Institute of International Bankers 2010 Anti-Money Laundering Seminar

Transcription

1 Institute of International Bankers 2010 Anti-Money Laundering Seminar Corporate Governance and AML Program Structure Ellen Zimiles Managing Director Global Head of Investigations and Compliance May 20, 2010

2 Table of Contents I. Compliance Program Basics II. Establishing an Effective and Independent Compliance Function III. Compliance Program Management and Oversight IV. Independence of the Compliance Function V. Compliance Monitoring and Testing VI. Speaker Biography i

3 I. Compliance Program Basics A. Core elements of a comprehensive BSA/AML compliance program 1. Designated compliance officer 2. System of internal controls to ensure ongoing compliance 3. Independent testing of BSA/AML compliance 4. Training for appropriate personnel B. Implementing these requirements is not a one size fits all proposition, but risk based 1

4 II. Establishing an Independent and Effective Compliance Function A. Internal Audit: Traditionally independent function from business line B. Compliance: No traditionally consistent placement in the organization 2

5 II. Establishing an Independent and Effective Compliance Function Basel Committee on Banking Supervision Compliance and The Compliance Function in Banks (2005) ( Basel Report ) Adopted by U.S. in Federal Reserve Board Supervisory Letter SR-08-8 (2008) ( SR-08-8 ) Provides very clear guidance on how to establish an effective and independent compliance function Federal Financial Institutions Examination Council Manual (April 2010) ( FFIEC Exam Manual ) Applies the principles of Basel and the FRB letter to BSA/AML compliance 3

6 III. Compliance Program Management and Oversight A. Role of the Board 1. Approve the compliance program 2. Establish an effective culture and tone of compliance a. Compliance should have a prominent role in the organization b. The importance of compliance should be communicated across the organization and be evidenced through rewards and penalties See Basel Report, page 9 SR-08-8, page 7 FFIEC Exam Manual, page 163 4

7 III. Compliance Program Management and Oversight A. Role of the Board 3. Oversee structure and management a. Ensure that compliance has sufficient resources compliance should not be starved b. Ensure management is capable and qualified c. Ensure that management has appropriate authority, independence and access to personnel and information See Basel Report, page 9 SR-08-8, page 7 FFIEC Exam Manual, page 163 5

8 III. Compliance Program Management and Oversight B. Role of Senior Management 1. Implementation of the compliance program 2. Communication and reinforcing board established tone and culture See Basel Report, pages 9 and 10 SR-08-8, page 8 FFIEC Exam Manual, pages 163 and 164 6

9 III. Compliance Program Management and Oversight B. Role of Senior Management 3. Establishment of incentives to integrate compliance into management goals and compensation structure including a. Salary and bonus b. Hiring and firing 4. Reporting to senior management, the board or board committee on the program s effectiveness Authority to take appropriate corrective actions See Basel Report, pages 9 and 10 SR-08-8, page 8 FFIEC Exam Manual, pages 163 and 164 7

10 IV. Independence of the Compliance Function A. Banks have discretion as to how to structure and manage their compliance function 1. Imbedded in and report to the management of the business line 2. Centralized function at the corporate level 3. Dencentralized with dotted line reporting to Compliance Group B. Regardless of how the compliance function is structured it can only be effective if it is independent of business decisions and P&L considerations 8

11 IV. Independence of the Compliance Function C. To Whom Does Compliance Report 1. Legal 2. Risk 3. Operations 4. Business 9

12 IV. Independence of the Compliance Function D. Safeguards to ensure that compliance remains independent 1. Dotted line reporting to the corporate level (i.e., global head of compliance; compliance head of most prominent business line; internal audit) where compliance reports to business line 2. Active involvement in matters affecting AML risk (i.e., new products; review or termination of customer relationships; filing determinations) 3. Escalation and resolution process to address disputes between compliance and business line personnel 10

13 V. Compliance Monitoring and Testing A. Robust compliance monitoring and testing play a key role in identifying weaknesses in the compliance function and are critical in assessing the program s effectiveness B. The results of monitoring and testing should be reported to senior management and the board of directors C. The compliance program should include a mechanism to address and remediate the issues raised by monitoring and testing 11

14 VI. Speaker Biography Ellen Zimiles Managing Director Global Head of Compliance and Investigations Ellen Zimiles, Navigant s Global Head of Compliance and Investigations, and former co-founder and CEO of Daylight Forensic & Advisory, LLC, has more than 25 years of litigation and investigation experience, including 10 years as a federal prosecutor. Before forming Daylight, Ellen was a principal at a Big Four accounting firm, where she coordinated the forensic practice across all industry segments and was practice leader for the financial services industry. She is a leading authority on anti-money laundering programs, corporate governance, regulatory compliance, fraud control and public corruption matters. Ellen has worked with a multitude of financial institutions preparing for regulatory exams, developing remediation programs and assisting organizations as a regulatory liaison. Navigant Consulting, Inc. 1 Rockefeller Plaza New York, NY Phone: ezimiles@daylightforensic.com Before her Big Four experience, Ellen was an assistant United States attorney in the Southern District of New York for more than 10 years. She served in the civil and criminal divisions and was chief of the forfeiture unit for morethan six years. Ellen was responsible for many high-profile money laundering, fraud and forfeiture cases. In recognition for her contributions as a federal prosecutor, Ellen received the United States Department of Justice s John Marshall Award for Outstanding Service and the United States Department of Health and Human Services Integrity Award. Ellen earned a bachelor's degree at Brooklyn College and a law degree at Syracuse University College of Law, where she served as an editor of the law review. 12