Anti Money Laundering. Cork. Fergus Bradley November 2011

Transcription

1 Anti Money Laundering Cork Fergus Bradley November 2011

2 Program Objectives Define Money Laundering Understand Corporate & Personal responsibilities i Define some Best Practices Keep up to date with changes

3 The Legislation Criminal Justice Act, 1994 Criminal Justice (Terrorist Offences) Act, 2005 Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010 gives effect to the 3 rd EU Anti Money Laundering Directive

4 Central Bank Role Directive 37: gives the Regulator the power to Fine & Sanction firms and individuals where it observes a lack of: Customer due diligence Maintenance of Records Clear reporting lines Staff training: Continuous Annual Training Requirement

5 TCSP s Trust & Company Service Providers now a designated person Authorised and monitored by: Dept of Justice & Equality

6 What s changed? No major change for the average consumer. Politically Exposed Persons (PEP): Natural persons entrusted with prominent public functions, their immediate family members or close associates (Enhanced due diligence required

7 Changes for you? Risk Based Analysis: your professional subjectivity/instinct! Are you satisfied as to the source of the funds?

8 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 providing a legitimate cover for the source of income.

9 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

10 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

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

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

13 Analysis Need to consider how risk-based approach should be applied Leading to changes in practices and procedures Longer term implementation/review

14 Elements of a Plan Policies & procedures Risk assessment Customer Due Diligence Types of Transactions Monitoring Staff training i Reporting

15 Simplified CDD Exceptions to full CDD Customer and/or Product Certain credit institutions Listed companies Certain insurance policies and pension schemes e.g. AP < 1k, SP < 2.5k Still needs ongoing monitoring

16 Standard CDD Importance of KYC source of wealth/funds Identify customer from independent and trustworthy source Identify Beneficial Customer e.g. Owner of 25% shares in Company Extent of business relationship Ongoing monitoring i transactions ti

17 Standard CDD Prior to establishing relationship Single or series of transactions > 15k Any perceived risk evident

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

19 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

20 When dealing with PEP Procedures to determine if PEP Obtain senior management approval to proceed Adequate measures to establish source of wealth and source of funds A/c may be opened pending CDD, but no transactions

21 Reliance on Third Parties Ok provided third party is a designated person Must have its own AML procedures etc Problem: Does investment firm have to monitor relations on an ongoing g basis?

22 Designated Persons Financial Institutions Stockbrokers Credit Unions Insurance/Investment brokers Mortgage brokers, Estate Agents, Solicitors, Tax Advisors TCSP s

23 Third Party Arrangements Need agreement that: Party is regulated Maintains policies and procedures On request, to forward copies of all CDD documentation Firm will retain AML docs for 5 years after relationship ends

24 Reporting to both: Garda Siochana Revenue Commissioners

25 4 Stages of ML Placement - physical disposal of cash proceeds Layering - creation of complex layers Integration - absorbing funds back into economy Tax evasion

26 Pitfalls Money Laundering Assisting a money launderer Failure to identify client Failure to keep records Failure to report suspicious transaction Tipping-off a suspect spect client

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

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

29 Failure to: Maintain policies and procedures Provide appropriate training

30 Failure to keep records Records must be retained for 5 years after last transaction or relationship with client ends. (Central Bank requires file record retention for 6 years)

31 Failure to report Designated Bodies must make report through MLRO. Once MLRO has been advised, employees have met obligations.

32 Tipping- off Tipping-off a client or divulging information which might prejudice an investigation

33 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)

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

35 Who to identify Company! Beneficial owners (25%+) Significant beneficiaries

36 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

37 Face to Face Preferred method of contact Personal ID Passport/Licence Address ID utility bill, bank statement, phone directory, electoral register

38 Non Face to Face Personal ID: Original or Certified copy of passport, licence or identity Address identification

39 Address ID From the following: - utility bills - insurance certificate - bank statement - Revenue certificate - Social Welfare identification - CRO verification

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

41 Certify documents Certify copies of all documents Stamp Original sighted Sign and Date

42 Related issues Retain ID on latest t client file If client under investigation: - hold files even if over 5 years - don t destroy without GBFI permission

43 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 Significant cash in current a/c for long time

44 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

45 Tipping-off Don t arouse client suspicions Request ID as normal Proceed as normal Report immediately!! Use your instincts

46 Reporting Complete report for MLRO Don t discuss with anyone else Reporting does not breach confidentiality Reporting to MLRO discharges your obligations Who is your MLRO?

47 You should. Know your responsibilities Know your procedures Be alert Identify clients & retain ID Remember Central Bank involvement!