ACAMS

Advancing Financial Crime Professionals Worldwide

[acams-aml]

Andy Love to discuss Treasury’s proposed extensions to existing SM&CR regime at ACAMS’ UK Chapter meeting

ACAMS Europe announces influential guest speakers Andy Love and Polly James are to discuss the “Senior Managers & Certification Regime (SM&CR)” at its forthcoming UK Chapter meeting. The event will take place on Wednesday 24th June at Lexis Nexis, 30 Farringdon Street, London, EC4A 4HH from 6.30pm. Members of the media are welcome to register their interest and attend.

One of the UK’s largest regular networking events for international Anti Money Laundering and Financial Crime professionals, ACAMS UK Chapter meets quarterly to discuss new trends and share practical insights. Following the Bank of England Governor, Mark Carney’s announcement last week to expand the scope of criminal liability to include Asset Managers (including Hedge Funds) and Interdealer Brokers, June’s session, entitled -“The Senior Managers & Certification Regime: Understanding The Impact on MLROs”, promises to include a very lively debate.

The SM&CR is a key area of future regulation. It will replace the existing senior persons' regime and apply to senior staff in both UK firms and UK branches of foreign firms from 7 March 2016. A new criminal offence will also come into force on this date, through which senior managers in UK banks, building societies and PRA-regulated investment firms whose reckless misconduct causes their firm to fail, could face up to seven years in prison

These changes have arisen as a direct result of recommendations by the Parliamentary Commission on Banking Standards, which tighten personal accountability across Senior Management including Compliance Officers & MLROs [Money Laundering Reporting Officers] and introduce potential criminal liability for the first time. 

Andy Love served as the MP for Edmonton from 1997 until he stood down last month. During this period amongst many other posts, he served two terms as a Member of the influential Treasury Select Committee including a series of wide ranging investigations into the causes and consequences of the credit crunch & financial crisis.  In 2012 he was one of only four members of the TSC to be asked to serve as a member of the ground breaking Parliamentary Commission on Banking Standards investigating the shortcomings and failures of the Banking sector and resulting in a series of far reaching recommendations and hence will explain the rationale at Parliamentary level behind the new regime. Andy is a Physics Graduate and qualified Chartered Secretary (FCIS).

Joining Andy Love at the ACAMS’ UK Chapter meeting is Polly James from Berwin Leighton Paisner, one of the UK’s leading regulatory law firms.  Polly James is a senior associate in BLP’s Financial Regulation group, specialising in advising firms and individuals involved in regulatory investigations and enforcement actions. Having been seconded to the FSA’s (pre split into FCA & PRA) Enforcement Division, Polly has a detailed understanding of how the regulator works in practice. Polly will explain the key changes for firms resulting from the forthcoming regulatory changes in the individual accountability regimes, with a particular focus on the practical impact for MLROs (and therefore those who work for and support them).

David Symes, Co-Chair of ACAMS’ UK Chapter and a former President of the Institute of Chartered Accountants London Region will convene the meeting. David Symes is the managing director of Compliance Recruitment Solutions and a former Deputy Head of Compliance for a FTSE 100 Group.

To register as an attendee

If you would like to attend the ACAMS UK Chapter meeting please contact Lesley Muir in the first instance, by emailing [email protected] or call [phone].

[acams-aml]

AML - FCA priorities

Understanding and planning for forthcoming regulatory reviews and investigations has never been more critical. Early intervention has become the by-word for the FCA. In 2014 there were 31 reported cases of early intervention by the regulator. There were only 13 the previous year. And as we look to 2015 and beyond this trend is likely to intensify. The two large-scale investigations of 2014 [note 2014], LIBOR and Forex, are drawing to a close. The FCA now has more resources with a marked increase in oversight across more subject areas likely in the short and medium term.

Frankly, if you find yourself on the wrong end of an FCA review you might find that you have nobody but yourself to blame. The regulator publishes a huge amount of information on its website precisely to avoid scenarios where businesses are unsure about what they should or should not be doing. The UK regulator is excellent at flagging  future areas of focus to companies of interest. There are a number of work streams currently in train, ranging from reviews on the consumer credit market to the collection of unsecured debt. It’s a busy time.

One of the key considerations is how the role of the compliance officer will change. Gone are the days when responsibility could be discharged by informing senior management, or the board, to be overruled. The Senior Managers Regime will certainly change the dynamic between compliance and senior leaders and it will be interesting to see how this pans out over time. Much of the media attention has focused on the criminal offences attached to the new regime but the enforcement consequences certainly deserve more attention. It is important to understand that if the compliance officer discovers an issue within the business, it is by no means enough to simply report it.  They  must also report it directly to the regulator, which will then  discharge them from their duties.

Author

Paul Sharma, Managing Director, Alvarez & Marsal

[acams-aml]

Model Calibration: Enhancing the Effectiveness of an AML Model

Regulatory expectations, risk management, and cost control have created the need for banks and other financial institutions to develop, implement, and use complex automated models to synchronise their anti-money-laundering (AML) compliance programs with the bank’s ongoing business and regulatory need. Suspicious-activity monitoring, cash aggregation and reporting, and customer and transaction watch list screening are common AML models. The models monitor and manage AML risks across large volumes of customers and transactions.

“Model calibration” is an important component of model risk management.[i] The process of planning for and adjusting model variables and parameters to align with a bank’s unique risk, model calibration helps to provide effective risk coverage, accuracy, and efficiency in AML models deployed enterprisewide.

Simply stated, every institution has its own risks. An organisation that uses an out-of-the-box solution with no further thought is inviting unwanted risk and could be introducing inefficiency and complacency into the organisation. Through model calibration, a more accurate AML system can emerge to support an effective model risk management program.

Although supervisory guidance does not explicitly point to model calibration, examiners in the field currently look for evidence that it is taking place at banks that use AML models. This emphasis on model calibration indicates how critical its proper execution is to achieving a truly effective AML model risk management program. Banks should aim to take a proactive approach to risk management, demonstrating agility and efficiency.

The Three Critical Elements of Calibration

Three critical elements – conceptual design validation, prescriptive methodology, and documentary evidence – comprise model calibration and should be performed on all of a bank’s AML models.

1. Conceptual Design Validation

First, the bank must perform a conceptual design validation to determine whether the current model covers the bank’s risk. Examining the foundation of the current model will provide insight into the other components of model calibration.

2. Prescriptive Methodology

The next step is formal documentation of the bank’s comprehensive approach to calibrating an AML model using the bank’s prescriptive methodology. Documentation of the change-control procedures or any initiating events that might require subsequent adjustments also should be included.

3. Documentary Evidence

Finally, the bank should create an audit trail of changes it has made to the AML model parameters and thresholds during the calibration process.

The level of sophistication of AML models varies. Knowledge and understanding of the structure and application of each AML model, down to the basic level and its parameters and thresholds, is crucial. The design of a model leads to a granular understanding of its parameters or threshold. Model calibration’s prescriptive methodology element identifies the various parameters and thresholds of each AML model and defines how and when adjustments should be made. This process includes identifying the parameters that can be tuned and those that are static. The goal is accuracy and efficiency of each system or model to support the organisation’s AML program.

The calibration of AML models is expected to remain an important expectation of bank examiners.

The Six Critical Components of AML Model Risk Management

Model calibration is only one of the six critical components of effective AML model risk management.[ii] To truly reduce risks inherent in AML models, a comprehensive and sustainable AML program should consist of the following:

1.     Model inventory and assessment

2.     Model development, implementation, and use

3.     Model validation

4.     Model calibration

5.     Model governance

6.     Model foundation

 Author: Clayton Mitchell

Partner, Crowe Horwath LLP

[phone]

[email protected]

References

[i] For more detail about calibration, see the Crowe Horwath LLP article “Planning and Executing an Effective AML Model Risk Management Program: Model Calibration,” http://www.crowehorwath.com/ContentDetails.aspx?id=5835

[ii] Crowe has developed a comprehensive framework to support banks in identifying and managing risk associated with AML models. For an overview of the Crowe model risk management framework and its six critical components, see the white paper “Effective AML Model Risk Management for Financial Institutions: The Six Critical Components,” http://www.crowehorwath.com/ContentDetails.aspx?id=10045

[acams-aml]

Financial Crime Compliance: The Case for an Industry-wide Approach

By Bart Claeys, Head of KYC Compliance Services, SWIFT

Recent record fines imposed on major financial Institutions once again affirm that banks face unprecedented pressure to comply with financial crime regulations.  Financial sanctions have become the tool of choice for government policymakers in combating terrorism, weapons proliferation and crime.  In this environment, regulators have placed increasingly high expectations on banks and have dramatically stepped up compliance enforcement.  Penalties for non-compliance are severe, driving home the point that there is no tolerance for failure.  Regulators have levied more than $10 billion in fines and settlements on banks over the last 18 months, demonstrating the determination and ability of regulators to use civil and criminal law to enforce financial sanctions on a global level.   Anyone who thought these regulations inconsequential has now been disabused of that notion.

While the mandate is straightforward, the means of achieving it are not.  When violations of a country's regulations can occur anywhere in the world, compliance must be managed consistently and within a global framework.  However rules differ and sometimes conflict across jurisdictions, and are subject to frequent change.  The sanctions lists against which customers and transactions must be screened change on a regular basis and continue to grow in size and complexity.  Presently there are more than 30 lists from various jurisdictions and sanctions programs containing the names of more than 30,000 sanctioned entities and individuals.  Banks are not only expected to catch transactions involving those named on the lists, but are also expected to catch transactions containing variations or misspelling of their names.  Consider the inherent challenge when there are, for example, hundreds possible variations on Muammar Gaddafi's name and there are no agreed guidelines in terms of how many of these variations should be checked.  Tight policies would increase the number of alerts generated by the screening process; these in turn would have to be manually investigated to ensure accuracy and the full process would need to be documented in a time-consuming, labor-intensive process.   Loose policy, though, could potentially expose the bank to liability for lax compliance.   Each bank must make a judgment call weighing the costs and the risks, in line with its own risk appetite.

Similarly complicated is the world of Know Your Customer (KYC) regulation, in which banks must not only know their own retail and corporate customers and monitor their transactions, they must also know and monitor their correspondents and counterparties both upstream and downstream.  Under the parameters of KYC compliance, each bank must collect, validate and maintain information about its correspondent banks.  This information must be updated on a continuous basis to reflect any changes.  To put it in perspective, within the SWIFT network there are more than 7,000 banks active in correspondent banking that maintain 1.3 million distinct correspondent relationships.  The result is an enormous amount of redundancy in the system, as well the risk of error, as these institutions repeatedly send the same or similar information to each of their counterparties in order to comply with KYC regulations.

This level of complexity renders financial crime compliance one of the most difficult and costly challenges confronting banks, and it underscores the banks’ need to comply both effectively and efficiently.  Effective compliance is of paramount importance but it must be achieved it in a manner and at a cost that is sustainable for the ongoing operations of the business. In their quest for effectiveness, banks have invested billions of dollars in their compliance programs.  However, given the rapidly evolving requirements, it has been difficult to invest these funds with a view towards a long-term, scalable solution.  Almost nothing has been done in terms of developing standards or best practices benchmarks as each bank has tended to tackle financial crime compliance on its own, in an individual and bank-centric way.  Much of the cost and effort has been duplicative – each bank, in effect, inventing its own wheel.  The result is ballooning costs and redundancies.

The inefficiency of plowing investment into solving the same industry-wide problems is abundantly apparent, but it does not have to be the status quo.  Compliance is not a competitive field.  While each bank must be compliant, being compliant does not confer a competitive advantage upon any bank.  Instead there needs to be a marked shift in the industry's approach to compliance. The cost and inefficiencies of financial crime compliance are motivating banks to move from standalone, proprietary solutions towards collaborative, utility approaches.  Banks realize that they need to work together on these issues to increase both effectiveness and efficiency.  An industry-wide utility approach can help crystallize best practices and also serve as a forum for further innovation.  Standardized solutions can unlock economies of scale.  While banks will benefit from efficiency and cost perspectives, regulators will also benefit as banks working together can create a system more capable of effectively enforcing financial sanctions across the global financial system.

[acams-aml]

ACAMS announces International Panel on Global Sanctions

Sanctions compliance is becoming ever more challenging.  ACAMS international panel tackles the issue head on with an excellent session at our European conference this week. As Eric Sohn, one of our sanctions experts highlighted, we are saving some of the best to last. Or, put another way, ensuring that each day of our conference is jam packed, from start to finish, with content that’s simply too good to miss.

Complying with Global Sanctions Obligations

Moderated by Markus Schulz, Head of FCC Controls, Group Financial Crime Compliance at Standard Chartered Bank, this session will cover the following:

Creating a dynamic sanctions management program that addresses and adapts to evolving EU and OFAC requirements;

Updating your CDD controls to incorporate capital flight typologies originating from Russia and Ukraine;

Strengthening your sanctions screening program to spot and stop the deliberate circumvention of sanctions within your institution.

Presenters include:

Robert Cohen, Financial Crime Officer, GE Capital

Aga Polcyn, Head of Sanctions Advisory, Corporate & Institutional Banking Conduct & Regulatory Affairs, Royal Bank of Scotland

Eric Sohn, Director of Business Product, Dow Jones.

Complying with Global Sanctions Obligations takes place on Friday 29th May, 15.55 - 16.00.

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Legal 500 Zia Ullah announced as ACAMS Europe speaker

ACAMS is pleased to announce that Zia Ullah, a Partner at Eversheds International is speaking at #ACAMSEurope next week on “Zeroing in on Common Themes from Headline Making Law Enforcement Actions”.

Zia is a specialist in financial crime and a Partner in the Financial Services Disputes and Investigations team. He advises on a range of regulatory compliance issues with specific focus on Sanctions, Anti-Money Laundering (AML) and Anti-Bribery and Anti-Corruption (ABC). He was previously the global head of sanctions at Barclays.

His recent experience includes:

advising the UK branch of an international investment bank on US/EU sanctions on Belarus and Iran;

drafting an international sanctions guide for a global health insurer;

conducting an ABC review on behalf of a international bank;

advising an oil and gas operator on an internal investigation into alleged bribery and corruption and;

dealing with the SFO investigation that followed.

Zia is recognised by Chambers and Partners as a "Leader in the Field" of corporate crime and investigations. Chambers says that: "Impressed sources say he gets solutions for clients before problems start."

He is also rated as "approachable" and "going the extra mile for clients" in the Legal 500. He has written articles on compliance in the financial services sector for numerous magazines and has also been quoted in national newspapers as well as appearing on radio and television.

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Peering into the Sanctions Crystal Ball

#ACAMSEurope speaker blog 

ACAMS, in its infinite wisdom, has left the best for last at this year’s European conference. For the stalwart among you who choose to stick it out and attend our session, you will gain unique insight into what you should be planning and budgeting for over the next few years.

On the enforcement front, a pair of conflicting developments will require continued vigilance for financial services firms with operations in New York. The good news is that, despite the recent settlement between U.S. agencies and Commerzbank and rumored future enforcement actions driven by OFAC, it is likely that the age of “mega-fines” is drawing to a close. There is no evidence yet of any investigations related to conduct after 2012, when European and U.S. sanctions on Iran became more harmonized. The more uniform regulations will be unlikely to incent firms to find loopholes which are legal on this side of the Atlantic but which are prohibited on the other.

The bad news is that firms are now just realizing that a settlement with regulators is not really the end of the road. As has become abundantly clear, the New York Department of Financial Services (NY DFS), being unencumbered by legislation circumscribing what actions it can take, is emboldened to get guilty verdicts on the record, as well as mend firms’ compliance departments with the installation of impartial monitors, as well as with terminations and bans of employees involved in the violating conduct. Additionally, the additional NY DFS actions against multiple firms after the original agreement, as well as the Justice Department’s voiding of the UBS Libor settlement, underscores the need for imposing tighter internal controls and auditing of compliance functions.

As troubling as all this may be for regulated firms, it pales, however, to the ominous storm clouds emanating from Eastern Ukraine and Crimea. While sanctions regulations across the globe have traditionally barred dealings with firms “owned or controlled” by those explicitly listed on governmental lists, there was never explicit guidance as to how to interpret that. Even now, with limited exceptions, most regulators leave the wording vague, but the potential liability crystal-clear. However, it is reasonable to assume that the world will follow OFAC and the E.U.’s lead over time. Additionally, one should plan for that guidance to become the regulatory enforcement hurdle for all sanctions programs – most OFAC sanctions program descriptions already provide hyperlinks to the amended guidance from August 2014 which mandates aggregated 50% ownership as the standard for determining ownership and control.

Similarly, the OFAC Crimean sanctions are far-reaching, but only explicitly designate a single firm.  At the same time, OFAC is very explicit on interdicting everything that would violate the terms of Executive Order 13685, which established the program. The lack of specificity leaves significant room for risk-based guessing, ranging from stopping Crimean transactions by explicit references to its cities to designating all Russian cargo vessels on the assumption that they might stop at Sevastopol. One should expect this trend to also continue – maximum enforcement, minimal guidance.

But, wait – is there more? While we can’t be sure, of course, there are a couple of developments that might portend future trends.

One regulator in the Asia/Pacific region’s standard for gathering Ultimate Beneficial Ownership (UBO) data is at the 25% level. When queried about what constitutes “owned or controlled” in their sanctions regulations, they asserted that industry practice ranged from 10 to 25%, and referred to the UBO standard. It would be no shock to see “owned and controlled” shift from an emphasis on ownership to one of effective control.

Another disturbing, although not surprising, development is the offloading of ownership stakes to unsanctioned relatives, such as Roman Rotenberg’s purchase of Hartwall Arena from his sanctioned father and uncle (as reported in The Economist). Will regulatory guidance expand to cover relatives and close associates? That will depend on how extensive such evasion becomes, but it would not be a jaw-dropper.

See what you might miss if you don’t stay till the bitter end?

 Eric A. Sohn, CAMS, Director of Business Product, Dow Jones Risk & Compliance, New York, NY, USA, [email protected]

[acams-aml]

Handy guide to pre-conference workshop programme

WEDNESDAY, 27 MAY 2015: CAMS PREP

08.00 – 9.00 - Plaza Room Foyer

CAMS Prep Check-In

09.00 – 16.30 - Plaza Suite  1-3

CAMS Prep

Facilitators:

Jurgen Egberink, Head of Compliance Risk Management  and Awareness, Director, Swiss  Reinsurance Company

Yevgeniya  Balyasna – Hooghiemstra, CAMS, Founding Partner, Radosyn

 WEDNESDAY, 27 MAY 2015

PRE- CONFERENCE WORKSHOPS (Separate registration required. Workshop registration includes educational materials and networking and refreshment breaks. Note these sessions are not open to members of the press)

08.00 – 13.00 - Plaza Suite Foyer

Pre-Conference Workshop Check-In - 09.00 – 12.00 Plaza 10-13

WORKSHOP A:

Optimising Your AML Programme to Successfully Manage Correspondent Banking Relationships

Facilitators:

Emma  Hardaker, Director, Promontory Financial Group

Saskia Rietbroek, MBA, CAMS,  President, AML Services International

 13.00 – 16.00 Plaza 10-13

WORKSHOP B:

Conducting an Effective Financial Crime Investigation

Facilitators:

Stephen Payne, Group Financial Crime Manager, RSA

Danny Sanhye, CAMS, Head of Regional FIU – Europe,  HSBC

Programme and speakers are subject to change. Please visit amleurope.org for the latest updates.

[acams-aml]

Confirming ACAMS Europe conference agenda for Day 2

FRIDAY, 29 MAY 2015 - MAIN CONFERENCE DAY TWO

For full details of the conference agenda online click here

07.30 – 16.00 - Westminster Ballroom  Foyer

Registration Desk Open- Name Badge courtesy of FinScan. Conference Bag courtesy of SWIFT.

07.30 – 14.40 - Westminster Ballroom  3-4 Exhibit Hall Open

07.30 – 08.30 - Westminster Ballroom  3-4 Networking Breakfast in Exhibit Hall

Plenary Sessions

08.30 – 08:40 - Westminster Ballroom  1-2

Opening Remarks

08.40 – 09.55 - Westminster Ballroom  1-2

Leveraging  AML Controls to Safeguard Your Institution against Fraudulent Transactions

Moderator:

Peter Hazlewood, Global Head of AML Compliance, HSBC

Presenters:

Alexon Bell, Compliance Solution Director EMEA & AP, SAS

Rod Stone, Former Assistant Director of the  Organised Crime National Coordination Unit, HM Revenue and Customs Agency  (HMRC)

09.55 – 10.25 - Westminster Ballroom 3-4 Networking  and Refreshment Break in Exhibit Hall

Concurrent Sessions

10.25 – 11.40

1. Westminster Ballroom 1-2

Adhering to  International and Regional Anti-Bribery and Corruption Laws

Moderator:

David Clark, Financial  Crime Leader, Capital International Compliance, GE Capital

Presenters:

Louise Delahunty, European  Counsel, Sullivan & Cromwell LLP

Jurgen  Egberink, Head of Compliance Risk Management and Awareness, Director, Swiss Reinsurance Company

Rick Small, CAMS, Executive Director,  Anti-Money Laundering and Financial Crimes, EY

2. Plaza 1-3

Emerging Trends in the KYC space; a look into today's issues and tomorrow's  solutions Presented by SWIFT

Presenters:

Bart Claeys, Head of KYC  Compliance Services, SWIFT

Olivier Goffard, Head of Group Compliance &  Ethics, Director, Euroclear

Kwaku Osafo, COO, Global Banks, Financial  Institutions, Lloyds Bank Commercial  Banking

Thomas Piontek, Head of Regulatory Services, Commerzbank AG

11.40 – 12.55 - Westminster Ballroom Foyer Networking Luncheon

12.55 – 14.10 - Westminster Ballroom  1-2

AML and Financial Crime Hot Topics

Moderator:

John Byrne, Esq., CAMS,  Executive Vice President, ACAMS

Presenters:

Alexander Bogensperger, CAMS, Global Anti-Money  Laundering Coordinator, Allianz SE

David Clark, Financial Crime Leader, Capital  International Compliance, GE Capital

Neil Jeans, Global Head of Policy & Standards, Thomson Reuters

14.10 – 14.40 - Westminster Ballroom  3-4 Networking and Refreshment Break in Exhibit Hall

14.40 – 15.55 - Westminster Ballroom  1-2

Complying  with Global Sanctions Obligations

Moderator:

Markus Schulz, Head of FCC Controls, Group Financial  Crime Compliance, Standard Chartered  Bank

Presenters:

Robert Cohen, Financial Crime  Compliance Officer, GE Capital

Aga Polcyn, Head of Sanctions Advisory, Corporate  & Institutional Banking Conduct & Regulatory Affairs, Royal Bank of Scotland

Eric Sohn, Director of Business Product, Dow Jones

15.55 – 16.00 - Westminster Ballroom 1-2

Closing  Remarks and Conference Takeaways

Programme and speakers are subject to change. Please visit amleurope.org for the latest updates.

[acams-aml]

ACAMS Europe conference - Final agenda for Day 1 - 28th May

THURSDAY, 28 MAY 2015: MAIN CONFERENCE DAY ONE

BELOW ARE FULL DETAILS OF ALL THE SESSIONS TAKING PLACE. YOU CAN ALSO BOOKMARK THIS LINK WITH THE FULL AGENDA FOR ALL THREE DAYS.

07.30 –  18.20 - Westminster Ballroom Foyer

Registration Desk Open - Name Badge courtesy of FinScan. Conference Bag courtesy of SWIFT.

07.30 –  19.35 Westminster Ballroom  3-4

Exhibit Hall Open

07.30 – 08.30 Westminster Ballroom  3-4

Networking Breakfast in Exhibit Hall

Plenary Sessions

08.30 – 08.40 Westminster Ballroom 1-2

Welcome Remarks

08.40 – 09.55 Westminster Ballroom 1-2

Preparing for the Implementation of the Fourth EU Money Laundering Directive

Moderator:

John Byrne, Esq., CAMS, Executive Vice President, ACAMS

Presenters:

Dr. Michelle Frasher, Ph.D, Non-resident Visiting  Scholar, European Union Center, University  of Illinois

Jennifer Hanley- Giersch, CAMS, Managing Partner, Berlin Risk Limited

David Swanney, Director, British Bankers’ Association

09.55 – 10.25 Westminster Ballroom 3-4

Networking  and Refreshment Break in Exhibit Hall

10.25 – 11.40 Westminster Ballroom 1-2

Zeroing in  on Common Themes from Headline-Making Enforcement Actions

Moderator:

Kieran Beer, CAMS, Editor in Chief, ACAMS moneylaundering.com

Presenters:

Matthew Schwartz, Partner,  Boies, Schiller & Flexner

Paul Sharma, Managing  Director, Alvarez & Marsal

Rick Small,  CAMS, Executive Director, Anti-Money Laundering and Financial Crimes, EY

11.40 – 12.10 Westminster Ballroom 1-2

Keynote Address

Maria Woodall, Detective Superintendent, Head of  Operations and Funded Units, City of  London Police

12.10 – 13.25 Westminster Ballroom Foyer

Networking  Luncheon

Concurrent Sessions

13.25 – 14.25

1. Westminster Ballroom 1-2

Fine-Tuning  Your Institution’s Risk Assessment Practices

Moderator:

Jurgen Egberink, Head of  Compliance Risk Management and Awareness, Director, Swiss Reinsurance  Company

Presenters:

Yevgeniya Balyasna-Hooghiemstra, CAMS,  Founding Partner, Radosyn  

Emma  Hardaker, Director, Promontory Financial  Group

Timothy Minall, Chief Compliance Officer, UK,  GE Capital

2. Plaza 1-3

Making Sense of the Big Data Phenomenon

Presented by Oracle Financial Services

Presenters:

Sasi Mudigonda, Senior  Product Manager,

Oracle Financial Services

14.25 – 14.30 Move to Next Session

14.30 – 15.30

1. Westminster Ballroom 1-2

Creating a  Balance Between De-risking Policies and Financial Inclusion Initiatives

Moderator:

Yevgeniya Balyasna – Hooghiemstra, CAMS,  Founding Partner, Radosyn

Presenters:

Chrisol Correia, Director,  Market Planning, LexisNexis Risk Solutions

Danny Sanhye, CAMS, Head of Regional FIU – Europe, HSBC

2. Plaza 1-3

Using Case  Studies to Overcome Challenges with AML Research

Presented by Bureau van Dijk

Presenters:

Henrik Bertelsen, Managing  Director – Scandinavia, Bureau van Dijk

Ted Datta, Strategic  Account Director, Bureau van Dijk

15.30 – 16.00 Westminster Ballroom 3-4

Networking  and Refreshment Break in Exhibit Hall

16.00 – 17.00

1. Westminster Ballroom 1-2

Addressing  the Challenges of AML Model Risk Management

Moderator:

Kieran Beer, CAMS, Editor in Chief, ACAMS moneylaundering.com

Presenters:

Karim Rajwani,  Managing Director, Global Head AFC IT Strategy, Deutsche Bank

Markus Schulz, Head of FCC Controls, Group Financial Crime Compliance, Standard  Chartered Bank

2. Plaza 1-3

Strategies to Enhance Relationships  with Regulators & Prosecutors

Presented by Exiger

Moderator:

Lisa Osofsky, Managing  Director & European Regional Chair, Exiger

Presenters:

Nigel Coles, Managing  Director, Exiger

Vesna McCreery, Managing  Director & Asia-Pacific Regional Chair, Exiger

Aaron Stephens, Partner,  Litigation & Dispute Resolution, Berwin Leighton Paisner

17.00 – 17.05 Move to  Next Session

17.05 – 17.35 Westminster Ballroom 1-2

Keynote  Address

René Bruelhart, President,  Financial Intelligence Authority (AIF), Vatican  City

17.35 – 18.35 Westminster Ballroom  1-2

Protecting  Your Institution from the Latest Terrorist Financing Activities

Moderator:

Saskia Rietbroek, MBA, CAMS, President, AML Services International

Presenters:

Fabrice Borsello, Chief AML Risk Officer and Vice President, Western Union Payment Services Ireland  Ltd. / Western Union Business Solutions

Andy McDonald, Head of Specialist  Investigations, SO15 Counter Terrorism Command, New Scotland Yard

Justine Walker, Director, Financial  Crime (Sanctions and Bribery), British Bankers’ Association

18.35 – 19.35 Westminster Ballroom 3-4

Networking Reception  in Exhibit Hall

[acams-aml]

Mobile App for ACAMS’ European conference is now live

To help you plan your visit to next week’s 11th Annual AML & Financial Crime Conference – Europe, the ACAMS Mobile App is now live:

How to download The App Available for iPhone, iPad, Android and Blackberry.

Visit App Store or Google Play and search for ACAMS Conferences

Select ACAMS 11th Annual AML & Financial Crime Conference – Europe

Login to the app using your usual email address as username and the following case sensitive password: EU2015

For queries and further questions please contact Iliana Colón by emailing [email protected]

[acams-aml]

Detecting and deterring criminal transactions originating from VAT carousel fraud

#ACAMSEurope SPEAKER BLOG

By way of background there are approximately 160 countries in the world operating either the VAT or GST systems and none are immune from the risk of VAT carousel fraud. This type of fraud is also known as Missing Trader Intra Community (MTIC) fraud, or simply referred to as cross border VAT fraud. Rod Stone OBE, a panelist in the “Leveraging AML Controls to safeguard your institution against fraudulent transactions” session outlines the challenges of combating VAT carousel fraud.

Although referred to as ‘missing trader’ fraud, the so called missing trader is not actually the primary beneficiary to the fraud but rather the device by which the fraud is perpetrated. The actual beneficiaries are the other participants in the transactions and those who orchestrate the fraud. Europol estimates that VAT fraud costs EU Member States approximately €60 billion annually.

Many types of fraud, and particularly revenue frauds, exploit exemptions and reliefs that are available to facilitate business. However, in return, business is now expected to ensure that organised criminal groups (OCGs) do not abuse the entitlements that business has been given. If they fail to do so, and it can be demonstrated that a business knew or should have known that they were participants in a fraud, they can lose their right to claim their entitlement.  As a result the right to VAT input tax deduction, VAT exemptions such as zero rating or entitlement to the reverse charge procedure, can be reversed leaving a significant and enforceable VAT debt.

To protect their clients from the application of the abuse of right principle, some advisers emphasise the need for their clients to undertake due diligence before entering into transactions. However they do so without understanding what is actually required. Consequently for many businesses due diligence is limited to confirming the identity and credit worthiness of prospective counterparties.   Confirming a person’s identity and creditworthiness does not mean they are not participants in a fraud.

The UK Court of Appeal, in the matter of Mobilx, said that VAT Tribunals (Lower Court) should not unduly focus on the question of whether a trader has acted with due diligence. Even if a trader has asked appropriate questions, he is not entitled to ignore the circumstances in which his transactions take place if the only reasonable explanation for them is that his transactions have been, or will be connected to fraud.

The danger in focusing on the question of due diligence is that it may deflect a VAT Tribunal from asking the essential question posed in Kittel, namely, whether the trader should have known that by his purchase he was taking part in a transaction connected with fraudulent evasion of VAT. The circumstances may well establish that he was.

VAT carousel fraud and the associated money laundering go hand in hand. The VAT stolen from this type of fraud is handed down the supply chain and dissipated off shore. Subsequently it enters the legitimate financial system and is used to maintain lifestyle.  VAT carousel fraud is also used to launder the money from other forms of criminality. Consequently, financial institutions may identify potential VAT carousel frauds during commodity trading, during client account review or because of the characteristics of financial transactions. Other parties may identify suspicious activity during audits or when criminal money enters the financial system or during the purchase of assets.

In order to minimise their potential liability, a business needs to understand the risks and to have in place the appropriate risk systems to adequately review prospective counter parties and to measure the integrity of the supply or financial transactions. The extent to which they delve will depend on the level of perceived risk.

Rod Stone OBE is a panellist in the “Leveraging AML Controls to safeguard your institution against fraudulent transactions” session taking place on Thursday 28th May.

 About the author

Rod Stone OBE was formerly an Assistant Director of HM Revenue and Customs (HMRC) Organised Crime National Coordination Unit and had oversight of VAT carousel fraud. During his tenure he was a member of the EU Eurofisc and Europol groups on VAT carousel fraud. Eurofisc consider administrative solutions, whilst Europol consider criminal solutions to VAT carousel fraud.

During 2005, Mr Stone OBE was responsible for the development and implementation of the abuse of right principle to address VAT fraud and particularly VAT carousel fraud.  The European Court of Justice subsequently confirmed the use of this principle by tax administrations in its July 2006 judgement in the matter of Axel Kittel. The application of the abuse of right principle in the UK contributed to the recovery of more than £3.2bn and a decline in the level of tax losses in the UK generated by this type of fraud.

Mr Stone OBE has been recognised by the Court of Appeal as an expert in his field. Since leaving HMRC he has continued to lecture at the European Police College (CEPOL) and advise law enforcement agencies and tax administrations about revenue frauds. He has been engaged by 4 Eyes Ltd, a London based firm of specialist fraud and compliance advisors, to provide support to litigators and businesses and to provide expertise on supply chain integrity.

Mr Stone OBE will address the conference about the mechanics of VAT carousel fraud, the impact on business and the current risks and indicators of fraud. He will be available to answer questions from delegates.

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Join #FightFinCrime at ACAMS’ European conference with two interactive sessions

ACAMS is pleased to announce two interactive sessions in the programme on Friday 29th May.

Anti-Bribery and Corruption Laws

This session will feature a panel discussion entitled “Adhering to International and Regional Anti-Bribery and Corruption Laws,” and explore the following:

Analysing the impact of the UK's new anti-corruption programme on your compliance program

Identifying common themes from the first UK Bribery Act prosecution to enable you to enhance your anti-bribery and corruption programme

A deep dive into recent corruption investigations, including the FIFA world cup, to understand their impact on financial institutions.

Moderated by David Clark, Financial Crime Leader at GE Capital International, the discussion will feature panelists including:

Louise Delahunty, European Counsel, Sullivan & Cromwell

Jurgen Egberink, Head of Compliance Risk Management and Awareness and a Director at Swiss Reinsurance Company

Rick Small, Executive Director, Anti-Money Laundering and Financial Crimes for EY.

The “Adhering to International and Regional Anti-Bribery and Corruption Laws” session takes place on Friday 29th May between 10:25 and 11.40.

 Financial Crime Hot Topics

Informed by observations and analysis generated throughout the 2-day programme, ACAMS’ Executive VP John Byrne will moderate one of the conference’s final sessions, an interactive discussion debating the “Hottest Topics in Financial Crime and AML”.

Driven by input from delegates, a panel of industry experts will offer insight into the latest AML and financial crime challenges that attendees are nominating in the two weeks prior to the conference, including, for example: sanctions screening controls, record breaking enforcement actions and global regulatory guidance.

Delegates attending this debate will walk away with some of the most informed and up-to-date financial crime intelligence available anywhere.

Presenters joining John Byrne include:

Alexander Bogensperger, CAMS, Global Anti-Money Laundering Coordinator at Allianz SE

David Clark, Financial Crime Leader at GE Capital International

Neil Jeans, Global Head of Policy & Standards at Thomson Reuters.

The “AML and Financial Crime Hot Topics” session will take place on Friday 29th May between 12:55 – 14:10.

Join us at the ACAMS’ European conference for #FightFinCrime.

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Indirect Tax Expert and former HMRC policy advisor Rod Stone OBE will speak at ACAMS’ European conference

ACAMS is delighted to announce that Rod Stone OBE, the former Assistant Director of the Organised Crime National Co-ordination Unit at HMRC will be speaking at the forthcoming European conference in London.

An HMRC (HM Revenue & Customs) Indirect Tax Compliance Officer and Senior Policy Advisor for over 40 years, Mr. Stone was recognised as one of their foremost investigators and VAT compliance experts. He is now an independent indirect tax expert and the founder of Part Five Ltd, a management consultancy specialising in providing indirect tax solutions to corporate entities, litigators and law firms regulated by SRA. Rod Stone is also an internationally acknowledged authority on VAT / GST compliance, cross border VAT / GST fraud (Missing Trader Intra Community (MTIC) fraud, other forms of complex VAT / GST fraud and associated money laundering and the development of administrative compliance solutions and interventions.

Rod Stone OBE is recognised as an expert in his field and has taken the podium at the OECD’s Global VAT Forum, and events hosted by US Department of Justice, the Institute of Advanced Legal Studies, the EU Commission and the World Customs Organisation. He has extensive experience of court procedures and given evidence in more than two hundred criminal prosecutions and appeals to the First Tier Tribunal.

In 2012, Mr. Stone was awarded the OBE in recognition of his contribution and expertise.

Rod Stone will be joining the panel discussion “Leveraging AML Controls to Safeguard your Institution against Fraudulent Transactions” together with Alexon Bell, Compliance Solution Director EMEA & AP SAS.  The session will be moderated by Peter Hazlewood, Global Head of AML Compliance at HSBC.

Key topics being discussed will include:

Detecting and deterring criminal transactions originating from VAT carousel fraud

Utilising your institution’s financial intelligence data to spot and stop illicit activities using e-money

Understanding new triggers that may indicate fraudulent activity by criminal organisations.

The session: Leveraging AML Controls to Safeguard your Institution against Fraudulent Transactions will take place on Friday 29th May from 08:40 – 09:55.

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Vatican’s President of Financial Intelligence, Rene Bruelhart named as keynote speaker

ACAMS is very pleased to welcome Rene Bruelhart, President of the Financial Intelligence Authority (AIF) at Vatican City, as a keynote speaker at the 11th Annual AML & Financial Crime Europe conference, taking place in London on 28th and 29th May.  

Since beginning his Vatican tenure two years ago, Mr. Bruelhart has revised its banking procedures and imposed globally accepted standards of transparency on the Holy See. During a keynote Q&A discussion due to take place on Thursday 28th May, Mr Bruelhart will outline the primary measures implemented to facilitate the Vatican’s ability to return to the international financial system.

 The Vatican’s recent financial history

Prior to Mr. Bruelhart’s appointment and the appointment of other senior figures, all of whom were instrumental in bringing about change, the Vatican was perceived as a high-risk institution within the financial services industry. This was one of the outcomes following the recent EU financial crisis, during which institutions throughout Europe, including the Vatican bank, were scrutinized for their financial conduct.

As part of its routine due diligence work, The Bank of Italy uncovered a number of transactions with the Vatican bank that it considered ‘troubling’.  This triggered a chain of events, which included some banks cutting ties with the Holy See. Meanwhile, the Italian authorities maintained their pressure on the Vatican, which is a sovereign state, to adopt more transparent financial methods.

For example, JP Morgan Chase severed ties with the Vatican bank because of a lack of transparency surrounding funds being moved around the world on its behalf by the US bank. Then in July 2012, Moneyval (Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism) ruled that regulators established by Pope Benedict lacked the legal powers and independence to monitor and sanction the Vatican’s financial institutions.

Shortly after this ruling, and as a result of pressure by Italian authorities, Deutsche Bank, which operated cash machines for the Vatican, withdrew its services and shut down the ATMs it operated throughout the Vatican.

In order to help address these issues, Pope Benedict appointed Rene Bruelhart as President of the Financial Intelligence Authority (FIA) at Vatican City. Well known for his anti-money laundering expertise, Rene has trouble-shooted at a number of high profile organizations. He previously held the position of Director of Financial Intelligence for the Lichtenstein FIU for 8 years and also served as Vice Chairman of the Egmont Group, the global network of national financial intelligence units. Prior to this, he served as coordinator for the taskforce of countering terrorism financing in Lichtenstein and is head of the country’s Moneyval delegation.

During this conference session, taking place on Thursday 28th May between 17:05 – 17:35, Rene Bruelhart will present his key achievements and take questions from delegates. http://www.amleurope.org/2015/programme.asp.

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ACAMS EU conference lays foundation for future partnerships with LEAs

ACAMS (Association of Certified Anti-Money Laundering Specialists) will host its 11th Annual European conference: Innovative Tools to Combat Financial Crime, on 28th and 29th May 2015 in London.

A strong public private partnership between law enforcement agencies (LEAs) and the AML profession is one of the best ways to fight financial crime successfully and in particular, mitigate the growing risks from terrorist financing. As a first step in forging strong links between LEAs and the AML community, ACAMS is delighted to announce Detective Superintendent Maria Woodall, Head of Operations and Funded Units, Economic Crime Directorate at the City of London Police as a keynote speaker on Thursday 28th May.

In addition, later that day, LEAs will join senior representatives of the banking industry to debate: How to protect your institution from the latest terrorist financing activities.

Moderated by Saskia Rietbroek, MBA, CAMS and President of AML Services International, this session will address:

Understanding state sponsored terrorism and its global effect on financial institutions

Spotting and stopping transactions resulting from charitable donations intended for terrorist organisations

Identifying and managing the banking risks posed by foreign fighters.

Panelists for this discussion, taking place at 17:35, include:

·      Andy McDonald, Head of the UK National Terrorist Financial Investigation Unit (NTFIU) at New Scotland Yard

·      Justine Walker, Financial Crime Director (Sanctions and Bribery) at the British Bankers Association

·      Fabrice Borsello, Chief AML Risk Officer at Western Union.

Find out more about Thursday’s conference agenda: http://www.amleurope.org/2015/programme.asp

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An ever-present challenge for AML professionals and the financial sector, risk management is a prominent theme of this year’s ACAMS EU conference. Weighing up the risks of banking relationships with the implications of de-risking, interpreting the latest FATF and FCA guidance and how to develop...