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Going back to the basics to address the needs of the future
Compliance–Back to the Future
Gizem Tansu, Commercial Manager, Compliance & Sanctions
Mike Powell, Product Manager, Sanctions Compliance Services
Michel Pronce, Key Clients Service Manager, EMEA
24 & 25 November 2014
Logistics
• This session will last for 1hour and 45 minutes
• It consist of a presentation, an activity and a debriefing
• Slides will be available for download after the event
• Please do not modify the setup of the tables, they are ready for the activity.
• Questions can be raised during the activity and debriefing
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 2
Objective
• Raising awareness of Compliance matters within financial institutions
(the objectives, the actors, the threats, the responses, etc) in an
interactive way with peers.
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 3
Financial Crime
• KYC
• Anti-Money Laundering
• Counter Terrorism Financing
• Sanctions Compliance
• Bribery and Corruption
• Fraud
• Identity theft
• And much, more…
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 4
3) Integration Bring the “cleaned” assets back in
the legitimate economy. Selling Shares, Buying Property...
1) Placement Place the criminal assets into the financial sector.
Often Cash…
2) Layering Create Complex layers of
financial tractions: Shell Companies, Trusts,
etc.
What is Money Laundering?
The Three Basic Steps.
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 5
What are Sanctions?
Sanctions impose controls on transactions and freeze assets and
are used by governments to influence or constrain the behaviour
of governments and individuals. In
tern
atio
na
l
bod
ies
Countr
ies
United Nations
European Union
Germany UK France United
States
Who is
responsible
for financial
sanctions?
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 6
What are Sanctions?
Who are on these lists?
• Countries
• Companies
• Individuals
• Vessels
• Aircrafts
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 7
USA – OFAC UK – HM Treasury United Nations
Country related
Balkans
Belarus
Burma
Ivory Coast
Cuba
Democratic Republic of the Congo
Iran
Iraq
Lebanon-Related
Libya
North Korea
Somalia
Sudan
Syria
Yemen
Zimbabwe
Other targeted/List based
Counter Narcotics Trafficking
Counter Terrorism
Diamond Trading
Former Liberian Regime of Charles
Taylor
Non-Proliferation
Transnational Criminal Organizations
Country related
Afghanistan
Belarus
Burma/Myanmar (Suspended to Apr
2013)
Democratic Republic of the Congo
Egypt
Eritrea
Federal Republic of Yugoslavia &
Serbia
Iran (human rights/nuclear
proliferation)
Iraq
Ivory Coast
Lebanon and Syria
Liberia
Libya
North Korea (Democratic People’s
Republic of Korea)
Republic of Guinea
Somalia
Sudan
Syria
Tunisia
Zimbabwe
Other targeted/List based
Al-Qaida
Terrorism and terrorist financing
Country related
Côte d'Ivoire (Ivory Coast )
Democratic Republic of Congo
Democratic People's Republic of
Korea (North Korea)
Eritrea
Iran
Iraq
Lebanon
Liberia
Libya
Somalia
Sudan
Other targeted/List based
Al-Qaida, Taliban, Bin Laden
Terrorism
Examples
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 8
Sanctions Fines
9
Sanction Fines
• Transactions to Sudan (as well as Cuba and Iran) enabled via Data Stripping
(2014) – OFAC –French Bank
• Transaction to Iran and Sudan by replacing the BIC with the name of the bank
(2013) – OFAC – UK Bank
• Lack of verification on name of beneficial owner against EU list
(2013) – Finansinspektionen – Nordic bank
• Data stripping on payments to Iran and Cuba, to hide the origin of the funds
(2012) – OFAC – Dutch Bank
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 10
What are PEPs?
PEPs are individuals who, by virtue of their office, might become
exposed to corruption
PEP Lists include, but are not limited to;
senior politicians, senior civil servants, and military officers in every
country, as well as their close families, colleagues, and advisors.
PEPs Lists contain
roughly 1.5 Million
Entities.
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 11
How a financial institution deals with compliance?
Customer
identification
& verification
Initial due diligence
Customer screening
Ongoing due diligence
Customer & transaction monitoring
Transaction screening
start transacting
On-boarding process Ongoing reviews
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 12
Compliance is a pervasive function within the financial
institution function
Banking Group
Business Retail | Corporates | FI | Business Compliance | …
Operations and IT Monitoring | Investigation | Operations Compliance | …
Compliance & Risk Management MLRO | Sanctions | AML | Capital Markets | Anti-Corruption…
Common Titles
Head of GTB Compliance
Head of KYC Team
Head of FI Group
Network Management
Operations & Regulation
Operations Risk & Controls
Head of Sanctions Screening
AML Advisory & Compliance IT
Head of Group Compliance
Head of AML & CTF
Sanctions & Embargo
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 13
AML Program
Independent
Audit
Compliance – AML Program
Training “Ensure the Rule Book
is being used
Compliance
Officers
The
Business
“Write the Rule Book”
“Implement the Rule Book”
Key Elements of an AML Program 1) A system of internal policies, procedures and controls
• KYC / CDD
• AML Transactions Screening
• PEP Screening
• Business Rules, Procedures, and Controls
2) A designated compliance officer with day-to-day oversight over the AML program;
3) An independent audit function to test the AML Program; and
4) An ongoing employee training program.
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 14
Questions?
15
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 16
Networking
Best Practices
You Informal B
reaks
Chat
Operational Topics Facilitators
So
luti
on
s
Key L
earn
ings
Fun
Sessions
Mon: 18:35-19:05
+ Cocktails & Snacks
Tue: 10:30-11:00
Tue: 13:10-13:40
Tue: 15:30-16:00
All details about Café Caroline can be found at the end of the
PSF Year Book: how to register, timing, topics, location
Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 17
Networking
Best Practices
You Informal B
reaks
Chat
Operational Topics Facilitators
So
luti
on
s
Key L
earn
ings
Fun
All details about Café Caroline can be found at the end of the
PSF Year Book: how to register, timing, topics, location
Sessions
Tue: 10:30-11:00
Tue: 13:10-13:40
Tue: 15:30-16:00
THANK
YOU
Thank you