finding a reliable and affordable method for data-transfer. According to Enterprise Forward, more remote areas often struggle with broadband-availability, and are forced to turn to the costlier satellite communication. In addition, farms with more diverse product range may face higher costs, as a wider variety of sensors can monitor the more diversified crop and animal needs.

The European Union decided to foster the digital approach in agriculture to tackle some of the obstacles. The European Commission shared in its website that application of smart farming technology in Europe is merely 24% compared to the approximately up to 80% of U.S. farms. According to Maria Kernecker from Leibniz Centre for Agricultural Landscape Research-ZALF, the low adaption of the technology can partly be accounted for by “the gap between the needs, interests and expectations of the research and the farmer communities.” To tackle the problem, EU is investing €192 million in IoT research and innovation projects starting between 2014 and 2017. The initiative includes €30 million Euro research funding granted for the agricultural project ‘Internet of Food and Farm 2020.’ The project brings together 73 partners with the intent to “demonstrate the business case of IoT for a large number of application areas in farming and food, integrate and reuse available IoT technologies by exploiting open architectures and standards, ensure user acceptability of IoT solutions in farming and food by addressing user needs, including security, privacy and trust, and ensure the sustainability of IoT solutions beyond the project by validating the related business models and setting up an IoT Ecosystem for large scale take-up.”

EU is not the only one who considers precision farming and smart agriculture an urgent matter. According to GovInsider, countries across Asia enjoy government support to turn towards precision farming. In Malaysia, for instance, the government focuses on an IoT plan in agriculture aiming to boost production with 20% by 2020. One of the main initiatives is a common IoT platform that provides environmental data to producers, traders, and suppliers. In addition, sensors are installed to detect the right time to pollinate oil palm trees or monitor fish health in breeding ponds. The government even paid attention to consumers and local exporters, who can follow details about fruit by scanning a barcode. Philippians uses drones to chart where the lands need extra protection from natural disasters while satellites help to predict annual yield and prepare for pest attacks.

Probably it doesn’t come as a great surprise that Japan is leading in IoT application in agriculture. The very first robot farm is about to be lunched in Kameoka, Kyoto prefecture. “The seeds will still be planted by humans, but every other step, from the transplanting of young seedlings to larger spaces as they grow to harvesting the lettuces, will be done automatically,”–explains JJ Price, the company’s marketing manager. Temperature, humidity, carbon dioxide levels, and light sources will also be automatically controlled. The applied technology will also be cost and environment friendly, as 98% of water supply will be recycled, while LED lighting will make sure that energy costs are reduced to a third. Based on the company’s predictions, the automatized precision farming will provide a significant boost in lettuce production: from the present 21,000 heads a day to daily 50,000 heads.

Even if the Japanese high tech farming is a far-away goal in many rural areas, there is a supportive environment to take the next step towards saving the world from hunger with technology; and in the meantime, creating more profit. Sometimes, additional custom software can help to make even more of the readily available solutions.