TESS further spreads its wings worldwide

MSC Malaysia Success Stories
TESS Innovation
By Charles F. Moreira

TESS Innovation has established itself as a leading developer and provider of financial crime solutions in South East Asia, with plans to have at least one or two customers in each Asia-Pacific country by 2016. Beyond that, it aims to penetrate the Middle East and the US markets.

TESS CEO B.Y. Liew

Besides Malaysia where it has a well-established market presence, TESS also has customers in Thailand and the Philippines, already has partners in Indonesia and Vietnam, and is in negotiations with potential partners to help it penetrate the China and Taiwan markets.

TESS CEO B.Y. Liew (left) with Peter Ong, Chief Technical Officer and Executive Director (seated) and Y.S. Yap, Head of Research and Development

“Our vision is to make Malaysia a recognised model in Asia for combating financial crime”, said B.Y. Liew, its chief executive officer. He also wants TESS to be recognised as a supplier of anti-financial crime solutions and to be a leading anti-money laundering solutions providers in Asia and the world. Liew is grateful for all the assistance TESS received from the Multimedia Development Corporation (MDeC), which has helped it in its long and ongoing journey to achieve great heights.

Founded on 22 March 2000 and now trading under the name TESS International, it initially developed Internet banking solutions and began marketing them but found it tough trying to convince local banks that a home-grown solution was as good if not better than the foreign ones which they tended to prefer.

TESS was awarded MSC Malaysia status in 2001 and that same year, it shifted its focus and adapted its Internet banking platform for unit trust management companies. Today, TESS' platforms are used by four of the five top unit trust companies in Malaysia, as well as a unit trust industry association.

TESS participated in a tender many years back to supply an Internet banking solution to a local financial institution and found that it was competing against 45 other companies offering the solution. Realising that this was a glutted market, in which competition was fierce and it would be hard to survive and grow, TESS made a shift.

We are not a “me too”

So in 2009, TESS decided to specialise on providing solutions to combat financial crime - a very niche market - and armed with RM1.2 million in funding from the MSC Malaysia Research and Development Grant Scheme (MGS Grant) - a matching grant which helped TESS develop CORAL iSEMTM (Intelligent Sensor for Money Laundering), its anti-money laundering solution, which it launched in mid 2010.

It won its first CORAL iSEMTM customer in 2011 and today has eight customers, including banks, insurance and unit trust companies. CORAL iSEMTM  enables these financial services companies to comply with Anti-Money Laundering and Anti-terrorism Financing Act 2001 (AMLA), as required by Bank Negara Malaysia (Central Bank of Malaysia).

It stores money laundering patterns and employs artificial intelligence (AI) to learn to identify patterns to identify possible fraud. It identifies possible fraud almost in real-time from major deviations from each customer's regular transaction profile and usage trends. It supports Thomson Reuters, Dow Jones, United Nations, U.S. Office of Foreign Assets Control, European Union, Financial Action Task Force and other internal and external watch lists. The system compiles detailed customer information to ascertain relevant risk profiling and customer screening capabilities, has comprehensive and enhanced customer due diligence  capabilities, analyses relationships, employs a business intelligence (BI) widget which displays statistics and analyses in graphical form and also generates reports.   

Prior to CORAL iSEMTM, TESS had developed the CORALTM iFES (Intelligent Financial eServices System) and CORALTM iRAS (Statistical Reporting Analysis and Submission System) which it supplied to Bank Negara Malaysia.

Its other CORALTM products today, include CORALTM Integrator – a next-generation business intelligence solution, CORALTM CMS - a currency monitoring and inventory solution, CORALTM iMobile - a mobile banking and enterprise wireless solution and CORALTM i3 - an Internet, investment and information monitoring solution. It also provides professional services - including consulting, development, implementation, outsourcing and training.

Thailand and the Philippines

In February, 2012, Thailand was blacklisted by the Asia-Pacific Group on Money Laundering (APG), and the Anti-Money Laundering Office (AMLO) of Thailand had to introduce currency declarations and checks on Thai nationals and foreign visitors entering and leaving the country. Such a blacklist increases the cost of funds transfers in and out of Thailand, and this provided an opportunity for TESS to offer its anti-money laundering solutions to help Thailand.

TESS CEO B.Y. Liew and Satish, Head of Sales at a Trade Mission to Vietnam lead by Minister of MOSTI in July 2011

Here, TESS adopted the software-as-a-service (SaaS) model and together with its CORALTM local partner in Thailand, they operated a cloud-based anti-money laundering Customer Due Diligence (CDD) gateway, which enables financial services companies, including banks there to perform customer screening. This service is approved by the relevant Thai authorities, and financial services companies subscribe to it and upload their customer data to the platform, which scans the customer data to detect any blacklisted persons, whom the relevant authorities would then investigate.

The service, which is on-going today, has reached a total of 170 financial services customers out of the estimated 8,000 in Thailand, which leaves a huge opportunity ahead for TESS to take advantage of.

Earlier this year (2014), TESS secured a bank in the Philippines as a customer for CORAL iSEMTM, and completed its implementation in one month. TESS also proposes to provide a similar cloud-based gateway to financial services companies in the Philippines as it has done in Thailand.

“MDeC and the Malaysian External Trade Development Corporation (MATRADE) helped open doors for us to find the right partners in Thailand and the Philippines,” said Liew.

Big data analytics

Banks run reconciliation of  their computer system's daily transactions in batch mode, usually after midnight, and this leaves a two to three hour window for anti-money laundering systems such as TESS' to analyse the previous day's transaction data to identify possible fraud. So TESS needed a very powerful and fast processing capabilities and it turned to the power of parallel processing using multiple graphic processor units (GPUs) and Compute Unified Device Architecture (CUDA) programming to develop a big data analytics system to screen through bank's transaction data.

Big data analytics is increasingly in importance today as a means to scan through huge amounts of data being generated in huge volumes rapidly from multiple sources, whether an SMS, e-mail, website, tweet, posting on social media, and traditional databases, and to be able to make sense of it all, and to see ongoing and emerging patterns and trends as they are happening, and not after the event.

In April 2013, MDeC  launched its Technology Acceleration Programme (TAP) in partnership with MIMOS and NVIDIA Corporation, to help Malaysian information technology companies speed up development of marketable products, and in June that year, TESS was amongst five successful companies out of many applicants, which were selected to attend bootcamp training and advanced training on GPU computing, conducted in collaboration with MIMOS Bhd and experts from GPU maker NVIDIA Corporation. The TAP programme is designed as such that a mentor is assigned to each TAP participant and  TESS was assigned a mentor to help it with CUDA programming and in December, 2013, TESS won second prize in the TAP 2013 Award for its Xcelerated Anti Money Laundering(AML) Watchlist Search via GPU. 

“Our Xcelerated Anti-Money Laundering platform speeds up the analytic screening process by at least 20 times,” said Liew. TESS has also been selected as one of the TOP 3 winners in the ASEAN ICT Award 2014. 

The TAP programmes focus on different technologies each year, and this year (2014), it focuses on big data analytics, in collaboration with Revolutionary Analytics as technology partner.

Development and commercialisation

Early this year, TESS received funding to develop an internal fraud detection solution, from MDeC's Product Development and Commercialisation Fund (PCF). This is a matching grant of up to RM750,000 over two years and helps companies with their operational and capital expenses, commercialisation and related costs. Seventy per cent of the funding is to support research and development and the remaining 30% is for commercialisation.

The first six months to 12 months of the funding period is for product development and the remaining 12 months is for commercialisation. PCF recipients are expected to have created at least one item of intellectual property and to have successfully commercialised their product within one year after having completed product development.

In prototype stage at time of writing is TESS' internal fraud detection solution, which will be able to detect possible internal fraud and prevent incidents such as recently where a bank officer and her husband were arrested for allegedly having siphoned money from accounts of some passengers on the still missing Malaysian airliner, Flight MH370.

TESS plans to launch its CORALTM iSEF (Intelligent Sensor for Fraud) fraud management solution in the first quarter of 2015. It screens every transaction to determine whether it complies with rules set in the Fraud Pattern Hub, analyses customer's and employees' rest levels according to these rules, has a comprehensive and configurable approval work flow,  comprehensive graphical tools to help in forensic fraud investigation and post transaction analysis, it scores transactions to assess their risk, enables monitoring of the fraud department's productivity and workload, and can be easily audited.

The company participated in the 6th International Conference On Financial Crime And Terrorism Financing (IFCTF 2014) in Kuala Lumpur on 8 and 9 October 2014.. Its theme this year is, “The Evolution of Compliance, Are We Ready?”. The event is organised by the Asian Institute of Finance (AIF) and the Compliance Officers' Networking Group, Malaysia. TESS has been invited to present on the topic of “Enhancing Compliance with Macro Analysis and Tools”. 

Liew expects there to be an increase in demand for compliance solutions such as CORALTM  following the Asia Pacific Group's audit of Malaysia, scheduled for the month of November 2014. “Compliance solutions are a cost and do not make money for banks and financial institutions, so they tend to put off their purchase until required to comply with regulatory requirements”, he said.