Transcript Rudy Duschek presentation - Association of Canadian Compliance
ANTI-MONEY LAUNDERING BEST PRACTICES
Passing an AML Audit
12th Annual ACCP Compliance Forum May 6th 2013 © 2013
CHRISMATHERS INC
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AML BEST PRACTICES It is the duty of a compliance officer to comfort the afflicted… comfortable.
… and to afflict the
AML BEST PRACTICES
Could you pass an AML audit or field examination?
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Evolution of AML regulations.
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What does “passing” mean?
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What are the regulators looking for?
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Where is the “low hanging fruit” in a field examination?
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What are the consequences of “failure”?
AML BEST PRACTICES
Summary of Significant Developments To Canadian Anti-Money Laundering Regulations 2000
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Proceeds of Crime (Money Laundering) Act comes into force.
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Act requires suspicious, transactions.
and mandatory certain reporting other, of financial
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FINTRAC established to analyze these reports and to release information to intelligence and law enforcement agencies.
2001
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Following 9/11, legislation changed to include countering the financing of terrorism and renamed PCMLTFA.
2008 -2010 Multiple substantive changes involving:
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Reporting Record Keeping Ascertaining Identity Politically Exposed Foreign Persons Third Party Determination Compliance Regime 2011
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Tax evasion and copyright infringement added to “designated offences” for suspicious transaction reporting 2013 - 2014
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Changes to assessment.
the definition of business relationship, requirement to assess risk on an ongoing basis and to document results of
AML BEST PRACTICES
COMPLIANCE REGIME The following (summarized) 5 elements must be included in an anti-money laundering compliance regime:
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Appointment of a compliance officer responsible for AML.
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Written compliance policies and procedures.
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Assessment and documentation of risks & measures to mitigate high risks.
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Ongoing, program.
written AML compliance training
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Independent review of AML compliance regime at least every 2 years.
AML BEST PRACTICES
What does “passing” mean?
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No jail time.
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No AMP’s.
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No “weaknesses” or “deficiencies”.
AML BEST PRACTICES
What are the regulators looking for?
From you …
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Full compliance Documented risk assessment Documented risk mitigating procedures Timely filing (STRs, SATRs, LCTs, EFTs) Training Proper record keeping
AML BEST PRACTICES
What percentage of entities had no AML compliance regime?
a. 7% b. 12% c.
20% d. 50%
AML BEST PRACTICES
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WHY?
Failure to: provide documents / cooperate.
develop written compliance policy & procedures.
assess and document risk.
develop a written training program.
keep information up to date.
report EFTs, LCTs, etc.
report on a timely basis.
keep prescribed records.
K W
AML BEST PRACTICES
What are the regulators looking for?
About you …
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Your business sector.
Your business location.
Your customers.
Your affiliations.
Trends.
AML BEST PRACTICES
Top destination or originating jurisdictions of electronic funds transfers related to suspected money laundering cases involving: ** Drug offences 1. USA 2. India 3. Vietnam 4. Hong Kong 5. China 6. Taiwan 7. Iran 8. United Kingdom 9. Belarus 10. Latvia 11. Switzerland 12. Mexico 13. Peru 14. Israel 15. Thailand Fraud offences (except securities fraud) 1. USA 2. United Kingdom 3. Iran 4. Japan 5. Hong Kong 6. Israel 7. Switzerland 8. China 9. Germany 10. Italy 11. Austria 12. France 13. Cyprus 14. Guernsey 15. India
** Source: FINTRAC Typologies and Trends Reports – April 2012
AML BEST PRACTICES
Top destination or originating jurisdictions of electronic funds transfers related to suspected money laundering cases involving: ** Securities fraud offences 1. USA 2. Netherlands Antilles 3. United Kingdom 4. China 5. Mexico 6. Bahamas 7. Antigua and Barbuda 8. Netherlands 9. Bermuda 10. Hong Kong 11. Panama 12. Dominican Republic 13. Turks and Caicos 14. Barbados 15. Luxembourg Suspected terrorist financing cases 1. USA 2. United Arab Emirates 3. Lebanon 4. Pakistan 5. United Kingdom 6. India 7. Austria 8. Netherlands 9. Iran 10. Hong Kong 11. Sri Lanka 12. Saudi Arabia 13. Switzerland 14. Hungary 15. Turkey
** Source: FINTRAC Typologies and Trends Reports – April 2012
AML BEST PRACTICES
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Low Hanging Fruit - Field Examination Issues Documented risk assessment 3 rd Party Determination Beneficial Ownership PEFP determination, “look back” Failure to file STR’s ID - Expired / Photocopies / Non FTF issues Record Keeping (numerous issues) Entities – no confirmation of existence Charities - improper procedures Use of Agents Individual’s business or occupation
AML BEST PRACTICES
The Consequences of “Failure”
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Naming and shaming.
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You’re “on the list”.
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Loss of business.
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Reputation of Compliance Officer
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A monetary penalty.
AML BEST PRACTICES
FINTRAC considers 3 criteria in determining the penalty amount:
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the harm caused by the violation(s);
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the compliance history of the reporting entity (5 years); and
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the non-punitive nature of an administrative penalty.
Recent asset procurement by regulators???
AML BEST PRACTICES
Violations classified as:
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Minor (individual / entity)
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AMP $1 to $1,000
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Serious (individual / entity)
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AMP $1 to $100,000
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Very Serious (individual)
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AMP $1 to $100,000
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Very Serious (entity)
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AMP $1 to $500,000
AML BEST PRACTICES
The PCMLTFA:
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Catching criminals or compliance officers?
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$5B to $15B laundered in Canada annually.
QUESTIONS???
(416) 860-8081 [email protected]