Anti Money Laundering & Counter Terrorist Financing Training. Henry M. Komansky

Transcription

1 Anti Money Laundering & Counter Terrorist Financing Training Henry M. Komansky April 30,

2 Henry M. Komansky Chief Compliance Officer Chief Compliance Officer at Clarien Bank Limited 10 Years of compliance expertise Former Head of Analysis at the Bermuda Financial Intelligence Agency Former Associate Attorney at Cox Hallett Wilkinson in Bermuda Former FBI Special Agent in Texas (2002 to 2005) Juris Doctor from Rutgers School of Law (1998) Masters in Environmental Law from Vermont Law School (1995) 2

3 AGENDA Bermuda Monetary Authority Money Laundering Terrorism Financing Duties of Key Stakeholders Suspicious Activity Reports ( SARs ) Penalties What to Expect 3

4 Bermuda Monetary Authority ( BMA ) The BMA is the integrated regulator of the financial services sector in Bermuda. Regulates and inspects financial institutions operating in or from within the jurisdiction; Issues Bermuda s national currency; Manages exchange control transactions; Assists other authorities in Bermuda with the detection and prevention of financial crime; and Advises the Government and public bodies on banking and other financial and monetary matters. If a company commits an offence under the Proceeds of Crime Act 1997 and the crime is shown to have been committed with the consent and connivance of an officer of the company or is attributable to any neglect on his part, then the officer as well as the company can be punished under that Act. 4

5 Money Laundering Money laundering is the process of transforming the proceeds of crime into ostensibly legitimate money or other assets. Three Phases in Money Laundering A United Nations Office on Drugs and Crime (UNODC) study estimates that in 2009, criminal proceeds amounted to 3.6% of global GDP, with 2.7% (or USD 1.6 trillion) being laundered. gafi.org/pages/faq/moneylaundering/ 5

6 Terrorism Financing What is terrorism financing? Terrorism is a crime against The State Reverse Money Laundering Funding of Designated Organizations Economic impact of terrorism? 9/11 economic consequences o Cost to the US Economy? $3,300,000,000, reckoning/costgraphic.html?_r=0 o Cost to Execute? $500, commission.gov/report/911Report_Exec.htm 6

7 Duties of Key Stakeholders Directors Degree of skill Attention to the business Reliance on others Executive Management Adopt a formal policy in relation to the prevention and detection of AML/CTF Managers Enforcement of policies Front Line Staff Execution of policies report (e.g. telling on your friends) 7

8 Suspicious Activity Reports (SARs) What is an ISAR (Internal Reporting) A Report to the Reporting Officer Your Duty Your Get out of Jail Free Card SAR COMPLIANCE UNIT ISAR 8

9 Suspicious Activity Reports (SARs) Section 46 of the Proceeds of Crime Act 1997 mandates the reporting of: Knowledge or Suspicion of Money Laundering Section 9 of the Anti Terrorism (Financial and Other Measures) Act 2004 mandates the reporting of: Belief or Suspicion of Terrorist Financing and Related Offences 9

10 Suspicious Activity Reports (SARs) Suspicion must be more than fanciful. SHAH v HSBC, [2012] EWHC 1283 (QB) May 2012) 10

11 How to File a SAR/ISAR Financial Intelligence Agency (FIA) As of the end of day 1st October 2011 the FIA will no longer accept any manually submitted SARs (including those faxed or ed). The FIA will only be accepting SARs submitted electronically via goaml (using the online submission form or XML transmission) Bermuda s Financial Intelligence Unit Under FATF Recommendation 29 all countries should establish a financial intelligence unit (FIU) and apply for membership with the Egmont Group. gafi.org/topics/fatfrecommendations/documents/fatf recommendations.html Bermuda s Financial Intelligence Agency Act 2007 Electronic Reporting No Manual Reporting 11

12 Penalties Criminal Penalties Section 48 of the Proceeds of Crime Act 1997 A person guilty of failure to disclose knowledge or suspicion (SAR) or tipping off: o On summary conviction 3 years & $15,000 fine o On indictment 10 years & an unlimited fine Civil Penalties In addition to the criminal violations under POCA, the BMA may also levy fines on regulated institutions for AML failures. Some of the practical applications are set out in the BMA s guidance, Statement of Principles Proceeds of Crime (Anti Money Laundering and Anti Terrorist Financing Supervision and Enforcement) Act The maximum fine is generally seen as $500,000 per breach. centre/policy and guidance/trust%20ii/ Statement%20of%20Principles%20on%20the%20Use%20of%20Enforcement%20Po wers.pdf 12

13 Penalties Penalties in Bermuda The Bermuda Monetary Authority [BMA] says while no evidence of money laundering was discovered during an investigation of the First Bermuda Group, the $100,000 fine... reflected the serious nature of its breaches of Bermuda s tough new Proceeds of Crime Regulations. fine reflected serious nature of breaches/ 13

14 Penalties Penalties in the US Bank president charged with failure to comply with requirements of the Bank Secrecy Act. o H. Jack Miller, 51, of Boca Raton, Florida, was charged on September 5, 2013, with one count of willful failure to maintain an effective anti money laundering program and one count of willful failure to file a SAR. o Miller pleaded guilty and sentenced in July 2014 to three years of probation and a fine of $5,000. United States v. H. Jack Miller, 13 cr 445 (E.D.Pa) edpa/legacy/2014/10/22/miller_information.pdf JP Morgan Chase to pay more than $2,000,000,000 in penalties for Madoff ties. Settling charges that it ignored evidence of fraud, the bank s payments to the US government now total nearly $20,000,000,000. o Failure to file a SAR o Deferred Prosecution Agreement d%20w%20exhibits%29.pdf 14

15 Penalties Penalties in the UK January 2014 Standard Bank PLC fined 7.6m for failures in its anti money laundering controls. bank plc fined for failures in its antimoney laundering controls May 2012 The Financial Services Authority (FSA) has fined Habib Bank AG Zurich (Habib) 525,000 and its former Money Laundering Reporting Officer (MLRO) Syed Itrat Hussain 17,500 for failure to take reasonable care to establish and maintain adequate anti money laundering (AML) systems and controls. March 2012 Coutts fined 8.75 million for anti money laundering control failings. 15

16 What to Expect SAR Filings ISAR Filings Group Trends Jurisdictional Trends o f28e 4dd6 9bb2 6765e1b0861a o 1.pdf 16

17 Questions 17