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  • 1. Anti Money Laundering Advisory Alert mechanism and Process Controls Riskpro, India 1

2. Source: Toonpool.com 2 3. Who is Riskpro Why us? ABOUT USMISSION Riskpro is an organisation of member firmsaround India devoted to client service Provide integrated risk managementexcellence. Member firms offer wide range consulting services to mid-large sizedof services in the field of risk management.corporate /financial institutions in India Currently it has offices in three major cities Be the preferred service provider forMumbai, Delhi and Bangalore and alliances complete Governance, Risk and Compliancein other cities.(GRC) solutions. Managed by experienced professionals withexperiences spanning various industries. VALUE PROPOSITIONDIFFERENTIATORS You get quality advisory, normally deliveredby large consulting firms, at fee levelsRisk Management is our main focuscharged by independent & small firmsOver 200 years of cumulative experience High quality deliverablesHybrid Delivery model Multi-skilled & multi-disciplined organisation.Ability to take on large and complex projects Timely completion of any taskdue to delivery capabilities Affordable alternative to large firms We Hold hands, not shake hands.3 4. Risk Management Advisory Services Basel II/III Advisory Corporate RisksInformation Security Market Risk Enterprise Risk Assessment IS Audit Credit Risk Fraud Risk Information Security Operational Risk Risk based Internal Audit IT Assurance ICAAP Operations Risk IT Governance Forensic servicesSERVICES Operational RiskGovernance Other Risks Process reviews Corporate Governance Business/Strategic Risk Policy/ Process Review Business Strategic risk Reputation Risk Process Improvement Fraud Risk Outsourcing Risk Compliance Risk Forensic Accounting Contractual RiskTrainingRecruitment Banking E Learning Virtual Risk Managers Corporate Training Full Time Risk Professionals Regular Risk Management Training Part time Risk Professionals Online Training material Risk Managers on call free Workshops / Events4 5. Background and Challenges to Money LaunderingBACKGROUND Money laundering is the process by which criminal proceeds / owners of these funds are concealed ina manner so as to make it appear that these funds are obtained from legitimate sources. Procedures used to combat money laundering activities are known as Anti Money Laundering (AML)processes. Money Laundering is specifically the act of disguise proceeds of illegal activity to make them appearas legitimate money Most common way to launder money is to circulate the money several times through differentchannels, different bank accounts and using different transactions amounts such that it leaves acomplex money trail and makes it very difficult to trace the origin of the money.CHALLENGES Very difficult to validate the genuineness of KYC documents Money launderers always have innovative ways to forge documents Staff may not be sufficiently trained to identify suspicious transactions Without complete automation of Core Banking Systems, transaction monitoring is difficult Decentralized operations in terms of account opening or processing transactions increases chancesof Money laundering Automated monitoring alerts may not be properly setup or queries may be faulty resulting in fraudulenttransactions from being detected. 5 6. Regulatory Guidelines & Process Controls for KYC / AMLCarry out a robust KYC procedure to ensure that only genuine customersare introduced to the banking systemVerification of new customer name against negative listsRegulatorySanction MonitoringGuidelinesConstantly monitor the operations of the bank accounts for suspicioustransactionsKYC / AML Policy documentation in the institutionCash Transaction reporting/ Susceptible transaction reporting to FIU - IND Review of KYC/AML Framework and improvement of process controls Daily review of account activities for unusual transactionsProcess Controls Training and awareness to institutions staff to enhance AML efforts Key Risk Indicators to highlight trends in KYC / AML breaches /lapses Use of automated tools and technology to assist in data mining andmonitoring of CASA account activityTechnology Controls Real time monitoring of high value transaction in the Clearing Dept,Treasury Departments6 7. AML Alert Examples - Monitoring of Staff Accounts Staff accounts need to be monitored and this is one of theprecautionary step towards identifying those accounts which aremisused by the staff by rolling funds of some unknown third personand helping them to launder the money. One of the recent example of Citi Bank fraud in Gurgaon of aroundRs.400 crores by one of its staff member who had diverted funds ofcompanies and individuals into an account jointly held by his relatives.Staff accounts are flagged by setting a query on the cash deposits in theseaccount.Cash Deposits inThe trigger threshold should be decided by the bank. Staff Accounts Benefit: This query will list out all the staff accounts in which there arefrequent cash deposits and which is not matching with his profile. Cash deposit threshold to be based on employee designation and notStaff profiles to bestandard for all employees. considered Benefit: Help in monitoring the transactions since managerial level stafftransactions are very different from officer level staff. List the accounts which had a frequent number of cash deposits totaling to Fortnightly cash Rs.10lakh in a month and mostly withdrawn too. deposits Benefit: This will help to identify the accounts in which there are frequentnumbers of deposits in small volumes of cash to avoid RBI reporting.7 8. AML Alert Examples Dormant Accounts Dormant accounts are those in which there are no transactions by the account holder for the last sixmonths and suddenly these accounts are used for deposits/withdrawals These accounts are suspicious because money launderers and fraudsters mostly use these kind ofaccounts for rolling of funds so that their original identity can be hidden and they can do transactionin those accounts which are already KYC compliant. As per the recent update by RBI, it had issued a directive to all Banks to monitor all dormantaccounts and the reason for this is there are at most 10 million dormant accounts in the IndianBanking system and these accounts have around Rs.17 billion unclaimed deposits. The queries which can we set to monitor these dormant accounts are all based on the amountsdeposited in account. Some of these queries are as mentioned in next slide. IF an Account is dormant in last 6 months ANDCustomer net worth 20000 AND Amount received in 3 days >500,000 8 9. AML Alert Examples Other Useful Alerts to monitor accountsAlert Description Alert AmountCash deposit or withdrawals in a saving account in a single day >50,000All series of cash transactions and where such series of>10,00,000transactions have taken place within a month and the aggregatevalue of such transactions the limitNon cash deposit OR Withdrawal in a saving account in a single>25,00,000dayHigh transaction volume in savings account fortnightly / cash & High risk Customer: >25,00,000non cashMedium risk customer: >50,00,000Low risk Customer:>1,00,00,000Large Volume Non Cash transactions in Savings account in aHigh risk Customer: >25,00,000Day Medium risk customer: >50,00,000Low risk Customer:>1,00,00,000Large Volume transaction in Dormant account in a Day>5,00,000Large Number of cheque leaves in Savings account fortnightSavings account 100 chequesBasis Current account 350 chequesATM withdrawal fort night basis in savings account>2,00,0009 10. Web Based Risk Management TrainingKYC / AML Training Today organisations face immense regulatory, compliance and operational risks People who execute key processes such as settlements, KYC, AML reviews,account openings, payment processing are some times not trained enough Why Untrained people often make excessive errors or ignore key process controls Web based training is a very cost effective way to impart knowledge to largeemployee base to minimize operational and reputational risks This is not E Learning. This is real industry experts talking about key issues. A series of 5-10 sessions are customized and outlined that touch upon key riskissues and compliance requirements. How Practical, industry knowledge is shared as the speakers are industry experts The sessions are grouped with other users to bring down delivery costs. We canalso deliver sessions exclusively for your organisation. Training can be delivered as low as Rs 200 / employee / per session. How Much We can discuss your training requirements and provide final quote10 11. KYC / AML / Fraud Web based SeriesSession TopicKey Learning DurationKYC / AML Fundamentals KYC / AML framework 1.5 Hoursand FrameworkBlocking problem accounts at account opening Importance of KYC/AML in accounts outsourced by third partiesFraud Risk Management in Overview of frauds1.5 HoursBanksExamples of frauds in banksEWI for Frauds Early detection and remediation of frauds 1 Hour Understand process controls to management fraudsFraud and Risk Analytics Detection of frauds through database queries1 Hour Building effective fraud risk Analytics and ReportingReputation RiskRole of employees in reputation risk management 1 HourManagement Outsourced arrangements and increase in reputation riskTotal Training6 HoursTarget Audience: Branch Banking Staff, Operations Dept, Customer Service and Clearing Depts,Internal Audit. Even all new hires at lower levels can benefit.Training Price Rs 1,000/employee for all 5 sessionsRs 200 / Employee/ Session (Minimum 25 employees) 11 12. Riskpro Clients Our ClientsAny trademarks or logos used throughout this presentation are the property of theirrespective owners 12 13. Team Experiences Our ExperiencesOur team members have worked at world class Companies Any trademarks or log