Anti Money Laundering. Cork. Fergus Bradley Jan 2014

Transcription

1 Anti Money Laundering Cork Fergus Bradley Jan 2014

2 Agenda Focus on key obligations of AML Review CBI industry feedback Look at practical steps in AML in business Incorporate CJA Act 2013 implications

3 CBI Sanctions Since financial sanctions & publications Total 22.14m approx. Era of Enforcement!

4 AML/CTF CBI Dear CEO letter Oct 2012 Applies to Institutions & Intermediaries Strong signal that CBI is taking AML very seriously Act inforce 3 years this year Governance inadequate Board actions

5 Dear CEO (cont d) Risk assessment Policies & Procedures Inadequate training Customer Due Diligence Suspicious Transactions Reporting

6 What is Money Laundering? Process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal conduct. If undertaken successfully, money laundering enables criminals to legitimise dirty money by mingling it with clean money. Ultimately provides a legitimate cover for the source of income.

7 Criminal Conduct Concealing or disguising the true nature, source, location, disposition, movement, or ownership of the property, or any rights to the property Converting, transferring, handling, acquiring, possessing, or using the property

8 Criminal Conduct (cont d) Removing the property from, or bringing the property into, the state And The person knows or believes (or is reckless as to whether or not) the property is the proceeds of criminal conduct

9 Types of criminal conduct? Drug trafficking Fraud Theft Tax evasion Terrorism

10 Risk Based Approach Significant change in focus since 2010 Geographical risk Product/service risk Customer risk & customer base Delivery channel face to face or non face to face

11 Simplified CDD Exceptions to full CDD Customer and/or Product Certain credit institutions Listed companies Certain insurance policies and pension schemes e.g. low premiums Still needs ongoing monitoring

12 Standard CDD Importance of KYC source of wealth/funds Identify customer from independent and trustworthy source Identify Beneficial Owner Purpose and intended nature of business relationship Ongoing monitoring transactions

13 Enhanced Due Diligence Additional CDD Correspondent banking relationship usually different jurisdiction Politically Exposed Persons (PEP)

14 PEP Non Resident person, who within last 12 months has been: Head of state, government minister Member of Parliament Member of judiciary Auditor/Board member of Central Bank Family or Close Associate of above If applicable, refer to Act

15 Designated Persons Financial Institutions Stockbrokers Credit Unions Insurance/Investment brokers Mortgage brokers, Estate Agents, Solicitors, Tax Advisors TCSP s & Bookmakers, etc Above can rely on each other s ID

16 4 Stages of ML Placement - physical disposal of cash proceeds Layering - creation of complex layers Integration - absorbing funds back into economy Tax evasion

17 Failure to: Apply CDD Comply with timing of identification of client/beneficial owner Continuing with relationship where unable to apply CDD measures

18 Failure to: Apply special measures to business relationships Apply EDD to PEP s Report suspicious transactions Report transactions with designated states

19 Failure to: Maintain policies and procedures Provide appropriate training Keep records 5 years of transaction or relationship end

20 Failure to report Designated Bodies must make report through MLRO. Once MLRO has been advised, employees have met obligations. Report to both Garda & Revenue

21 Tipping- off Must not: Tip-off a client, or Divulge information which might prejudice an investigation

22 Max Penalties On summary conviction: -Fine up to 5k - Jail up to 5 years On indictment: - Unlimited fine - Jail up to 14 years (or 20 years for financing terrorism)

23 Client ID Product provider entitled to specify its own requirements for ID Inconsistency in market Sectoral Guidance Notes discretion among providers!!

24 Who to identify Company! Beneficial owners (25%+) Trusts Trustee or beneficial owner Significant beneficiaries

25 What form of ID Generally Best possible documents Hardest items to forge Passport or Driving Licence or State Issued documentation Utility bills to link name/address

26 Company ID Original or Certified Cert of Incorporation Memo & Arts Information lodged with CRO Individual authorised to act on behalf of company

27 What s suspicious? Client inconsistencies Compatibility - client & payment type Information - client reluctance Large cash transactions Series of smaller cash payments Significant cash in current a/c for long time

28 What is suspicious? (cont d) Quality of bank statements or inability to get original bank statements Source of funds Large third party cheques Linked transactions Very early policy surrenders Change in fund ownership

29 Internal Policies/Procedures Statutory obligations Identification of complex/large transactions Measures to prevent client anonymity Keep documents/information up to date Measure for heightened risk Awareness of technological developments

30 Actual sanctions Very few Jail for serious criminal activity Very hard to prove/obtain convictions Are institutions paranoid or is the system working?

31 Criminal Justice Act 2013 Significant focus on criminal use of mobile phones Tweaking of financial transaction limits Enhanced Due Diligence Document retention in/out of State

32 FATF Report Oct 2013 Specific issues and threats identified Progress on certain countries listed e.g. Iraq, Nepal Countries no longer subject to FATF compliance process e.g. Morocco, Nigeria Document retention in/out of State

33 Agenda Focus on key obligations of AML Review CBI industry feedback Look at practical steps in AML in business Incorporate CJA Act 2013 implications