On Compliance: Anti-money laundering vigilance

Community of Development Cooperatives Credit of North Federal Dade Fraud with Federal Regulatory Authorities and the Possible Death of Violations Against Money Laundering Offers an Enlightening Narrative on the Need for Compliance with Continued Supervision of the Right of Secrecy Banking and the law of the Patriot. In the investigation complaint and the resulting fine of $ 300,000, the Financial Crimes Enforcement Network accused the syndicate of $ 3 million credit exposed the US financial system to significant risks of money laundering and terrorist financing country High risk in the Middle East and Central America.

North Dade Community Development FCU was wound up in 2015 by the National Administration of Credit Unions due to violations. The crate had been hired to serve 56 in MSB areas at high risk. He has handled nearly $ 2 billion in financial transactions for money service businesses and the process fails to meet obligations against money laundering and terrorism in order to verify clients, filing reports, risk assessments Conduct, report suspicious transactions and maintain robust controls mitigate risks. Risks.

This case serves as a warning to credit unions that must rigorously monitor customers and related businesses can not use third parties to exercise due diligence and comply with the AML.

Fit-to-Purpose Compliance Program

A standard compliance program that fits all financial institutions does not simply exist, so each organization must develop a framework that meets their needs and culture. A first step for a caisse to build an AML compliance program is to conduct an overall risk assessment taking into account all products, services, customers, entities, transactions and geographic locations with internal controls put in place Mitigate the risks. Next, you should test and evaluate the effectiveness of their AML policies and procedures. Once you identify and strengthen weaknesses, credit unions can develop a unique and comprehensive view of members and risks.

KYC principles

The second key step is to consistently apply the principles of "knowing your client". An effective KYC program is one of the keys to preventing violations of regulations against money laundering strategies. This includes a client identification program below, which is designed to allow the background to form a reasonable belief that it knows the true identity of each member. The assessment of front-line member risks, as well as processes and procedures to understand the financial transactions of members, are designed to lead without knowing the wrong actors and become a conduit for money laundering.

It is essential to build an internal team to identify indications of money laundering activity. Financial institutions are required to designate an AML compliance officer and ensure that appropriate procedures are in place to allow employees to report suspicious activity. Accurate information means that unions and credit must document and follow procedures for transactions escalations clearly high risk, so that any employee of a credit union that you have a question or suspicion of a transaction knows how Assemble the string management. Contact (phone, e-mail, face to face or using the specific software application / system) and when to communicate (within what time frame).

Finally, credit unions should invest in the training of personnel responsible for managing funds and open accounts to ensure that these employees recognize the red flags of money laundering.

New threats, old tools

According to the Wall Street Journal, banks and smaller US credit unions are targeted by criminals trying to avoid the most sophisticated and rigorous controls used by large banks. Any attempt to detect new threats with outdated tools or security measures are not exhaustive leaves open to forms of crime and the evolution of financial institution findings by default.

Traditional AML technology solutions used by many institutions focus on customers, transactions and accounts to detect suspicious transactions. These systems adopt a standards-based approach based on a pre-defined set of fixed rules to identify known patterns of criminal behavior, such as "Tell me where the ID is used for a client" or "Tell me when there are A cash deposit and more than $ 10,000 ".

This approach is appropriate to identify suspicious activities that were previously identified and tested, which is one aspect of regulatory compliance. But this reactionary approach often can not discover new methods carried out by criminals to launder money, commit fraud or use the financial system to facilitate other crimes.

To identify these more sophisticated financial crimes, credit unions should be able to look beyond the usual member information, identity, accounts and transactions of members. A broader vision could include other channels of information, such as phone calls, emails and social networking messages. However, the complex network of systems, geographical areas and disparate functions within financial institutions can hamper the collection and analysis of additional data.

One solution is to use advanced analysis software that can filter large amounts of data to identify suspicious behaviors. Advanced analysis software provides a higher level of protection against money laundering, searching for all available data and analyzing and merging them to create usable intelligence for investigators. With the detection of anomalies, advanced analyzes examine all available data and highlight the unusual relationships between accounts, customers and transactions. Identifies and alerts users to suspicious activities, such as remittances and unusual types of account interaction.

Derek Brown is Vice President / Americas for the Wynyard Group, which develops software to analyze financial crimes. Brown has more than 20 years of experience to help organizations gain commercial value from the effective use of technology and application of advanced analyzes in financial services organizations and crime agencies.

Anti-money laundering to be discussed at Finance Malta conference

The Fourth EU Money Laundering (AMLD) fight will be one of the key issues to be addressed in Malta to finance this year's conference entitled "The Financial Services Industry in Malta - Taking the Next Over Time ".

The AMLD sought to combat money laundering against criminal activities and the financing of terrorism. However, it faces difficulties.

Juanita Bencini, President of the Institute of Financial Services Professionals and Partner of KPMG, said: "Never in the history of the EU AML guidelines, we had a situation in the directive should be modified before that the next national legislation was incorporated into the next Month as regulators and practitioners try to implement a directive that we know a priori, may be subject to changes lead to great uncertainty and confusion.

Ms. Bencini, who will present and moderate the afternoon session of "European Union trade and fourth AML Directive", added: "The session will outline the operational implications of the fourth AMLD and attempt to answer some of the questions Which doctors then ask as they try to implement the Directive. "

Together with Ms. Bencini, the focus group will include Alfred Zammit, deputy director of UIAF, Ariane Azzopardi, Managing Director of Alter Domus, and Manfred Galdes, partner of ARQ Group.

This year, the Malta Finance Conference will also address other issues and issues such as the implications and opportunities of Brexit and the implications of this development in the context of Commonwealth, Fintech, Crowdfunding, Securitization, Blockchain, as well as a number of others Events related to global and national industry.

The conference begins Wednesday with a pre-conference networking event and a full conference day at the Hilton Conference Center.

Firms need to embrace technology to ensure robust anti-money laundering procedures

At the end of last year we predicted in these pages that the fine of € 98,000 in Bray's credit union by the Central Bank of failures of anti-money laundering control procedures would be "the end a very large area as the central bank points An absolute attitude toward the anti-money laundering (AML) control practices of financial institutions. "

With the announcement this week of a fine of 2.3 million euros taken from AIB for similar offenses, this prediction seems credible to say the least.

The growing demands of central banks around the world that banks have a "goal-oriented" procedure and counter-terrorism financial procedures (CFT) are getting heavier, but the resolution of regulators as a witness to The recent compliance action, seems clear. "In particular, we expect our retail banks, as gateways to the financial system, to establish systems and better controls against money laundering," said Derville Rowland, director of the central bank's application, in connection with the AIB case .

Similarly, the complex due to insufficient resources is unlikely to be heard with sympathy.

AIB was reprimanded and admitted six felonies under the Criminal Justice Act of 2010 (WASP and Terrorist Financing) (CJA 2010). Two flaws were highlighted: failure to report suspicious transactions and lack of due diligence (CDD).

Regarding the reporting of suspicious transactions, the flaws have focused on the acquisition of EBS in July 2011.

The Central Bank considered that "BIA did not apply adequate resources to ensure that warnings of possible suspicious activity (in a" delay "generated by its EBS activity) were promptly investigated and, if applicable, reported to the Garda and income Legal. Centralized unit of AML AIB, to investigate and report suspicious operations, took more than 18 months to fully process the backlog which at one time represented more than 4,200 notifications in circulation for more than 30 days. "

AIB was also unable to exercise due diligence (CDD) on clients who had accounts prior to May 1995 ("pre-95 clients") when the first Irish laws on money laundering and anti-money laundering came into force terrorism.



In fact, the two problems are related to each other. Suspicious transactions are most often the result of lack of due diligence and the second result of insufficient resources, but more relevant, ineffective, apply.

With the decision of the Central Bank and its determination to apply with punitive measures if obvious, banks and credit unions now have to re-evaluate the capital cost / benefit of sufficient resources deployed for the task. The cost of this equation can feel many managers.

But this does not have to be like this. Technology provides the answer, especially at the crucial stage of customer shipment.


In fact, the two problems are related to each other. Suspicious transactions are most often the result of lack of due diligence and the second result of insufficient resources, but more relevant, ineffective, apply.

With the decision of the Central Bank and its determination to apply with punitive measures if obvious, banks and credit unions now have to re-evaluate the capital cost / benefit of sufficient resources deployed for the task. The cost of this equation can feel many managers.

But this does not have to be like this. Technology provides the answer, especially at the crucial stage of customer shipment.