Larc2013 - Regulatory Plenary


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Larc2013 - Regulatory Plenary

  1. 1. 1SWIFT Latin American Regional Conference - 11-12 July 2013 Jim Wills SWIFT USA Silvana Mesquita Mark Samara BTG Pactual Brazil OFAC Colombia The Evolution of Central Counterparty in Latin America and the Need for More Oversight (Spanish) @swiftcommunity #LARC2013 Regulatory Plenary
  2. 2. OFAC Sanctions: Who, What, Where… …and Iran and TBML too! “Instead of being a secondary measure, as in the past, economic sanctions have become a centerpiece of national security policy.” - Washington Post 03/23/2011
  3. 3. Who is OFAC? OFAC administers and enforces economic and trade sanctions against targeted: Foreign governments Individuals Entities Vessels Practices OFAC is Not a Bank Regulator OFAC cannot mandate compliance We can (and do) impose penalties for violations We work with regulators to ensure compliance by U.S. financial institutions
  4. 4. Jurisdiction – To Whom Does OFAC Apply? • Individuals located anywhere in the world, doing business in the United States or through U.S. persons • Corporations located anywhere in the world, doing business in the United States or through U.S. persons • Transactions: – Transactions by foreign persons to extent they involve the United States; – Transactions in property of blocked person within the United States; – In limited circumstances, transactions involving controlled U.S.-origin goods or technology.
  5. 5. OFAC Terminology: Blocking v. Rejecting BLOCKING “Freezing” assets under U.S. jurisdiction Across-the-board prohibitions against transfers or transactions regarding the blocked property Title of blocked property remains with sanctioned target REJECTING Underlying transaction that is prohibited, but contains no “blockable” interest U.S. person must simply refuse to process the transaction
  6. 6. Specially Designated Nationals (SDN) List OFAC’s prohibited parties list Over 6,000 individuals and entities identified by OFAC Individuals, entities, vessels, banks all over the globe who are owned, controlled by, or acting on behalf of targeted governments or groups UPDATED FREQUENTLY!!
  7. 7. Active Sanctions Programs (23) Sanctions Programs Balkans Iran North Korea Belarus Iraq Sudan Burma Lebanon Syria Cote d’Ivoire Liberia Somalia Cuba Libya2 Transnational Criminal Organizations Congo Kingpin Narcotics Yemen Diamond Trading Narcotics Trafficking Zimbabwe Global Terrorism NPWMD
  8. 8. Comprehensive Sanctions Programs • Cuba • Iran • Sudan • Syria These countries have trade restrictions!
  9. 9. Limited Sanctions Programs • Burma • North Korea • Diamond Trading
  10. 10. List-Based Sanctions Programs: Regimes • Balkans • Belarus • Congo • Ivory Coast • Iraq •Liberia • Libya • Zimbabwe
  11. 11. List-Based Sanctions Programs • Terrorism • Proliferation • Narcotics Trafficking • Lebanon •Yemen • Somali Piracy •Transnational Criminal Organizations
  12. 12. Sanctions Impact Iran – OFAC designated 360+ names linked to Iran (Weapons of mass destruction, support for terrorism, and Iran’s energy and trade). o As a result of U.S. sanctions and outreach: • Most foreign financial institutions have dramatically reduced their business w/ Iran. • Those foreign financial institutions that run afoul of U.S. sanctions risk having their access to the U.S. banking system restricted or being cut off – Pursuant to CISADA, in July 2012 Treasury identified two foreign banks: Kunlun Bank in China // Elaf Islamic Bank in Iraq. • Reports indicate that Iranian oil-revenues have dropped by 50% Burma –Sanctions targeted Burmese regime’s repression of democracy. o As Burma made progress in political reform Treasury has eased sanctions • Sanctions no longer prohibit U.S. persons from engaging in new investment in Burma • Sanctions no longer prohibit U.S. banks from exporting financial services to Burma
  13. 13. Iran Sanctions: Is there even more now??
  14. 14. First East Export Bank PLC Labuan, Malasia Vobster Shipping Company Ltd. Malta Cobham Shipping Company Limited Isle of Man
  15. 15. Banco Internacional de Desarrollo C.A. Caracas, Venezuela Eleventh Ocean Administration GMBH Hamburg, Germany Galliot Maritime Inc. Panama
  16. 16. International Safe Oil Malasia Hercules International Ship Atenas, Grecia Cylinder System LTD Croacia MCS Enginerring Alemania
  17. 17. Kont Investment Bank Tajikistan Golden Resources Trading Company LLC Dubai, UAE One Class Properties (PTY) LTD. Sudafrica
  18. 18. Overview 1. IFCA 2. E.O. 13645
  19. 19. AML Compliance & Onboarding Controls July, 2013
  20. 20. 22 Money Laundering Phases Money laundering refers to the process of concealing the source of legally, illegally, and grey area obtained monies. Layering (means separating the illegally obtained money from its source through a series of financial transactions that makes it difficult to trace the origin) Integration (means converting the illicit funds into a seemingly legitimate form) Placement (physically placing illegally obtained money into the financial system)
  21. 21. 23 How to Mitigate AML Risks Deals With 3rd parties? What is THIS source of funds? Compatible with income and wealth? Compatible with business activity? Suspicious transactions must be reported Corporate Governance Knowledge constant update AML involvement in new products and structures Training Sessions and Communication Memos KYC Who is the customer? What is the source of funds? Are there Negative News? PEPs? Sanctioned?
  22. 22. 24 High Risk Customers PEPs (Politically Exposed Persons), SIAPs (Sensitive Industry Affected Persons), SCAPs (Sensitive Country Affected Persons), Media (Persons involved in scandals and proceedings). IDENTIFICATION APPROVAL MONITORING
  23. 23. 25 Onboarding Controls Background Checks Documentation Review Systems Digital Files/ Archives Powers/ Signatures
  24. 24. 26 AML Compliance main attributions High Risk Names Approval Monitoring Annual Review Transactions Individual Limits Monitoring Review and Approval of Alerts Due Diligences Documents verification AML Policies review Register on Regulators Internal Approvals Policies and Procedures Annual Review Internal Memos Market Best Practices Training Basic AML (for all employees) Account Opening Foreign Exchange Background Checking Senior Management
  25. 25. 27 Contact and Questions E-mail to: DL-AML-Brazil Silvana Mesquita – Tel . 55 11 33832536
  26. 26. Q&A ? SWIFT Latin American Regional Conference - 2013 11-12 July 2013 28