Presented by: Hany FaidySenior Vice President,Head of Compliance Division

March 2009

Procedures followed by FI’s when reporting Suspicious Transaction

• Risks of Money Laundering & Terrorist Financing

• What KYC Means?

• Detection of Suspicious Activity

• Analysis & Investigation

• SAR (NCB Sample)

Content

1

Risks of Money Laundering & Terrorist Financing

• Money Laundering or Terrorist Financing operations could expose Banks to face potential risks that could occur including the following:

• Reputation risk – customer loss of confidence in being involved with an entity apparent to be assisting criminals or terrorists. This loss of confidence could lead to a loss of business and revenue.

• Regulatory risk –This could result in possible fines or regulatory sanctions.

• Personal risk – employees who facilitate money-laundering or terrorist activities, or fail to take appropriate steps to prevent these activities, could face personal criminal action, civil action or dismissal. lawful

What KYC Means?

KYC is certainly considered one of the top key elements of the AML Compliance Program:

• Know? What you should know?

True identity and personal information, address, financial information and beneficial ownership of the accounts

• Your? Who should know?

Branch employee, Relationship manager, all Bank employees.

• Customer?

One who maintains an account, establishes business relationship, on who’s behalf account is maintained, and one who carries potential risk through one off transaction.

-- It is important to have the customer regularly updating his/her information --

Risk Ranking

Customer & Transaction Profile

Customer

information

Transactions

Information

Products

Channels

Legal Entity, Nationality ,Occupation ,Income

Cash Deposit

Transfer

Utility Bills

Branch, ATM, Tele-Banking, Internet Banking

Remittance

Credit Card

Trade Services

Monitoring Customer Activities

•High Risk Individuals

•PEP’s

•PBK

•Charities

•Corr. Banks

Local

International

POS

Internet

FX/MM/SAWPSTreasury

LC/LG

Suspicious transaction means a transaction that the Bank suspects or have

a reasonable ground of suspicion that:

– It may involve the proceeds of crime or

– Appears to have no economic purpose.

Beside having online monitoring system, bank employees are obliged to

report any suspicious activity to the Anti-Money Laundering Department

Detecting Suspicious Activity

All Transactions

Unusual Transactions

Suspicious Transactions

Analysis & Investigation

• Anti-Money Laundering Department should ensure conducting proper

analysis and investigations to cases reported from branches and other

business units within the Bank, and as a result,

• SAR must include customer personal information, financial,

employment, address, transactions movement, depositors,

beneficiaries, reasons of suspicious, etc…

• Anti-Money Laundering Department must file a SAR of any

real/suspicious case to the Financial Intelligence Unit.

SAR- Page1 (Suspect Information)

This page contains:

•Personal Information

•Financial Information

•Employment Information

•Account Information

•Summary of Transactions

•Product Used

•Channels Used

•Geographical and frequency of

Transactions

Customer Name Age

Nationality Gender

Phone Number Address

Monthly Income Source

Additional Income Source

Method of Payment --

Occupation

Years of Employment

Business Sector

Latest Update Date

Reason of Opening Account

Use of International Transfers

Use of Personal Checks

Use of ATM

Transactions Frequency

Geographical Location of Transactions

Products Used

□Transfers □Credit Cards □Local Shares □Int'l

Brokerage □Checks □Investment Funds □Int'l Trade

□Treasury

Case Assessment

□Daily □Monthly □Annually

Channels Used□Branch □ATM □Phone Banking □Internet Banking

□POS

Use of Internet Banking

Use of Tele-Banking

--

Account Information

Summary of Transactions

□Saving. □Investment. □Business. □Insurance.

□Local shares. □International Brokerage. □Other:

Business Phone

Suspect Information

Personal Information

Financial Information

Employment Information

Employer Location

Employer Name

SAR- Page2 (Account Movement Summary)

Customer Name:

Transfers to NCB accounts

0 0

Transfers to local banks A/C

0 0

Outgoing international transfers

0 0

Personal Checks

0 0

Sold Checks

0 0

Draft Checks

0 0

Utility payment 0 0

Credit Cards

0 0

Loan 0 0

Total Withdrawals 0 0

Account Number Period From To

Source of Fund Use of Fund

Transaction Type Total Count

Cash withdrawal

0 0

ATM Cash Withdrawal 0 0

POS 0 0

Transaction Type Total Count

Cash deposit 0 0

Transfers from NCB accounts

0 0

Transfers from local banks

0 0

Incoming international transfers A/C

0 0

Check deposit (NCB) 0 0

Check deposit (local banks)

0 0

Payroll 0 0

Loan 0 0

Total Deposits 0 0

Account Movement Summery

ATM Cash deposit 0 0

This page of SAR includes

summary of transactions

movement of the suspected

customer by each transaction

type.

SAR- Page3 (Suspicious Reasons)

This page of SAR includes

Reasons of Suspicion,

more information can be

added as appropriate.□ Size of transactions do not match with costumer profile

□ Cash deposits from resources not related to the suspect

□ Buying a large number of demand drafts and/or precious metals

□ Large number of incoming and outgoing transfers (Local – International)

□ Existence of financial dealings that prove the suspect is involved in illegal business or suspicious activities

□ Personal account used for commercial business, and customer has no certified documentation

□ Large number of outgoing international transfers to countries with weak AML standards

□ Split large amount of money into smaller amounts when executing transfers (Structuring).

□ (….etc)

Suspicious Reasons

Additional Information:

Thank you for your

time & attention