prevention of money laundering and terrorism financingprevention of money laundering and terrorism...
TRANSCRIPT
Agosto2005
PREVENTION OF MONEY LAUNDERING AND TERRORISM PREVENTION OF MONEY LAUNDERING AND TERRORISM FINANCING.FINANCING.
BBVA’SBBVA’S RISK MANAGEMENT MODELRISK MANAGEMENT MODEL
April 25April 25thth, 2008, 2008
KeepingKeeping inin mindmind......
BBVA is an international financial services group
Branches8.028 Countries
37Employees111.913
•A full range of financialproducts & services
Page 2
Shareholders1.0m Market cap
€62.8bn+
Total assets€502bn+
Data as of Dec-07
KeepingKeeping inin mindmind......
BBVA is an international financial services group
Assets (EUR Bn.)
Capitalisation (EUR Bn.) 62.8
Net attributable profit (EUR Bn.) 6.1
ROE (%) 34.2%
Branches 8 028
- Spain 3 595
- Americas 4 291
Staff 111 913
- Spain 31 106
- Americas
- Rest of the World 142
- Rest of the World
31/12/2006 31/12/2007
78 805
411.9
64.8
4.7
36.4%
7 585
3 635
3 797
153
98 553
30 582
66 146
1 825
502.2
2 002
Key Financial Figures
•Banking•Pension-FundCompanies•Insurance•Private Banking•Asset Management•Real Estate •Internet Banking•Correspondent Banking•Money TransferServices
••BankingBanking••PensionPension--FundFundCompaniesCompanies••InsuranceInsurance••PrivatePrivate BankingBanking••AssetAsset ManagementManagement••Real Estate Real Estate ••InternetInternet BankingBanking••CorrespondentCorrespondent BankingBanking••MoneyMoney TransferTransferServicesServices
DIVERSITY OF DIVERSITY OF BUSINESSBUSINESS
Page 3
KeepingKeeping inin mindmind......
……….with a leading position in Latin America
Puerto RicoBBVA Puerto RicoRank : 5th
BBVA share: 100%Branches: 45
Page 4
ArgentinaBBVA Banco FrancésRank : 2nd
BBVA share: 76%Branches: 307
ColombiaBBVA ColombiaRank : 3rd
BBVA share: 95%Branches: 432
PeruBBVA Banco ContinentalRank : 2nd
BBVA share: 48%Branches: 236
ParaguayBBVA ParaguayRank : 5th
BBVA share: 100%Branches: 8
UruguayBBVA Francés UruguayRank : 6th
BBVA share: 100%Branches: 8
PanamaBBVA PanamaRank : 5th
BBVA share: 97%Branches: 15
ChileBBVA ChileRank : 4th
BBVA share: 68%Branches: 257
VenezuelaBBVA Banco ProvincialRank : 2nd
BBVA share: 56%Branches: 326
MexicoBBVA BancomerRank: 1st
BBVA share: 100%Branches: 1977
BrazilBradesco transactional bankingBBVA Rep. Office in Sao PaoloFinance and Investment banking
KeepingKeeping inin mindmind......
NJ
RI
DEDC MD
MANYVT
VA
NC
TXLA
ID
IN
KYWV
AL
CO
NMAZAR
CA
FL
GA
IA
ILKS
MEMI
MN
MO
MS
MTND
NE
NVOH
OK
OR
PA
SC
SD
TN
UT
WIWY
WA
• $47 Bn. in Assets• $32 Bn. in Credits• $33 Bn. in Deposits• 622 branches in 7 States• 19º Bank in the US by
MktCap• 101 million people in the
area• Pop. growth 2005-2010:
11,8% vs. 6,7% national average
• $47 Bn. in Assets• $32 Bn. in Credits• $33 Bn. in Deposits• 622 branches in 7 States• 19º Bank in the US by
MktCap• 101 million people in the
area• Pop. growth 2005-2010:
11,8% vs. 6,7% national average
Compass Texas Regional Laredo National State National BBVA USA
State Branches
$ BnDeppsitsTexas 326 19,6
6,73,22,00,70,60.1
Alabama 90
California 33
Arizona 75Florida 44Colorado 33NewMexico
21
… with a strong position in the USA: nº1 Regional Bank in the “SunBelt”
Page 5
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C
B
1
A2
3 C
B
1
A2
3
From To LATAM (1) To Asia (2) To Africa (3)USA (A) 25,299 12,154 6,197
EUROPE (B) 16,953 23,334 20,739
GULF COUNTRIES (C) 2,325 17,225 13,172
43,650
61,650
34,05045,153
56,355
40,864
KeepingKeeping inin mindmind........remittances are a relevant business and a truly global factor..
150 B. US$ are sent every year through three maincorridors
KeepingKeeping inin mindmind......…Asia is an important milestone for BBVA presence…
Strategic alliance with China CITIC Bank and CITIC InternationalFinancial Holdings Limited
Page 7
All data as of 2005Source The People's Bank of China 2005
E a s t M id d leW e s t N o rth e a s tE a s tE a s t M id d leM id d leW e s tW e s t N o rth e a s tN o rth e a s t
GDP by region
GDP growth
º ÚÁ ú½ -H e ilo n g jia n g
¼ ªÁ ÖJ ilin
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Á ÉÄ þL ia o n in gº Ó± ±
H e b e i
É ½Î ÷S h a n x i É ½¶ «
S h a n d o n g
º ÓÄ ÏH e n a n
½ -Ë ÕH a n g s u
° ²» ÕA n h u i
Õ ã½ -Z h e jia n g½ -Î ÷
J ia n g x i¸ £½ ¨
F u jia n
º þÄ ÏH u n a n
º þ± ±H u b e i
É ÂÎ ÷S h a a n x i
Ë Ä́ ¨S ic h u a n
¹ ó́ ¨G u iz h o u
¹ ãÎ ÷G u a n g x i ¹ 㶠«
G u a n g d o n g
º £Ä ÏH a in a n
Ô ÆÄ ÏY u n n a n
Î ÷² ØT ib e t
Р½ ®X in jia n g
Ç àº £Q in g h a i ¸ ÊË à
G a n s u
Ä þÏ ÄN in g x ia
º ÚÁ ú½ -H e ilo n g jia n g
¼ ªÁ ÖJ ilin
Ä Úà ɹ ÅIn n e r M o n g o lia
Á ÉÄ þL ia o n in gº Ó± ±
H e b e i
É ½Î ÷S h a n x i É ½¶ «
S h a n d o n g
º ÓÄ ÏH e n a n
½ -Ë ÕH a n g s u
° ²» ÕA n h u i
Õ ã½ -Z h e jia n g½ -Î ÷
J ia n g x i¸ £½ ¨
F u jia n
º þÄ ÏH u n a n
º þ± ±H u b e i
É ÂÎ ÷S h a a n x i
Ë Ä́ ¨S ic h u a n
¹ ó́ ¨G u iz h o u
¹ ãÎ ÷G u a n g x i ¹ 㶠«
G u a n g d o n g
º £Ä ÏH a in a n
Ô ÆÄ ÏY u n n a n
Î ÷² ØT ib e t
Р½ ®X in jia n g
Ç àº £Q in g h a i ¸ ÊË à
G a n s u
Ä þÏ ÄN in g x ia
Taiwan
13.1%
12.6%12.8%
12.0%
11.4%11.6%11.8%12.0%12.2%12.4%12.6%12.8%13.0%13.2%
East
Middle
West
Northeast
55%
19%
17%
9%
East
Middle
West
Northeast
KeepingKeeping inin mindmind......
…BBVA is a global player…
Spain IndonesiaHong Kong
USA
Mexico
North America
Europe
Asia
South America
Portugal
Germany
Italy
UKFrance
Belgium
Switzerland
Russia
Argentina
Colombia
UruguayChile
Panama
Perú
Beijing
Singapore
ShanghaiJapan
Bolivia
Puerto Rico
Brasil
Cuba
Ecuador
Korea
Paraguay
Venezuela
India
Australia
Page 8
DIVERSITYOF
COUNTRIES
DIVERSITYDIVERSITYOFOF
COUNTRIESCOUNTRIESREGULATIONSREGULATIONSREGULATIONS TYPES OF
CUSTOMERSTYPES OFTYPES OF
CUSTOMERSCUSTOMERSBUSINESS
RELATIONSBUSINESSBUSINESS
RELATIONSRELATIONSSUPERVISORY
AGENCIESSUPERVISORYSUPERVISORY
AGENCIESAGENCIES
Page 9
11-S11-S
Due Diligence onBanking Customers (BIS)
8 Special RecommendationsOn Terrorist Financing(FATF/GAFI)
Oct 2001 Oct 2002
The use of nonprofit organizations to finance terrorist activities(FATF/GAFI)
Feb 2003
General Guide forAC & IC (BIS)
Jun 2003
The 40 Recomendations(FATF/GAFI)
Oct 2004
Consolidated “KYC” RManagement(BIS)
USA PATRIOT Act
Dic 2001
Directive 2001/97
May 2003
Customer Identification Program
Sep 11th
Jul 2004
Report to the US Senateon the Riggs Bank Case
Feb 2001
Report to the USA Senate on InternationalCorrepondent Banking Services
March 11th
Directive 2005/60.
SpecialRecomendation# 9 Regarding the
Financing of Terrorism(FATF/GAFI)
Nov 2005Mar 2005
Report to the US SenateThe Pinochet accounts inRiggs Bank
KeepingKeeping inin mindmind......
The beginning of a new trend:- AML regulations converge worldwide- Increasing requirements from supervisory agencies.- Change in the entities´ role: Service Providers + “watchdogs”
The beginning of a new trend:- AML regulations converge worldwide- Increasing requirements from supervisory agencies.- Change in the entities´ role: Service Providers + “watchdogs”
KeepingKeeping inin mindmind......
OFFSHORE CENTERS(IDENTIFIED BY THE IMF - DRUGS PRODUCERS – TOP 50 CORRUPT
JURISDICTIONS -
IDENTIFIED BY THE FATFAS JURISDICTIONS WITH AML/CTF DEFICIENCIES -
Page 10
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Date Source FiguresFMI Money laundering amounts to 2%-5% of the
World’s GDPMoney laundering amounts to 2,5%-6,3% of the GDP in South America.Illicit money amounts to 17%-25% of the World’s GDP.Money laundering worldwide is bigger than theGDP of 88% countries in the world.The Mafia is responsible for 7% of the ItalianGDP.
FMI
FMI
ONU
Italy
2005
2005
2008
2007
2007
KeepingKeeping inin mindmind......
Some figures………..Some figures………..
……each company must define its strategy to prevent each company must define its strategy to prevent money laundering and terrorism financing activities…money laundering and terrorism financing activities…
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“As a financial group providing services to millions of people and conducting its activities in different social environments to whose well-being it is committed, BBVA cooperates fully with governmental bodies, international agencies and other organizations in the fight against drug trafficking, terrorist activities and other forms of organized crime.”
“As a financial group providing services to millions of people and conducting its activities in different social environments to whose well-being it is committed, BBVA cooperates fully with governmental bodies, international agencies and other organizations in the fight against drug trafficking, terrorist activities and other forms of organized crime.”
BBVA GROUP CODE OF ETHICS BBVA GROUP
CODE OF ETHICS
OUR ASSUMEDCOMMITMENT
OUR ASSUMEDCOMMITMENT
PRESERVING OURCORPORATE INTEGRITY
PRESERVING OURCORPORATE INTEGRITY
MAINTAINING THE CONFIDENCEOF OUR CLIENTS,
SHAREHOLDERS, EMPLOYEES, PROVIDERS,...
MAINTAINING THE CONFIDENCEOF OUR CLIENTS,
SHAREHOLDERS, EMPLOYEES, PROVIDERS,...
ToTo promotepromote and preserve the and preserve the welfarewelfare of the of the communitiescommunities ininwhichwhich wewe conductconduct businessbusiness
ToTo prevent our products and prevent our products and services fromservices from being used for being used for
illicitillicit endsends
……and Antiand Anti--Money Laundering is a top priority for the Money Laundering is a top priority for the BBVA Group.BBVA Group.
Page 13
Money Laundering & Terrorism FinancingMoney Laundering & Terrorism FinancingRisk Management MODELRisk Management MODEL
SatisfyingSatisfying bothboth goalsgoals meansmeans ......
... having a strong cooperation with national and international ... having a strong cooperation with national and international agencies in agencies in fighting organized crimefighting organized crime
... and having several specialized elements (policies, ... and having several specialized elements (policies, procedures, structure and resources) procedures, structure and resources) combinedcombined in a:in a:
... with the ... with the mitigationmitigation of REPUTATIONAL RISK as the of REPUTATIONAL RISK as the cornerstone of the Model.cornerstone of the Model.
REPUTATIONAL RISKReputational risk is defined as the potential impact that adverse publicity regarding a bank business practices and associations, whether accurate or not, will cause a loss of confidence in the integrity of the institution, due to:
•The probability of its products and services being used for illicit purposes.•The failure to comply with the AML law and regulations,
REPUTATIONAL RISKREPUTATIONAL RISKReputational risk is defined as the potential impact that adversReputational risk is defined as the potential impact that adverseepublicity regarding a bank business practices and associations, publicity regarding a bank business practices and associations, whether accurate or not, will cause a loss of confidence in the whether accurate or not, will cause a loss of confidence in the integrity of the institution, due tointegrity of the institution, due to::
••The probability of its products and services being used for illiThe probability of its products and services being used for illicitcitpurposes.purposes.••The failure to comply with the AML law and regulations,The failure to comply with the AML law and regulations,
... particularly the one associated with Legal and Regulatory Ri... particularly the one associated with Legal and Regulatory Risk, is sk, is the one who represents the highest threat of eroding shareholderthe one who represents the highest threat of eroding shareholder
value.value.
...understanding this risk as......understanding this risk as...
... transcends geographical borders and corporate legal responsi... transcends geographical borders and corporate legal responsibilitybilitylimits.limits.
... the association of an institution... the association of an institution-- by action or omissionby action or omission-- with money with money laundering or with the financing of terrorist activities.laundering or with the financing of terrorist activities.
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Regulation ManagementRegulation Management
......there are two types of management approachesthere are two types of management approaches ......
Risk ManagementRisk Management
ReferenceReferenceRules and regulations, Rules and regulations,
guidelines and best guidelines and best practicespractices
Local Regulation
Organized on the basisof legally required
developments
BasedBased onon ““RiskRiskassessmentsassessments””
Static: it changes only when required by changes to legal
requirements
Dynamic: evolves based Dynamic: evolves based on the changing on the changing
requirements of a broad requirements of a broad environmentenvironment
Reactive and isolated, with the focus on ‘legal coverage’
ProPro--active with a active with a systematic vision of risk systematic vision of risk
managementmanagement
ModelModel featuresfeatures
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1. Reduce the probability that the entity could be seen as an “accesible” vehicle for being used in money laundering or terrorism financing operations.
2. Reduce introduction and contagion risks, and increase the effectiveness of the institution’s detection systems to reduce the impact of any operation potentially linked with illegal activities.
…… GOALSGOALS of our of our Risk ManagementRisk Management Model:Model:
3. Reduce the negative effects in the event that any operationlinked with illegal activities could arise.
Four components of BBVA’s AML ModelFour components of BBVA’s AML Model
ORGANIZATIONALORGANIZATIONALSTRUCTURESTRUCTURE
POLICIES,POLICIES,PROCEDURESPROCEDURES
& INTERNAL & INTERNAL CONTROLSCONTROLS
COMMUNICATIONCOMMUNICATIONAND TRAININGAND TRAINING
IND
EPEN
DEN
T R
EVIE
WIN
DEP
END
ENT
REV
IEW
Responsibilities andfunctions clearly defined
throughout the Organization
11
22
33
44
POLICIES defined on a global basis
PROCEDURES adapted locally
CONTROLS executed locally
Basic lines defined on a global basis and executed
locally
Page 17
ORGANIZATIONAL STRUCTUREORGANIZATIONAL STRUCTURE(Functions and Responsibilities)(Functions and Responsibilities)
11
Outlined in a Corporate AML & CTF Model that Outlined in a Corporate AML & CTF Model that establishes...establishes...
BODIES “AD-HOC” REQUIRED BY THE
MODEL
RESPONSIBILITIES AND FUNCTIONS
THROUGHOUTTHE ORGANIZATION
• BOARD OF DIRECTORS• SENIOR MANAGEMENT• MANAGERS AND
EMPLOYEES• COMPLIANCE• INTERNAL CONTROL• INTERNAL AUDIT• …/…
• AML&CTF MEETINGS• COMMUNICATION AND
PROMOTION OF POLICIES
• TRAINING OF ALL EMPLOYEES
• TERMINATION OF BUSINESS RELATIONS
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ORGANIZATIONAL STRUCTUREORGANIZATIONAL STRUCTURE(Functions and Responsibilities)(Functions and Responsibilities)
11
Chairman &CEO
President & COO
ChairmanChairman’’ssareasareas
General Sec.Legal, Tax, Audit
andCompliance
ServicesEduardo Arbizu
Image &Comunication
Chairman’s office
Accounting &Consolation
InstitutionalAffairs
BusinessBusinessUnitsUnits
HR, IT &Operations
GlobalBusiness
Area
Spain & Portugal Innovation &
DevelopmentMexico South America
USA
CFO Risk
IT PROJECTSLATAM & ASIACOORDINATION
Page 20
GLOBAL COMPLIANCEAntonio del campo
ASIA
COMPLIANCE STRUCTURE IN OTHERS
JURISDICTIONS
EUROPE USA MEXICO LATAM
HEAD OF LEGAL, TAX, AUDIT AND COMPLIANCESERVICES
Eduardo Arbizu
GLOBAL AML/FAT
Hierarchichal Reporting lineFunctional ReportingLine
AUDIT AND COMPLIANCE
COMMITTEE OF THE BOARD OF
DIRECTORS
Periodic reporting
GLOBAL BUSINESS INTEGRITY
PROCESSESMANAGEMENT
ORGANIZATIONAL STRUCTUREORGANIZATIONAL STRUCTURE(Functions and Responsibilities)(Functions and Responsibilities)
11
MONITORINGSYSTEM &
TECHNICALSUPPORT
INTEGRITYPOLICIES & PROGRAMS
AML/FATPROGRAMS
AML/FATSPAIN
BOARD OF DIRECTORS
SupervisionSupervisionof AML&CTF of AML&CTF
relevantrelevantissuesissues Timely
correction of situationsreported by …
Yearly ActionPlan of the ComplianceArea approved by theCommittee
SupervisoryAgencies
Internal Audit or ComplianceAML&CTF
COMMITTEES
Ensure the effectiveness of the AML & CTF Model
ORGANIZATIONAL STRUCTUREORGANIZATIONAL STRUCTURE(Functions and Responsibilities)(Functions and Responsibilities)
11
COMPLIANCE AND AUDIT
COMMITTEE
AML-CFTDEPARTMENT
Page 21
BOARD OFDIRECTORS
COMPLIANCE AND AUDIT COMMITTEE
ORGANIZATIONAL STRUCTUREORGANIZATIONAL STRUCTURE(Functions and Responsibilities)(Functions and Responsibilities)
11
AML&CTFCOMMITTEES
Responsible for implementation within the Responsible for implementation within the business units of the AML & CTF Modelbusiness units of the AML & CTF Model
Promoting the development of systemsand procedures to ensure the effectiveness of those internal rules
The issue of internal rules to develop Corporates Policies.
Supervision and control of developments and procedures.
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AML-CFTDEPARTMENT
DelegatedFunctions
ORGANIZATIONAL STRUCTUREORGANIZATIONAL STRUCTURE(Functions and Responsibilities)(Functions and Responsibilities)
11
BOARD OFDIRECTORS
COMPLIANCE AND AUDIT COMMITTEE
AML-CFTDEPARTMENT
AML&CTFCOMMITTEES
Administration and control of Administration and control of screeningscreening andandmonitoring processes.monitoring processes.
Analysis and investigation of activities at risk of Analysis and investigation of activities at risk of being tied in with illegal activities or lacking any being tied in with illegal activities or lacking any apparent licit purpose.apparent licit purpose.
Report to the local F.I.U. of suspicious transactions.Report to the local F.I.U. of suspicious transactions.
Development of contents of Training Program Development of contents of Training Program activities and channelsactivities and channels
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Supervision of Training Program implementation.Supervision of Training Program implementation.
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INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
CORPORATECORPORATEPOLICIESPOLICIES
INTERNALINTERNALCONTROLS AND CONTROLS AND PROCEDURESPROCEDURES
... and BBVA’s... and BBVA’s ...... ... are the framework ... are the frameworkof AML & CTF Model.of AML & CTF Model.
They are developed bearing in mind…They are developed bearing in mind…
Phases of customer relationship processCustomer Segmentation
Nature of the economic activityof the customer
Types of financial services & products delivered to our
customersThe degree of risk will vary accordingThe degree of risk will vary accordingto the product/service or amount of to the product/service or amount of funds potentially funds potentially involvedinvolved in our in our businessbusiness relationshiprelationship with the with the customer.customer.
TheThe probability that the probability that the the economic the economic activity of the customeractivity of the customer maymay havehave anan
illicitillicit purposepurpose or may or may serveserve as a as a vehicle for money launderingvehicle for money laundering
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
……and from the combination of both variables, results:and from the combination of both variables, results:
CONSUMERS
REST
RELEVANT
PRIVATE BANKING OFF SHORE DOMESTIC
HIGH RISK ECONOMIC ACTIVITIES REPUTABLE REST
CUST
OMER
S FINA
NCIA
LNO
N FI
NANC
IAL
WITHOUT TRANSACTIONAL ACTIVITIES
REST
MONEY TRANSMITTERS AND EXCHANGE HOUSES
FOREIGN BANKSWITH
TRANSACTIONALACTIVITIES
LARGE TRANSACTIONALACTIVITIES
Page 25
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
Policies Procedures
Inde
pend
ent
Rev
iew
OrganizationalStructure
Policies,Proceduresand Internal
Controls
Communication and Training
CustomerAcceptance Policy
CorrespondentBanking Corporate
PolicyPolitically Exposed
Persons (PEPs)
Training Policy
Monitoring
Filtering
Reporting
...
Identification
Verification and knowledge of the
economic activity of the customer
Controls
Policiesand
Procedures
Private Investment Companies
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Customer Accounts Opened by non financial
intermediaries
Alert Review Procedure
Further Investigation Parameters or re-profile
Investigation Procedure
SAR Committees’ andFiling Procedures
...
...
...
...
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
...We...We havehave developed the developed the followingfollowing policies :policies :
Page 27
Customer AcceptanceCustomer AcceptancePolicyPolicy
CorrespondentCorrespondent BankingBankingPolicyPolicy
PoliticallyPolitically ExposedExposedPersonsPersons ((PEPsPEPs))
Training PolicyTraining Policy
IdentificationIdentification
Verification and Verification and KnowledgeKnowledge ofofthe Economic Activity of the the Economic Activity of the
CustomerCustomer
PrivatePrivate InvestmentInvestment CompaniesCompanies
CustomerCustomer AccountsAccounts openedopened bybyNon Financial Non Financial IntermediariesIntermediaries
ExchangeExchange HousesHouses and Money and Money TransmittersTransmitters
CorrespondentCorrespondent BankingBankingCorporate PolicyCorporate Policy
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
...We...We havehave adoptedadopted thethe followingfollowing procedures:procedures:
Customer AcceptanceCustomer AcceptancePolicyPolicy
CorrespondentCorrespondent BankingBankingCorporate PolicyCorporate Policy
PoliticallyPolitically ExposedExposedPersonsPersons ((PEPsPEPs))
AppliesApplies toto allall correspondentcorrespondentrelationshipsrelationships withwith foreignforeign banksbanks
DecisionDecision appliesapplies to BBVA entitiesto BBVA entitiesworldwideworldwide
•• No Shell No Shell BanksBanks•• NoNo PayablePayable ThroughThrough AccountsAccounts
•• RejectionRejection ofof wirewire transferstransfers withoutwithoutproperproper sendersender identificationidentification
RiskRisk--basedbased Due DiligenceDue Diligence
Training PolicyTraining Policy
Page 28
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
Iden
tific
atio
n
Scre
enni
ng
Ass
igm
ent t
oSe
gmen
t Recording&
VerificationProcedures
DetectionProcesses
Monitoring Aná
lysi
s
Com
unic
atio
n
Customer Admission Process Transactional Activity
Other Risk ManagementProcesses
Management ofSuspicious
Activities
PHASES OF BBVA CUSTOMER RELATIONSHIP PROCESS
CustomerAcceptance
Policy
Specificrules fortype of
customer Compliance Departmentrules and procedures
General prevention rulesInternal analysis & reporting
Inve
stig
atio
n
Activities of the AMLCompliance Department
Scre
enni
ng
AML processes associated to theAML processes associated to the phasesphases of BBVA customer of BBVA customer relationshiprelationship process :process :
Page 29
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
AMLAML SystemsSystems
CUSTOMERCUSTOMERADMISSIONADMISSION
CUSTOMER ACTIVITY ANALYSISCUSTOMER ACTIVITY ANALYSIS
M T SM T S DATAMARTDATAMART
• Provide Black lists and PEPslist
• Provide the algorithms to checkcustomeractivity
• MonitoringInternationalMoney Transfers Activity
Page 30
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES
FILTERING TOOL FILTERING TOOL -- FIRCOSOFTFIRCOSOFT
FILTROBATCH
Firco Files FilterLists
Rules
AlertsBatch
Firco FilesFilter Verify
Web
BB.DD. X
BB.DD. Z
BB.DD. Y
…COMPLIANCE
22
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INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES
MANTAS “Money Laundering Monitor” (MLM) is a system developed for AML requirements. With
several scenarios available and data-miningtechniques, Mantas MLM allows to detect
patterns of behaviour.
22
MONITORING TOOL MONITORING TOOL -- MANTASMANTAS
World Bank
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
AMLAML SystemsSystems –– Global StrategyGlobal Strategy
Page 33
Madrid HUB
Mexico HUB
Data Miners
Data MinersAnalysts
Analysts
Analysts
Analysts
Analysts
Analysts
AMLDepartment
Branches
HUB
MANTASCustomers
&Accounts
MonitoringMonitoring MainMain WorkflowWorkflow
Country A Mexico or Spain
Transactions
Alerts
FIU
INTERNAL CONTROLS AND PROCEDURESINTERNAL CONTROLS AND PROCEDURES22
Page 34
Employees and managers must be familiar Employees and managers must be familiar with the policies adopted and the rules and with the policies adopted and the rules and
procedures in placeprocedures in place
Improve their ability to detect and report Improve their ability to detect and report situations which might expose the institution situations which might expose the institution
to the money laundering riskto the money laundering risk
An EffectiveAML & CTF
Communicationand Training Strategy toPromote a
ComplianceCulture
COMMUNICATION AND TRAININGCOMMUNICATION AND TRAINING33
The efficiency of the Risk Management Model The efficiency of the Risk Management Model rests mainly onrests mainly on thethefollowing factors:following factors:
IndependentReview
Strict application of the relevant policies, rules Strict application of the relevant policies, rules and proceduresand procedures
Page 35
COMMUNICATION AND TRAININGCOMMUNICATION AND TRAINING33
COMMUNICATICOMMUNICATION PROCESSON PROCESS
Communicate new developments or changes in the Communicate new developments or changes in the legal framework and internal regulations.legal framework and internal regulations.
CommunicateCommunicate new patterns of suspicious new patterns of suspicious behaviourbehaviourdetected by Compliance and answers to FAQdetected by Compliance and answers to FAQ
ToTo keepkeep allall employeesemployees informedinformed of new of new lawslaws andandregulationsregulations
ToTo maintainmaintain anan appropiateappropiate levellevel ofof sensitivitysensitivity
Page 36
COMMUNICATION AND TRAININGCOMMUNICATION AND TRAINING33
Page 37
TRAININGTRAININGPROCESSEPROCESSE
SS
IdentifyingIdentifying trainingtraining needsneeds according to the exposure to the according to the exposure to the money laundering risk of their job. money laundering risk of their job.
TargetingTargeting the type of training activities to the type of training activities to theirtheir needsneeds..
Internal processes
Central Services
Employees with little exposure to moneylaundering risk
Employees executing transactions in contact with clients
Employees with specific supervision, control, training and/or advisory duties
Board of Directors
Managers
Segm
ents
Segm
entsEmployees are Employees are
divided intodivided intosegments…segments…
...... tthe resulting “score” determines the nature, frequency and specifhe resulting “score” determines the nature, frequency and specificiccontent of the training actions scheduled.content of the training actions scheduled.
INDEPENDENT REVIEWINDEPENDENT REVIEW44
InternalInternalAuditAudit
Page 38
Legal requirement: In some jurisdictions, AML & CTF proceduresand internal controls must be reviewed by an “external expert”once a year.
Independent reviewof AML &
CTFPolicies,
Rules and Procedure
s
Compliance with Compliance with Policies, Rules Policies, Rules and Proceduresand Procedures
CustomerCustomeradmissionadmission
Internal reporting of Internal reporting of suspicioussuspiciousactivitiesactivities
Analysis of Analysis of alerts generated by thealerts generated by themonitoring system.monitoring system.
ExternalExternalExpertExpert
AML & CTF CULTURE AND CONTROL ENVIRONMENT ACROSS THE WHOLE ORGANIZATION ARE CRUCIAL
LastLast thoughtsthoughts ......
AML & CTF issues are getting more and more
important
Growing costs and controls to reduce risks
The key issue in AML & CTF is KYC (identification, source of fundsand transactional activity)
INCREASING AND STRICTER REGULATIONS MORE SOFISTICATED PRODUCTS
GLOBAL PRESENCE
Risk in businesses more complex
Page 39
Agosto2005
PREVENTION OF MONEY LAUNDERING AND TERRORISM PREVENTION OF MONEY LAUNDERING AND TERRORISM FINANCING.FINANCING.
BBVABBVA’S RISK MANAGEMENT MODEL’S RISK MANAGEMENT MODEL
April 25April 25thth, 2008, 2008