v. conferencia internacional antilavado de dinero y contra el financiamiento al terrorismo...

V. Conferencia Internacional Antilavado de dinero y Contra el Financiamiento al Terrorismo

Anti-Money Laundering Compliance for Broker/Dealers

Current Trends and Leading PracticesJuly 2009

KPMG FORENSICSM

ADVISORY

2©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Current Regulatory Environment

Increased Anti-Money Laundering (“AML”) focus of SEC and FINRA routine exams involving broker/dealers

According to the SEC, a significant number of all routine exams showed deficiencies in AML Compliance

Renewed focus of SEC and FINRA on fraud - ponzi schemes*

New focus of FINRA on Foreign Corruption Practices Act (FCPA)*

Source: www.finra.org

3©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Common Deficiencies

According to the SEC*, most common AML exam deficiencies at broker/dealers include: Lack of comprehensive AML programs Lack of implementation of AML programs Lack of / inadequate independent AML compliance testing Inadequate transaction monitoring systems Failure to report suspicious activity

* Source: www.sec.gov

4©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Know Your Customer (“KYC”)

Who is your customer? CIP is not sufficient to “know” parties to an account.

Concealment of source and ownership of funds Complex ownership structures

Anonymous beneficiaries

Screening parties to the account against relevant lists (OFAC, Section 311, PEPs)

5©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Know Your Customer (“KYC”)

Relying on customer admission is not a sufficient means to identify PEPs

Commercially produced filtering systems can be used to identify PEPs Results will only be as good as the information gathered at account

opening

Detailed policies and procedures essential to mitigating these risks

6©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Know Your Customer (“KYC”)

Continuous Risk Assessment

Monitoring

Trending& Re-scoring

On boarding

Customer

7©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Transaction Monitoring SystemsNo Universal Solution

Build vs. Buy

“People who design these systems should use them. Although I've said systems are not sophisticated, they are sometimes too much so for our own good” Switzerland respondent*

“We need more intelligence-based transaction monitoring with the capability to detect transactions not noted by human scrutiny” Russia respondent

“I would like to have a system that can track both behavioral and statistical transactions based on a transaction pattern (e.g. volume, country, business)” Hong Kong respondent

“We should focus on updating the enterprise-wide system, rather than different ones in different areas of the bank” Taiwan respondent

*Source: KPMG Global Anti-Money Laundering Survey 2007

8©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Transaction Monitoring SystemsNo Universal Solution

Manual vs. Automated Monitoring

If automated – Build vs. Buy Decision

Analysis to understand the universe of all transaction types the institution utilizes *** A critical step

Assessment to determine the risks certain products and product groups pose for money laundering and terrorist financing

Assessment to determine the risk related to the customer base

Assessment of global operations

9©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Transaction Monitoring SystemsNo Universal Solution

Continuous Assessment

VALIDATION

MONITORING & TRENDING

TUNING

INDEPENDENT TEST

10©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Selected Enforcement Actions*

J.P. Turner & Co.

Park Financial Group, Inc.

Legent Clearing, LLC

Crowell, Weedon & Co

NevWest Securities Corporation

Oppenheimer & Co

Bear Sterns

* Sources: www.finra.org, www.fincen.gov, www.sec.gov

11©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Current Trends in Venezuela

Permutas

Rosemont Finance Corporation

Current challenges for Venezuelan based broker/dealers

Current perception of permutas in the U.S.

Potential solutions

12©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Thank You

Sven Stumbauer

Director, KPMG LLP

sstumbauer@kpmg.com

++1-404-402-8578

All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.