Consulting Services for Management & Banking Synergies Between AML & Fraud Departments/Programs Presented by: Ana Maria H. de Alba April 5 th, 2012 1
AML & Fraud Policies & Programs 1. Developing a Fraud Prevention Program makes it clear that: a) Fraud by employees will not be tolerated and all employees are responsible for its prevention b) Government & taxpayers take fraud very seriously 2. Developing an AML Program makes it clear that: a) Money Laundering prevention is the responsibility of all employees in an organization b) Government and the international community take money laundering very seriously 2
What is fraud? Definitions There are several types of fraud; one of its principal definitions is: concealment of material facts Fraud is generally divided into three major categories, one of which is: fraudulent statements What is Money Laundering? The process by which the origin or source of funds are hidden or obscured in order to make that source appear legitimate 3
Similarities in Fraud & AML Prevention Programs Both the AML and Fraud Prevention Programs require, essentially, the same strategies: Setting Tone at the top Implementation of policies Robust system of internal controls (include appropriate technology, case management, and monitoring tools;) Ongoing training Periodic testing or audits of the effectiveness of the implemented internal controls Establishing a Financial Integrity Unit and an AML Compliance Unit Note: An AML/CFT Program also requires the designation of a senior manager responsible for executing and supervising the Program (The Compliance Officer) 4
Similarities in Detecting Fraud & Money Laundering o Generally, an organization will be alerted of the occurrence of fraud or possible money laundering via: Alerts produced by the internal control system (i.e. monitoring, internal reporting mechanisms, etc.) Internal or External Audit (i.e. noted discrepancies, transaction testing, etc.) Notification from Supervising authority or law enforcement 5
The Fraud & AML Prevention Programs For an entity to have an adequate prevention program, it must: Develop, document, and implement a Policy (approved by your entity s BOD) Conduct a risk assessment to identify vulnerabilities in each of the major categories Fraud: Fraudulent Statement, Corruption, and asset misappropriation AML: Customers, Products & Services, Geographies Apply control procedures on the basis of materiality and risk, and conduct due diligence on existing relationships (customers, employees, and vendors) at appropriate times. 6
The Fraud & AML Prevention Programs For both the Fraud and AML Prevention Programs, entities must also apply: Appropriate Oversight (i.e. audit committee, AML committee, AML Compliance Officer, internal audit team, independent consultants, etc.) Internal audit control Separation of duties or division of responsibility Ongoing training Reporting mechanism (including anonymous suspicious activity reporting) 7
The Fraud & AML Prevention Programs 8
Leverage/capitalize from internal information Liaise with each Unit Summary Participate in Committees (i.e. Compliance Committee, Audit Committee) Negotiate on technology tools (i.e. case management tools, monitoring, etc.) Coordinate efforts for detecting suspicious activity 9
Case Fraud or Money Laundering? Credit card customer from Mexican institution: Entity receives call from Hotel at time of customer check out from a Starwood Hotel (Sheraton Hotel) in Dallas, Texas: Customer did not have sufficient credit in card Customer claimed to have deposited $10K for the trip on his card Checkout balance was $13K + Customer claimed that with his deposit and his line of credit he should have had sufficient to cover Credit Card division was quickly evaluating if a line increase or temporary overage was possible KYC profile disclosed that customer was a teacher in Mexico 10
Tone at the Top ZERO TOLERANCE Copyright 2012 CSMB - All Rights Reserved 11
Ana Maria de Alba, AMLCA, CPAML Ana María H. de Alba, is an independent risk management consultant. She is the founder and Principal of Consulting Services for Management and Banking (CSMB), established in Miami, Florida since 1997. She is also an associate at various internationally recognized business intelligence, investigations, and security firms, and is the FIBA AML Institute s lead instructor. Ana Maria has over 24 years experience and training in both the banking and consulting industries. As a banking executive, she worked in domestic and international financial institutions, including Sun Trust, Banco Atlántico, International Finance Bank and Banco Internacional de Costa Rica. As a consultant, she has spearheaded and participated in numerous risk management and investigation assignments and projects in the USA, Venezuela, Brazil, Chile, Ecuador, Uruguay, Colombia, Mexico, Peru, Panamá, Honduras, Costa Rica, Guatemala, and the Caribbean. Her professional history and accomplishments include supervision and development of risk management and assessment projects, as well as numerous other projects in forensic investigations linked to money laundering and financial fraud. Additionally, she has been engaged in projects concerning currency exchange; strategic organizational planning; investment analysis; market analysis; development of banking products and services; development and implementation of policies and procedures for all units within a banking institution; training and development, including public speaking on AML subject matter; development of compliance programs; and look-back or forensic review projects. Ana Maria de Alba has an undergraduate degree in Business Administration with a Major in Finance from the University of Miami, as well as an MBA with emphasis in Banking and Finance from Nova Southeastern University. Additionally, in AML subject matter, Ms. De Alba is certified by FATF in Methodology for Mutual Evaluations as an expert country evaluator and is certified in Anti Money Laundering by FIBA in association with FIU, with both the AMLCA and CPAML designations. 12
Consulting Services for Management & Banking Thank You Ana Maria H. de Alba" Principal" Email: amdealba@cs-mb.com" Tel: 305.865.5664" Mobile: 305.951.0421" For Additional Information, please visit us at:! www.cs-mb.com! 13