Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Is too much compliance a bad thing

510 views

Published on

Presentation on compliance at BBA Bank N.V. on August 1, 2013.

  • Be the first to comment

Is too much compliance a bad thing

  1. 1. 1 Giana Quandt, Senior Consultant Simon Consulting VBA Presentation BBA Bank N.V. August 1, 2013 IS TOO MUCH COMPLIANCE A BAD THING? STRENGTHENING THE INTER-RELATIONSHIP BETWEEN THE REGULATORS AND THE FINANCIAL INSTITUTION TO MITIGATE CHANCE OF DISCREPANCIES
  2. 2. FACILITATORS 2 Pierre Simon Managing Director Simon Consulting Group Giana Quandt, LLM CAMS Senior Consultant Simon Consulting VBA
  3. 3. 11:00-11:05 Welcome and Introduction 11:05-12:00 The importance of the integration of Regulation for the Onshore Banking Entity 12:05-12:45 Trends in AML 12:45-13:00 Wrap-up 13:00 End of Presentation AGENDA 3
  4. 4.  Financial stability is crucial to the well-being of a modern economy  Investors may need protection from the risks posed by complex financial products  The introduction of unusual or suspicious transaction reporting by the regulated sector NECESSITY FOR REGULATION 4
  5. 5. THE MONEY LAUNDERING PROCESS 5
  6. 6. 6 6 AML/CFT BUSINESS PROCESS OVERVIEW
  7. 7. REGULATOR’S VS FINANCIAL SECTOR MAIN GOALS The main Regulator’s aim is to create successful circumstances for the financial sector: efficient profitable /good services more valuable money extended access to affordable services √ Regulated Firms have similar goals √ This creates a strong shared interest, despite inevitable tensions. 7
  8. 8. INTERCONNECTEDNESS OF REGULATION State Ordinance AML/ CFT AB 2011 no 28 Internal Codes and practice GuidanceMaterial AML Handbook FATF RECOMMENDATION 5 Customer due diligence CDD measures, including Identifying and verifying the identity of their customers. CDD on a risk sensitive basis FATF Recommendation 6 (politically exposed persons) FATF Recommendation 7 (correspondent banking) FATF Recommendation 8 (non-face-to-face customers) FATF Recommendation 9 (intermediaries) FATF Recommendation 10 (Record Keeping) 8
  9. 9. KEY AML/CFT PRINCIPLES IN ARUBA The 6 key AML/CFT principles cover the following areas:  Principle 1 – senior management responsibility;  Principle 2 – risk-based approach;  Principle 3 – know your customer;  Principle 4 – effective reporting;  Principle 5 – high standard screening and appropriate training; and  Principle 6 – evidence of compliance. 9
  10. 10. BUILDING AN EFFECTIVE RELATIONSHIP “Main elements:  Active management (on both sides)  Practical arrangements, e.g. interconnection  Provision of full information  Arrangements to ensure compliance  Straightforward approach to enforcement 10
  11. 11. MLCO WORK FLOW 11
  12. 12. PROCESS OVERVIEW 12
  13. 13. OVERVIEW EFFECTS OF NON COMPLIANCE 13
  14. 14. MLCO REPORTING What are the requirements? Monthly reporting by MLRO to senior management ( Board of Trustees) Assess the adequacy and effectiveness of the firms AML/CFT policies, procedures, systems and controls in preventing ML/TF as shown in slide 11 Timely reporting to allow senior management to deal with the report 14
  15. 15. STRATEGIC CONSIDERATION OF THE MLCO REPORT Consider and scrutinize each report made by the MLCO Promote Raising knowledge and awareness in the organization Stress the importance of detecting unusual transactions If deficiencies are identified – approve an action plan to remedy gaps 15
  16. 16. SECTION 2: GLOBAL TRENDS
  17. 17. MONEY LAUNDERING TRENDS Traditional methods - cash based businesses Real estate, loans and trade based money laundering Credit cards issued by offshore banks has increased Electronic money and internet-based trading and gambling 17
  18. 18. TAX EVASION 18
  19. 19. OWNERSHIP 19
  20. 20. FALSE INVOICING 20
  21. 21. REAL ESTATE 21
  22. 22. ‘TRADE BASED MONEY LAUNDERING’  Over- and under-invoicing  Multiple Billing  Fictitious transactions 22
  23. 23. INTERPLAY WITH OTHER WHITE COLLAR COMPLIANCE RISKS FATCA US legislation designed to force foreign financial institutions (FFIs) to disclose their US account holders • Operates by imposing 30% withholding on payments • In AuA, will most likely apply via an Inter Governmental Agreement (IGA) • IGA will align FATCA more with FATF concepts but will apply to FFIs even if no US assets • Requires additional KYC/CDD over AML/CFT requirements • Will require inter-agency cooperation and information sharing 23
  24. 24. INTERPLAY WITH OTHER WHITE COLLAR COMPLIANCE RISKS - REQUIREMENTS Sanctions  Complex sanctions obligations: UN, domestic legislation, consider foreign restrictions (eg. US)  Regulatory and commercial considerations  KYC/CDD  Terrorist financing risk tie-ins entity lists activities (risk flags for further KYC/CDD)  If serious enforcement contemplated, requires inter- agency cooperation 24
  25. 25. WRAP UP In closing 25
  26. 26. SUMMARY Board of Directors (BOD) & Senior Management (SM) overall responsibility Appointment of Board BOD and SM responsibility for promoting awareness & culture building Monitor plan till transition into Building Up mode Set up appropriate control structure Ensure appropriate segregation of duties Ensure adequate and comprehensive data Establish effective channels of communication Ensure appropriate Technological Support in place Continually monitor internal controls Effective and comprehensive internal audit of internal control system Report on identified internal control deficiencies Develop time bound implementation Plan EXEMPLARY GOVERNANCE INTEGRATED COMPLIANCE MANAGEMENT CONTROL STRUCTURE INFORMATION & COMMUNICATION MONITORING 26
  27. 27. CONCLUSIONS  AML/CFT is the “latest” in a long line of criminalisation of corporate misconduct  Even if your agency is not directly involved, it plays an important role through Integrity of data Inter-play of white collar criminal detection and enforcement  Your contribution in ensuring AML/CFT compliance will contribute to a healthy financial sector 27
  28. 28. THANK YOU FOR YOUR ATTENTION

×