AMLAC Event Overview
Online Documentation for the 16th Annual AMLAC Forum Now Available! Click here to view.
Welcome to AMLAC.com! Here, you'll find White Papers, AML news, and details on the 17th Annual AMLAC Forum, which is scheduled for September 17-19, 2007, at the Crowne Plaza Times Square in Manhattan.
CLICK HERE to go to AMLAC WEST, which will be held February 26-28, 2007 in San Francisco!
Latest News:
November 21, 2007 -- Robert W. Werner, Director of FinCEN, has announced his departure from the agency at the end of the year to join Merrill Lynch as Managing Director. Werner will serve as the head of Merrill Lynch's Monetary and Financial Control Group and its Bank Compliance Group, according to a press release. You can read the entire release here.
November 15, 2006 -- Queens County (N.Y.) District Attorney Richard A. Brown and New York City Police Commissioner Raymond W. Kelly today announced the indictment of 27 individuals and 3 corporations for their involvement in a $3.3 billion international gambling operation. The accused are charged with Enterprise Corruption, Money Laundering, Promoting Gambling, Possession of Gambling Records, and Conspiracy. Click here to read the press release.
November 5, 2006 – FinCEN released a report detailing the increase in suspected cases of mortgage loan fraud, noting that based on the percentage of SARs filed pertaining to this activity, suspected mortgage loan fraud has risen 35% over the past year. Click here to read the release, and here to download the report.
October 31, 2006 – FinCEN,the Federal Deposit Insurance Corporation (FDIC), and the New York State Banking Department (NYSBD) jointly announced the assessment of civil money penalties of $12 million against Israel Discount Bank of New York for violations of both federal and state AML regulations. The latest monetary penalties are in addition to $8.5 million in penalties already paid to the New York District Attorney's Office in December 2005. According to the FinCEN press release, Israel Discount Bank of New York agreed to the penalty without admitting or denying the allegations. Click here to read the full release.
October 5, 2006 – FinCEN released guidance designed to help mutual funds comply with the Suspicious Activity Reporting requirement, which will apply to transactions occurring after October 31, 2006. Click here to read the press release.
Click here to read the Previous News briefs
AMLAC Featured White Papers/Articles
October 5, 2006 – FinCEN released guidance designed to help mutual funds comply with the Suspicious Activity Reporting requirement, which will apply to transactions occurring after October 31, 2006. Click here to read the press release.
The Financial Crimes Enforcement Network is issuing these frequently asked questions to clarify the suspicious activity reporting obligations of investment companies pursuant to the applicable Bank Secrecy Act regulation located at 31 C.F.R. § 103.15 ("Reports by mutual funds of suspicious transactions").1 This regulation is applicable to investment companies (as defined in section 3 of the Investment Company Act of 1940 (the "1940 Act")) that are open-end investment companies (as defined in section 5 of the 1940 Act) and that are registered, or required to register, with the U.S. Securities and Exchange Commission (SEC). For purposes of this regulation, these investment companies are referred to as "mutual funds." These frequently asked questions are being issued following consultation with the staff of the SEC. Click here to download the latest rule, which was posted as a set of FAQs.
MSBs and Banks: Rebuilding Trust Through Communication
by Juan Llanos, CAMS
(originally published by Alert Global Media, March 2005)
In spite of the regulatory pressure on Money Services Businesses, many of these financial institutions have achieved high levels of compliance success. Unfortunately, many banks continue to turn their back on their business without even looking at their operations. MSBs must adopt a proactive approach and, while focused on maintaining their compliance standards, develop and implement a communication strategy aimed at reducing uncertainty and rebuilding trust with banks and regulators. Click here to read the rest of the article.
Compliance Report
By Adil Lalani, MICHAEL PAGE INTERNATIONAL
It comes as no surprise that the compliance industry is continuing to grow and develop. This comes as good news for specialist compliance recruiters but a shortage of good quality candidates looking and willing to move is still a major problem. The conundrum is simple – every new position created due to team expansion or a new rule and regulation requires a new body to fill it. Unfortunately there is only a finite pool of experienced candidates in the market and finding an alternative talent pool is proving to be a real problem. There are a number of solutions to the problem which include looking beyond the current compliance pool such as looking to specialists with the middle office/operation markets, lawyers and auditors but each brings with them a unique transition.
The demand for top quality candidates can be seen at all levels, whether in investment banking, in asset management on the institutional or private client side, hedge funds or private equity. The solution to this shortage for those with an unlimited budget is of course to buy candidates out of the market. It is as true today as it has been that if you make a candidate an exceptional offer for the same position in an alternative institution you always have a good chance of securing his or her services. It seems a shame that compliance people will, to some extent, be attracted to where the money is at the moment rather than think strategically but this is the nature of the game. On a positive note it is good to see that many of our clients are refusing to inflate salaries to secure top talent and are holding to the traditional values of the job itself and the merits of the institution as the key attractors. Having said that it is still true to say that the average salary has increased dramatically across the compliance arena over the last 18 months.
Click here to read the rest of this article, and to view the salary chart.
"Licensed Money Remitters Not High Risk" says FATF
By Juan Llanos, Chief Compliance Officer, REMESAS QUISQUEYANA INC.
On June 10, 2005, the Financial Action Task Force, the world's powerhouse for AML and ATF policy, issued the document Money Laundering & Terrorist Financing Typologies 2004-2005. Chapter I of the report contains the results of, quite probably, the first ever professionally conducted study on money laundering methods through money remitters, or money remittance systems, as the FATF has dubbed them.
Interestingly, the FATF has come up with an umbrella term -Alternative Remittance Systems, or ARSs- to refer to any "remittance system [operating] completely or in part outside conventional banking channels". [I personally believe the term alternative has a somewhat negative connotation.] The term includes any and all methods of remitting money outside of the banking system, regardless of their legal status, i.e., it covers the whole spectrum of companies, whether they are regulated, legal, registered, or not.
On page 14, the report presents a classification of ARSs based on their degree of sophistication and size, which is correlated with the complexity of their compliance systems and controls. (see "Categories of "Alternative Remittance Systems"). Western Union and MoneyGram would fall under the first category. Quisqueyana, Sigue, Uniteller, and their pay-in peers and some of their remittance-only pay-out correspondents would fall under category 2, while their agents would fall under category 3.
Click here to read the read the full article.
Tracking Politically Exposed Persons – A difficult (and now enforceable) procedure.
By Rupert de Ruig, Director of Factiva Public Figures and Associates, FACTIVA
It has been said that absolute power corrupts absolutely, but being corrupt and powerful is about to get harder. New financial regulations issued by many countries now focus on tackling the corruption of senior political figures. As public consciousness grows about political corruption, a proliferation of headlines has exposed scandals involving politicians or people in public offices associated with illicit activity. For example, Switzerland is returning more than $800 million in public funds stolen by Sani Abacha, part of an alleged $3 billion theft during his term as president of Nigeria in the 1990s. Most of these funds were laundered throughout banks in Europe.
The connection between aid and corruption also has become a public issue. Bob Geldof, the champion of eradicating poverty in Africa, has recently joined forces with the respected NGO Transparency International. He, like the public, has begun to understand that real reform is required to ensure that aid money reaches the needy—not the powerful. Financial institutions are on the front line of the new anti-corruption initiatives, and a further raft of new legislation and regulatory guidance is coming.
Click here to continue reading the article.
Fraud and Compliance Risk: Effectively Navigating Through the Mounting Storms
By Lisa Saunders, AML Compliance and Fraud Specialist, ACI WORLDWIDE
A major storm is brewing, and like a tornado or hurricane it threatens to wage destruction on those caught unaware in its path.
Traditionally, financial institutions have had to weather threats from increasing organized crime on one side while riding out waves of compliance requirements on the other. Financial crime has always provided challenges to financial institutions, as fraudsters traditionally remain one step ahead of risk management efforts. Criminals evolve their methods of operation more quickly than institutions can react, and recent trends are moving toward attacks against the main customer accounts.
Meanwhile, compliance risk has gained significant momentum in the area of anti-money laundering (AML). Over the past several years, government regulators have recognized the global threat of money laundering and terrorist funding. It seems that every day new regulations emerge globally or changes in existing mandates are announced country by country. Instead of weakening, these storms are gaining strength, and for some financial institutions, they threaten serious loss along with diminished value and brand.
Click here to continue reading this white paper.
How to Assure Good Value from Your Investments in AML Technology
By Patricia Potts, Data Framework Program, Transaction Data Warehouse Manager, WACHOVIA CAPITAL MARKETS
What is it that makes a solution of good value? Is the value of a solution based on the longevity of its existence? Is the value based on the overall bottom line - return on investment? Is the value of a solution based on its success in mitigating risk? Good value comes in many formats, and often times it plays hopscotch into all of these mentioned arenas.
Given the current Compliance climate, Anti-money Laundering is a "hot-spot" for the financial services industry. AML Technology programs within organizations are under the microscope from regulators, shareholders, and associates alike as to whether there is value in the chosen path. There are currently more questions today than there are answers - more obstacles than there are solutions. Can both the questions and obstacles in front of us be turned into value add answers and solutions? My answer to both is "yes".
Click here to download full white paper.
Mitigating Customer Risk: Important Considerations When Implementing a Know Your Customer ("KYC") Remediation Project
By Scott Moritz, Ana Alonso and Kevin Caulfield, DAYLIGHT FORENSIC
I. Introduction Section 326 of the USA PATRIOT Act requires financial institutions to have a Customer Identification Program ("CIP") to verify customer identification in connection with the opening of accounts and to apply a "risk based approach" when seeking to verify customer-provided information. Increasingly, U.S. and foreign financial services regulators have been meting out severe penalties for deficiencies related to customer identification, risk scoring and enhanced due diligence. Many of these regulatory actions required institutions to "remediate" their customer identification files to ensure adherence with the bank's CIP and Section 326. While it has been a requirement since October 1, 2003, many financial institutions still struggle with Customer Identification, Risk Scoring and Enhanced Due Diligence. To make matters worse, those that have insufficient CIP programs are frequently compelled to implement far reaching KYC remediation programs, sometimes across their entire customer base, under a compressed timetable. This article discusses the critical success factors and potential pitfalls that financial institutions face when planning for the assessment and remediation of customer identification files. At a high level, the most frequent challenges include organizational barriers, customer frustrations, lack of an appropriate strategy, poor project coordination and inconsistent application of the Bank's policies and procedures governing CIP. In particular, this article analyzes the opposition received from both the bank's own relationship managers and from the customers themselves when contacting them for information or missing documentation. This analysis also provides some methods and tools to overcome such opposition significantly increasing the likelihood of success of the remediation project.
Click Here to read the full article.
Helping Define the PEP Definition
By David Leppan, CEO and Founder, WORLD-CHECK
The importance of effective PEP intelligence:
PEP due diligence has far less to do with PEP identification than it has to do with risk reduction. A database that confirms the mere fact an individual is a PEP, is of little value to you. If you believe you are carrying out PEP due diligence so as to be able to confirm someone's existence and that they hold a certain influential position, you have missed the punch line. The sole reason you set out to identify a PEP is to mitigate PEP risk. Using a database that does little more than identify someone as holding a public office leaves your institution entirely exposed. Click here to download the full white paper.
SEC Brings First Enforcement Action Under PATRIOT Act "Know Your Customer" Rules
Submitted by Joel Feinberg, Partner, SIDLEY AUSTIN
In its first enforcement action under the USA PATRIOT Act, the Securities and Exchange Commission (SEC) settled charges with a brokerage firm for failure to document accurately its customer identification program. The SEC sanctioned Crowell, Weedon & Co. (Crowell), a Los Angeles broker-dealer. Without admitting liability, Crowell agreed to cease and desist from committing any future violations of the recordkeeping requirements for securities broker-dealers under the Act. Click here to read the full update.
Employee Selection and Retention: An Integrated KYE-Human Resources Model
By Juan Llanos, Chief Compliance Officer, REMESAS QUISQUEYANA, INC.
Based on the insight provided by organizational behavior experts, this paper presents a comprehensive model to integrate the Know Your Employee and the Human Resource functions of financial institutions. By leveraging existing HR processes, KYE compliance acquires a new dimension and increases its effectiveness with minimal interference in the normal operation of the company and optimum use of resources. Absent an HR infrastructure, compliance professionals can pave the way for the creation of a professional HR function and synergically influence the shaping of a corporate culture of compliance. CLICK HERE to download and read the full article.
Patriot Act Reauthorization Increases Civil Penalties for Export Control and
Sanctions Violations and Adds New Port Security Provisions
By Lisa A. Crosby, Partner, SIDLEY AUSTIN LLP
President Bush signed the USA Patriot Improvement and Reauthorization Act ("Act") on March 9, 2006. In addition to extending and expanding the USA Patriot Act, the Act increases maximum penalties for violations of the International Emergency Economic Powers Act (IEEPA), the underlying statutory authority for the Export Administration Regulations and many of the regulations administered by the Office of Foreign Assets Control (OFAC). The Act also contains provisions designed to enhance security at U.S. seaports. Continue reading the full article HERE.
Training-- An Important Tool For Disrupting Terrorist Financing
By Dennis Lormel, Sr. Vice President, CORPORATE RISK INTERNATIONAL
In the United States, there are three distinct areas where training offers the potential to facilitate the disruption of terrorist financing. These areas include training in the government sector, providing training to other governments developing Anti-Money Laundering (AML) and terrorist financing regimes, and training in the financial sector. For the most part, training in the government sector is adequate. In the international arena, the State Department, Department of Justice, FBI, IRS and Treasury Department have done an outstanding job of coordinating training for countries in need. In addition, consultants provide selective training to certain countries. The question is…has the financial sector done an adequate job of providing terrorist financing training to its employees? Unfortunately, the answer is…the industry has not provided terrorist financing specific training to the level or threshold that it might make a difference. Continue reading the full article Click here to read the entire article.
SAR Filing Explosion - Why More Doesn't Necessarily Mean Better
John Grimbergen, CEO, Syfact, Inc.
With increasing regulations and attention on financial crimes and compliance, it's easy to understand the trend of increased Suspicious Activity Report (SAR) filings. The numbers don't lie. From 2002 to 2004, the volume of SARs skyrocketed 145 percent, to 689,414 last year. In the first half of 2005, about 400,000 SARs have been filed, according to FinCEN.
As anyone responsible for filing SARs knows, much of this is due to what William J. Fox, Director of FinCEN sees as the growing trend of "defensive filings," or filings made solely to ensure compliance rather than improved security and crime prevention.
Click here to read the Money Laundering Threat Assessment, a report issued by several US agencies highlighting the various industries and methods targeted by money launderers.
Do you have a White Paper on AML you'd like to share? Send it to Keith Kirkpatrick, AMLAC Executive Director, for consideration to be published in the next AMLAC Newsletter, at kkirkpatrick@iirusa.com. The next edition will be published in early June 2006.
