AML/CFT Best Practices For Vietnam. accuity.com

Transcription

1 AML/CFT Best Practices For Vietnam accuity.com

2 Our history Accuity founded Accuity becomes the official registrar of ABA routing numbers Accuity acquired by CB.Net Reed Elsevier (now RELX) acquires Accuity, integrating it with Bankers Almanac Accuity launches first-to-market trade compliance innovation Accuity enables financial crime screening on R3 Corda blockchain platform Accuity to launch Firco Trade Compliance SEA Bankers Almanac established Bankers Almanac and the Wolfsberg Group create a central repository for bank due diligence information Accuity signs national contract with the U.S. Social Security Administration, marking the start of its PEC business Accuity acquires NRS Accuity acquires Fircosoft Accuity closes historic deal with PayPal Accuity to transform Bankers Almanac into advanced counterparty management solution

3 The RiskTech Quadrant is copyrighted August 2017 by Chartis Research Ltd. and is reused with permission. No part of the RiskTech Quadrant may be reproduced, adapted, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Chartis Research Ltd. RiskTech Quadrant is a registered trademark of Chartis Research Ltd. This RiskTech Quadrant graphic was published by Chartis Research Ltd. as part of a larger research report and should be evaluated in the context of the entire report. The Chartis report is available upon request from Chartis Research Ltd. Chartis Research accepts no liability whatever for actions taken based on any information that may subsequently prove to be incorrect or errors in our analysis. See for further information and terms of use.

4 Agenda AML/CFT Trends AML Screening Best Practices Trade Finance Perspective 3

5 Rise in regional conflicts

6 $5.6Tn and 200K Civilian deaths Cost of war on Al-Qaida Cost of War

7 Rising Complexities

8 Cost of compliance Staff Total Staff Yearly spend JPMC (2014) 235,000 $1.5B DB +500 (2014) 100,000 $1.3B CITI ,000 $1.7B UBS ,000 $0.9B HSBC (2014) 260,000 $1B Sources: FT, Dow Jones, WSJ, Bloomberg, annual reports, shareholder letters

9 Non Compliance can be expensive!

10 Planning an AML program

11 Policies & Procedures Basis - Past Regulator Bank Financial Intelligence Unit Policies Procedures Configuration KYC data transactions Systems

12 Compliance oversight from the regulator BANKS INSURANCE CORPORATES

13 Vietnam s Economy

14 Vietnam s Trade Economy Is Growing Faster Than Anywhere Else High Growth Cash Based Economy Top Import Export growth 13

15 Some Examples Cryptocurrency fraud involving VNĐ15 trillion (US$666 million) and affecting 32,000 people in HCM City in Vietnam Prosecuted three former officers of Vinashin Ocean Shipping Company (Vinashinlines) on charges of embezzlement in 2016 as well as an online gambling case in The probe found that the money was paid via legal and gateway payments exceeding VNĐ9.58 trillion (US$425.7 million). More than VNĐ9.29 trillion, or 97 per cent of the total, was transferred via pre-paid telecom cards and game cards. About VNĐ168 billion was sent from bank accounts. From , Việt Nam s criminal police force investigated 1,378 corruption and economic offense cases involving more than 3,400 offenders, reclaiming US$197 million for the state budget, according to a report by the People s Supreme Court 14

16 CONSIDERATIONS.. accuity.com 15

17 KYX Considerations Onboarding and periodic checks (On going monitoring) PEP/SOE and adverse media Ultimate beneficial ownership Traceability Comprehensive Audit trail Robust pre facto screening supports post facto monitoring efforts Domestic payments screening Advance checks, stripping detection, etc

18 KYX Considerations Trade Finance has become a popular instrument for Money Laundering as: The tremendous volume of trade makes it easy to hide individual transactions The complexity that is involved in multiple foreign exchange/cross border transactions The limited resources available to agencies wanting to detect money laundering

19 Resourcing a successful AML program Independence of Function Process KYC diligence AML Screening Transaction Monitoring Risk prioritization Independent testing procedures Minimize Manual processes Centralized systems Harmonise & automate Reporting Tech People AML expertise Visibility of AML issues Management Oversight Training mechanism

20 Most Critical Requirement. Board Level AML Steering committee Business Level Overseas implementation of a strong AML program Ensures the management prioritises requirements and provides the resources for implementation Ensure the program is executed monitored and controlled Seriousness and Focus shown by the Board & Senior Management is Critical for success of AML Programs

21 Point of Client Onboarding Quarter 1, 201X Quarter 2, 201X Quarter 3, 201X Quarter 4, 201X (Next Cycle) Current Developments - Process Automated On-Going Screening Up to 300 OFAC adds Up to 400 OFAC adds Up to 50 OFAC adds Up to 700 OFAC adds

22 Current Developments - Process Automated On-Going Screening API s Facilitate automation Trade Transactions Retail Cx Corporte Cx SWIFT Transactions Realtime API Realtime/ Batch AMH API Unified Compliance Screening Platform Sanctions List Private Lists PEPs/SOE Adverse News Enforcements data

23 Multiple challenges PEP Lists Private Lists Sanction List Dual Use Goods Vessels Multiple Compliance data Lists Account / Name Screening SWIFT/ Remittance Screening Trade Finance Screening Multiple Screening Systems at multiple locations Cost and time of maintaining different vendors! Fragmented Process Difficulty when changing source systems! User training costs Multiple reporting formats!

24 Screening Architecture Sanctions EDD/CTC Dual-use Goods PEPs / SOE Anti-social Forces Vessels Adverse Media Private Lists Sea Ports Vessel Tracking Scrubbing Engine (Rules + Algorithm) KYC On-boarding Customer Accounts Payment s SWIFT & Remittances Trade Finance Review Management Policy Process - Frequency

25 Current Developments - Process Automated On-Going Screening API s Facilitate automation Traceability Comprehensive Audit Trail Did you Screen? Against which watchlist? Who reviewed it? When was it reviewed? Why didn t it match? What was the filter configuration?

26 Current Developments False Positive Reduction Precision control on Screening False Positive Rules Risk Scoring Predictive Decisioning As in case of risk based approach specific rules and tolerance levels can be set for multiple datapoints This enables a tighter definition and lower false positives Create rules to eliminate the most common match patterns in your data set. Eliminate recurring matches through use of white listing Good File technology. Create Risk Scorecards according to your business rules. Prioritize higher score matches, eliminate lower score matches. Machine learning to reduce false hits Apply multiple machine learning models Get rule suggestions

27 Trade Specific Controls Trade Finance Profile Red Flags Prepare clients trading profile Prepare clients risk profile Provide the trade processing teams enough time to investigate Use red flags checklist Train staff of typical red flags (e.g. high risk juridictions/entities) Update Red Flags on a regular basis Goods Documents Vessels Develop a detailed dual use goods check programme Are the goods consistent with the business Develop and train on Dual use goods Scrutinize documents for under/over invoicing Incorrect description of trade elements Alteration of key information Check if the vessel or its beneficial owner is sanctioned Determine the history of the Vessel i.e. ports visited in the past Verify the Vessel name and IMO Monitor vessel movement to determine if the vessel calls of at a sanctioned or high risk port

28 27

29 Lets play!

30 Lets play!

31 Lets play!

32 Lets play!

33 Key take-aways It will get complicated There is a cost of non compliance that extends beyond just a monetary value Board and Management oversight is key to ensure a robust program Embrace technology and be COMPLIANCE READY

34 Helping Reduce Time, Cost, Resources

35 Thanks for your attention Cảm ơn