compliance back to the future- work session

Going back to the basics to address the needs of the future

Compliance–Back to the Future

Gizem Tansu, Commercial Manager, Compliance & Sanctions

Mike Powell, Product Manager, Sanctions Compliance Services

Michel Pronce, Key Clients Service Manager, EMEA

24 & 25 November 2014

Logistics

• This session will last for 1hour and 45 minutes

• It consist of a presentation, an activity and a debriefing

• Slides will be available for download after the event

• Please do not modify the setup of the tables, they are ready for the activity.

• Questions can be raised during the activity and debriefing

Compliance-Back to the Future – 24 and 25 November 2014 – Confidentiality: internal 2

Objective

• Raising awareness of Compliance matters within financial institutions

(the objectives, the actors, the threats, the responses, etc) in an

interactive way with peers.


Financial Crime

• KYC

• Anti-Money Laundering

• Counter Terrorism Financing

• Sanctions Compliance

• Bribery and Corruption

• Fraud

• Identity theft

• And much, more…


3) Integration Bring the “cleaned” assets back in

the legitimate economy. Selling Shares, Buying Property...

1) Placement Place the criminal assets into the financial sector.

Often Cash…

2) Layering Create Complex layers of

financial tractions: Shell Companies, Trusts,

etc.

What is Money Laundering?

The Three Basic Steps.


What are Sanctions?

Sanctions impose controls on transactions and freeze assets and

are used by governments to influence or constrain the behaviour

of governments and individuals. In

tern

atio

na

l

bod

ies

Countr

ies

United Nations

European Union

Germany UK France United

States

Who is

responsible

for financial

sanctions?


What are Sanctions?

Who are on these lists?

• Countries

• Companies

• Individuals

• Vessels

• Aircrafts


USA – OFAC UK – HM Treasury United Nations

Country related

Balkans

Belarus

Burma

Ivory Coast

Cuba

Democratic Republic of the Congo

Iran

Iraq

Lebanon-Related

Libya

North Korea

Somalia

Sudan

Syria

Yemen

Zimbabwe

Other targeted/List based

Counter Narcotics Trafficking

Counter Terrorism

Diamond Trading

Former Liberian Regime of Charles

Taylor

Non-Proliferation

Transnational Criminal Organizations

Country related

Afghanistan

Belarus

Burma/Myanmar (Suspended to Apr

2013)

Democratic Republic of the Congo

Egypt

Eritrea

Federal Republic of Yugoslavia &

Serbia

Iran (human rights/nuclear

proliferation)

Iraq

Ivory Coast

Lebanon and Syria

Liberia

Libya

North Korea (Democratic People’s

Republic of Korea)

Republic of Guinea

Somalia

Sudan

Syria

Tunisia

Zimbabwe


Al-Qaida

Terrorism and terrorist financing

Country related

Côte d'Ivoire (Ivory Coast )

Democratic Republic of Congo

Democratic People's Republic of

Korea (North Korea)

Eritrea

Iran

Iraq

Lebanon

Liberia

Libya

Somalia

Sudan


Al-Qaida, Taliban, Bin Laden

Terrorism

Examples


Sanctions Fines

9

Sanction Fines

• Transactions to Sudan (as well as Cuba and Iran) enabled via Data Stripping

(2014) – OFAC –French Bank

• Transaction to Iran and Sudan by replacing the BIC with the name of the bank

(2013) – OFAC – UK Bank

• Lack of verification on name of beneficial owner against EU list

(2013) – Finansinspektionen – Nordic bank

• Data stripping on payments to Iran and Cuba, to hide the origin of the funds

(2012) – OFAC – Dutch Bank


What are PEPs?

PEPs are individuals who, by virtue of their office, might become

exposed to corruption

PEP Lists include, but are not limited to;

senior politicians, senior civil servants, and military officers in every

country, as well as their close families, colleagues, and advisors.

PEPs Lists contain

roughly 1.5 Million

Entities.


How a financial institution deals with compliance?

Customer

identification

& verification

Initial due diligence

Customer screening

Ongoing due diligence

Customer & transaction monitoring

Transaction screening

start transacting

On-boarding process Ongoing reviews


Compliance is a pervasive function within the financial

institution function

Banking Group

Business Retail | Corporates | FI | Business Compliance | …

Operations and IT Monitoring | Investigation | Operations Compliance | …

Compliance & Risk Management MLRO | Sanctions | AML | Capital Markets | Anti-Corruption…

Common Titles

Head of GTB Compliance

Head of KYC Team

Head of FI Group

Network Management

Operations & Regulation

Operations Risk & Controls

Head of Sanctions Screening

AML Advisory & Compliance IT

Head of Group Compliance

Head of AML & CTF

Sanctions & Embargo


AML Program

Independent

Audit

Compliance – AML Program

Training “Ensure the Rule Book

is being used

Compliance

Officers

The

Business

“Write the Rule Book”

“Implement the Rule Book”

Key Elements of an AML Program 1) A system of internal policies, procedures and controls

• KYC / CDD

• AML Transactions Screening

• PEP Screening

• Business Rules, Procedures, and Controls

2) A designated compliance officer with day-to-day oversight over the AML program;

3) An independent audit function to test the AML Program; and

4) An ongoing employee training program.


Questions?

15


Networking

Best Practices

You Informal B

reaks

Chat

Operational Topics Facilitators

So

luti

on

s

Key L

earn

ings

Fun

Sessions

Mon: 18:35-19:05

+ Cocktails & Snacks

Tue: 10:30-11:00

Tue: 13:10-13:40

Tue: 15:30-16:00

All details about Café Caroline can be found at the end of the

PSF Year Book: how to register, timing, topics, location


Networking

Best Practices

You Informal B

reaks

Chat

Operational Topics Facilitators

So

luti

on

s

Key L

earn

ings

Fun

All details about Café Caroline can be found at the end of the

PSF Year Book: how to register, timing, topics, location

Sessions

Tue: 10:30-11:00

Tue: 13:10-13:40

Tue: 15:30-16:00

THANK

YOU

Thank you

compliance back to the future- work session

Economy & Finance