The evolving enterprise risk model

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The evolving enterprise risk model

  1. 1. The evolving enterprise risk modelMark DunnMarket Planning ManagerLexisNexis Risk3rd October, 2011 LexisNexis Proprietary & Confidential: For internal office use only 1
  2. 2. Converging regulatory drivers Money Laundering Regulations 2007 Sanctions Regime POCA Regulatory Bribery Act 2010 FATCA Risk Dodd-Frank FCPA LexisNexis Proprietary & Confidential: For internal office use only 2
  3. 3. Converging regulatory drivers “The Money Laundering Regulations 2007 “And of course for the purposes of the ..require that firms…prevent funds or Proceeds of Crime legislation, once bribery financial services being made has occurred, there will be a distinct likelihood available to those on the sanctions list ” of money laundering” FSA SFO “What we have been doing.. is “Corruption and bribery will be one of the to make the important link topics of our forthcoming round of thematic between corruption investigations” FSA and money laundering” SFO “Corruption in one country often “Corruption and money leads to laundering in another” laundering are intrinsically “We will be looking at FSA linked” FATF investment banks’ proceduresdesigned to contain the risk staff “Anti-money laundering (AML)or agents pay or receive bribes.” and counter-terrorist financing FSA “FATCA…requires far more in (CFT) measures are powerful tools that are effective in the depth and prescriptive KYC and fight against corruption” beneficial ownership FATF requirements” Wolfsberg 3
  4. 4. Converging risk assessment Country Sectoral Risk Risk Risk Assessment Business Transaction Partnership Risk Risk Business Opportunity Risk LexisNexis Proprietary & Confidential: For internal office use only 4
  5. 5. Converging due diligence tasks Know Your Customer Know Your Customer’s Due Know Your Supplier Customer Diligence Know Your Employee LexisNexis Proprietary & Confidential: For internal office use only 5
  6. 6. Converging due diligence tasksProcess Overview • Approach to due diligence covers three stages determined by risk assessment: Conduct 1. Conduct health check Ongoing health check Update records on existing entities monitoring 1. Manage incoming checks Conduct due diligence on new entities Due Diligence Core Tasks 1. Ongoing monitoring Conduct spot checks and periodic reviews Manage Arrow 2 incoming checks 6
  7. 7. Converging due diligence tasksProcess Overview Identify Review Risk Due Diligence Communication Assessment Monitor High Level And Training Process Audit Research 7
  8. 8. Converging due diligence tasks Sanctions PEP screening screening Negative Due Identity news verification Diligence Beneficial ownership LexisNexis Proprietary & Confidential: For internal office use only 8
  9. 9. Converging due diligence tasks AML Fraud Audit Strategy Procurem Corpora Corporate Credit AML Fraud Audit Strategy Procurement Credit ent teSecurity Security Company M&A Employeedue diligence ID due diligence screening Credit verification reference List Third party Investigations checking Reputation due diligence checks Transaction Country monitoring Conflicts risk checking 9
  10. 10. Adopting a consistent and more efficient process AML Fraud Audit Strategy Procurem Corpora Corporate Credit AML Fraud Audit Strategy Procurement Credit ent te Security Security AML Fraud Corporate Security Group Security Function 10
  11. 11. How we help clients realise a consistent process Simplified Due Diligence Company or individual Ongoing Monitoring investigations across: Automated checks: Yes Sanctions and Watch Lists Business ID verification data Report Approval PEP checks Sanctions and Watch Lists Proprietary Watch Lists PEP checks Negative Media Proprietary watchlists No Low / Med Alert Third New Risk PartyInterest Yes Identified? No Med / High Ultra High Enhanced Due Diligence Media Monitoring Perform in-depth checks Automated monitoring of across: global entities: Media and Negative News Lexis Content Company Information Ultra High “of Special Interest” Web Sources Legal Case History Social Media Paid Subscription Services 11
  12. 12. How we help clients realise a consistent process Yes Bridger Insight™ XG Business Approval Bridger Insight™ XG Report No Low / Med Alert Third New Risk PartyInterest Yes Identified? No Med / High Ultra High Lexis®Diligence LexisNexis Analytics Ultra High “of Special Interest” 12
  13. 13. Summary 13
  14. 14. Reference 14
  15. 15. Converging risk assessment Commonly encountered risks can be categorised into five broad groups: • Country risk This is evidenced by perceived high levels of corruption, an absence of effectively implemented anti-bribery legislation and a failure of the foreign government, media, local business community and civil society effectively to promote transparent procurement and investment policies. • Sectoral risk Some sectors are higher risk than others. Higher risk sectors include the extractive industries and the large scale infrastructure sector. • Transaction risk Certain types of transaction give rise to higher risks, for example, charitable or political contributions, licences and permits, and transactions relating to public procurement. • Business opportunity risk Such risks might arise in high value projects or with projects involving many contractors or intermediaries; or with projects which are not apparently undertaken at market prices, or which do not have a clear legitimate objective. • Business partnership risk Certain relationships may involve higher risk, for example, the use of intermediaries in transactions with foreign public officials; consortia or joint venture partners; and relationships with politically exposed persons where the proposed business relationship involves, or is linked to, a prominent public official. LexisNexis Proprietary & Confidential: For internal office use only 15

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