Presentation of October 10, 2014 during the Financial Service Centers of America (FiSCA) Annual Conference's BSA/AML Certification Course. Covering Culture of Compliance, Understanding your market, and Knowing your customers.
2. Objectives
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Enhance risk management practices
to better mitigate risks
Protect business and make it more
profitable
Protect and serve your community –
be a good citizen
4. Culture of Compliance
Signs of a lax, Non-Compliance Culture?
FinCEN’s Culture guidance – FIN-2014-A007
Advisory to U.S. Financial Institutions on Promoting a
Culture of Compliance
Engaged Leadership
Compliance not compromised by revenue interests
Appropriate internal information sharing
Adequate Human and Technological Resources
Effective Program- Independent, Competent Testing
Understand importance, utility of reporting
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5. Sea Change
“As Director, I feel it is important that financial institutions take responsibility when their actions
violate the BSA. And by accepting responsibility, it is not just about admitting to the facts alleged in
FinCEN’s enforcement action. It is also about admitting a violation of the law. Over the last year,
we have changed our practice at FinCEN to one in which our presumption is that a settlement of an
enforcement action will include an admission to the facts, as well as the violation of law. And, we have
begun implementing this practice in our enforcement actions against all sizes and types of financial
institutions.
Integrity and transparency goes a long way. It is a great bestowal of trust that enables financial
institutions to be part of the U.S. financial system, to be part of the global financial system. And that
trust -- that privilege -- comes with obligations. One of those obligations is a responsibility to put
effective AML controls in place so criminals and terrorists are not able to operate with impunity in the
U.S. financial system.
As FinCEN’s recent enforcement actions show, FinCEN will act under such circumstances to protect
the integrity and transparency of the U.S. financial system.”
Jennifer Shasky Calvery, Director, FinCEN
FIBA, Anti-Money Laundering Conference
February 20, 2014
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6. Hard Target OR Soft Pushover
Do not compromise yourself
with exceptions
poor documentation
lack of focus or willpower
Will you be a wet noodle? Man or Mouse?
Official government ID - real, current
not expired
not international driver’s licenses
not “for novelty purpose only” ID cards
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7. Customer Identification Program
Establishing a reasonable basis to believe person is who
he/she claims to be
Mickey Mouse? Elvis Presley? (I think not….)
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8. What does KYC look like?
Before you can Know Your Customer, you need to
know your market.
How do I recognize a customer when I see
him/her?
How do I distinguish a person coming in to buy
something that I don’t want to be a “customer”?
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10. What is normal & expected?
Socio - Economic profile
occupation
education
income
ethnicity
dress
speech patterns
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11. Socio-pathic profile
prevalent problems and issues in our neighborhood
familiarity with types of people who may be
perpetrating crimes in our neighborhood
familiarity with types of victims locally
Who is being taken advantage of in our
community?
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What is normal & expected?
16. Who is this person?
Be friendly- you want customers to come back
Details- employment, occupation, title, where
other identifiers
does person actually live/work nearby?
family, friends, business associates, related
customers
What might that tell us?
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17. What services?
Used, inquired about
Cross selling is good business practice
helps understand customer too
may also help identify red flags
Does person meet profile of what is expected for
market?
Does timing, frequency of transactions make sense?
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18. Levels of Knowing
• New customer – simple remittance
• Repeat remittance customer
• Detailed information gathered from multiple
tranx types
• No interaction
• Moderate interaction
• Closely held, limited openness
• Too open
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19. Training - Ongoing
Training –
not just once a year
can’t set it and forget it
do risk based refreshers
throughout year
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20. Role Playing
Isn’t role playing just another way of…
inspect what you expect?
Allows you to demonstrate how to handle real life scenarios
effectively
Mystery shopping can help prove whether training is
effective or not
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26. Jay Postma, CAMS
President
MSB Compliance Inc.
Jay.Postma@MSBComplianceInc.com
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