contents first: main points of national risk assessment second: fis risk assessment and cdd
TRANSCRIPT
Egyptian Money Laundering and Terrorism Financing Combating Unit
The Role of The Egyptian FIU in The AML/CFT
National Risk Assessment and CDD
Egyptian Money Laundering and Terrorism Financing Combating Unit
Egyptian Money Laundering and Terrorism Financing Combating Unit
CONTENTS
First: Main Points of National Risk Assessment
Second: FIs Risk assessment and CDD
Egyptian Money Laundering and Terrorism Financing Combating Unit
First: Main Points of National Risk Assessment
Egyptian Money Laundering and Terrorism Financing Combating Unit
1) RISK ASSESSMENT IN THE FATF RECOMMENDATIONS
Technical Compliance of FATF recommendation I
• Countries should identify and assess the ML/TF risks for the country and this includes:
• Resources should be allocated adequately in the AML/CFT regime and RBA should be applied on the FATF recommendations
•Identifying, assessing and understanding risks
•designate an authority or mechanism to co-ordinate actions to assess risks
•take enhanced measures to manage and mitigate the risks where higher risks are identified.
•Adopting a Risk Based Approach to ensure the coherence between AML/CFT measures and the degree of identified risk
Egyptian Money Laundering and Terrorism Financing Combating Unit
5
EVALUATING THE EFFECTIVENESS OF COMPLIANCE OF RECOMMENDATION I
IMMEDIATE OUTCOME 1
• Money laundering and terrorist financing risks are understood and, where appropriate, actions coordinated domestically to combat money laundering and the financing of terrorism and proliferation.
Egyptian Money Laundering and Terrorism Financing Combating Unit
6
Key concepts relevant to ML/TF risk assessment
Degree of understanding AML/CFT risks
How adequate AML/CFT policies tackle identified
risks
How results of the assessment were used to justify enhanced or simplifiedmeasures, or exemptions from AML/CFT requirements
How objectives and activities of
competent authorities are in
line with the national risk assessment
The extent of cooperation and
coordination between competent authorities to develop and implement AML/CFT policies and
activities
The country’s efforts to ensure awareness of FIs & DNFBPs of the
outcome of ML/TF risks on the national
level
Egyptian Money Laundering and Terrorism Financing Combating Unit
Understanding risks to adequately and effectively deal with them
Providing policy makers with the assessment results
Identifying knowledge gaps
Optimal allocation of resources
Helping relevant entities in their own risk assessment
providing assessment results to other mutual
evaluation groups
Understanding the purpose of the AML/CFT National Risk Assessment
Egyptian Money Laundering and Terrorism Financing Combating Unit
ML/TF Risk assessment
Reporting suspicious transactions
Applying CDD
Record Keeping
Criminalization of ML & TF
Efficient law enforcement
Currency declaration/ disclosure
AML/CFT Training
FIs/DNFBPs internal systems
Competent Judiciary
Egyptian Money Laundering and Terrorism Financing Combating Unit
Bottom-up approach rather than top-down
STRsCriminal
Investigations
Supervisory examinations
Policy makers Legislators Supervisors
National Strategies Budgets Guidance
PapersLegislation
s
FIs Risk Assessments
Egyptian Money Laundering and Terrorism Financing Combating Unit
10
Example on how the data are aggregated
Egyptian Money Laundering and Terrorism Financing Combating Unit
11
Egyptian Money Laundering and Terrorism Financing Combating Unit
12
Egyptian Money Laundering and Terrorism Financing Combating Unit
13
Egyptian Money Laundering and Terrorism Financing Combating Unit
Second: FIs Risk Assessment and CDD
Egyptian Money Laundering and Terrorism Financing Combating Unit
FIs Obligations according to FATF
Financial institutions and DNFBPs should be required to take appropriate steps to identify, assess, and understand their ML/TF risks (for customers, countries or geographic areas; and products, services, transactions or delivery channels).
Egyptian Money Laundering and Terrorism Financing Combating Unit
This includes being required to:
• Document their risk assessments.
• Consider all the relevant risk factors before determining the overall risk and appropriate mitigation to be applied.
• Keep these assessments up to date.
• Have appropriate mechanisms to provide risk assessment information to competent authorities.
• Have controls to mitigate risks.
• Monitor the implementation of these controls & enhance them when necessary.
Egyptian Money Laundering and Terrorism Financing Combating Unit
Regulations Guidance
CDD Rules Issued by the Egyptian FIU
Egyptian Money Laundering and Terrorism Financing Combating Unit
Customer Acceptance
Policy
Identifying & Verifying
customers
Monitoring Customer
Transactions
Updating customers’
data
Elements of the CDD
rules
Risk assessment
and Management
Wire transfers rules
Egyptian Money Laundering and Terrorism Financing Combating Unit
Examples of Types of Risks in FIs & DNFBPs
Geographical
Risks
Custom
ers’ Risks
Risks of products
and services
Delivery C
hannels
Risks
Egyptian Money Laundering and Terrorism Financing Combating Unit
Products and Services Risk• Identifying products and services that are considered more
attractive to money launderers and are considered high risk including new or innovative products/services provided by the bank or linked to it.
Banking Services
Private Banking
Wire transfersAssets Mgt Services
Prepaid Cards
Mobile Payments
Internet Banking
Egyptian Money Laundering and Terrorism Financing Combating Unit
Customers’ Risk
• Identifying the risk through CDD data & customers’ transactions.
• Identifying beneficial owners of legal persons to be able to judge the level of risk.
• Identifying various risk levels inside each risk category.
Egyptian Money Laundering and Terrorism Financing Combating Unit
Examples of high risk customers
• PEPs
• Nonresident customers
• Customers who belong to FATF public statement countries.
• NPOs
• DNFBPs
Egyptian Money Laundering and Terrorism Financing Combating Unit
Geographical Risk
ResidenceBusinessHeadquarters
Source/DestinationOf transactions
Countries Subject to intl. sanctions
FATF Public statement
Terrorism Supporting Countries
Countries with high crime rates
Egyptian Money Laundering and Terrorism Financing Combating Unit
RiskLikelihoo
dConsequence
s
Composed of
•Economic •Social•financial
.......
Threats
Vulnerabilities
The General Risk Equation
Egyptian Money Laundering and Terrorism Financing Combating Unit
Vulnerability
Score ThreatsScore
Likelihood
Consequences Score
The bank provides a small variety of not fully controlled e-banking products and services
0.45 Criminals can take advantage of these products/service to launder money or finance terrorism
0.50 0.23 Bank is mildly subject to ML/TF risks (reputation, legal, operational)
0.45
Egyptian Money Laundering and Terrorism Financing Combating Unit
Vulnerability
Score ThreatsScore
Likelihood
Consequences Score
Low level of human resources in the compliance dept
0.60 Criminals can penetrate the bank without being detected due to low level of monitoring
0.70 0.42 The compliance Department is not able to perform all its obligations.
Less chances of detecting ML/TF
Bank more subject to ML/TF risks (reputation, legal, operational)
0.80
Egyptian Money Laundering and Terrorism Financing Combating Unit
Vulnerability
Score ThreatsScore
Likelihood
Consequences Score
Half of the bank branches are in high risk countries
0.85 More chances of dealing with criminals or more chances of ML/TF attempts
0.75 0.64 Less chances to access foreign markets.
Bank ratings might fall down.
Bank is more subject to ML/TF risks (reputation, legal, operational)
0.80
Egyptian Money Laundering and Terrorism Financing Combating Unit
Vulnerability
Score ThreatsScore
Likelihood
Consequences Score
Low number of PEPs dealing with the bank and are subject to high controls
0.30 PEPs chances to launder the proceeds of corruption
0.4 0.12 Bank is subject to a minor level ML/TF risks (reputation, legal, operational) resulting from PEPs
0.30
Egyptian Money Laundering and Terrorism Financing Combating Unit
Risk analysis & assessment
Risk Likelihood Consequences1 Half of the bank branches
are in high risk countries0.64 0.80
2 Low level of human resources in the compliance dept
0.42 0.80
3 The bank provides a small variety of not fully controlled e-banking products and services
0.23 0.45
4 Low number of PEPs dealing with the bank and are subject to high controls
0.12 0.30
Egyptian Money Laundering and Terrorism Financing Combating Unit
Medium-High Risk
Low level of human resources in the compliance dept
Low Risk
Low number of PEPs dealing with the bank
Medium-Low Risk
The bank provides a small variety of not fully controlled e-banking products and services
High Risk
Half of the bank branches are in high risk countries
Consequences
Likelihood
zero10.5
0.5
Heat map1
Egyptian Money Laundering and Terrorism Financing Combating Unit
Zero
Low
High
Medium-High Risk
To be dealt with in the nearest
possible time
Medium-High Risk
To be dealt with in the nearest
possible time
Low Risk
To be monitored
Low Risk
To be monitored
High Risk
Requires immediate action
High Risk
Requires immediate action
Medium-Low Risk
To be dealt with in a suitable time
Medium-Low Risk
To be dealt with in a suitable time
100%
Consequences
Likelihood
Next … is to set steps to mitigate identified risks
Egyptian Money Laundering and Terrorism Financing Combating Unit
Customer Acceptance
Policy
Customer’s Nationality
Customer’s business activity
Customer’s Reputation
Other accounts connected
with the customer
Egyptian Money Laundering and Terrorism Financing Combating Unit
• Continuous monitoring mechanisms in place for detecting any possible unusual patterns through:
Risk
High
Medium
Low System alerts
Egyptian Money Laundering and Terrorism Financing Combating Unit
34
Versus
Risk Assessment …
Egyptian Money Laundering and Terrorism Financing Combating Unit
Thank you