Steve Ingram. AML - The Expectations, The Examinations and the Regulatory Requirements

Transcription

1 Technology and Innovation for Banking & Financial Services Conference 07 Steve Ingram Partner, AML - The Expectations, The Examinations and the Regulatory Requirements 14 June Page 1

2 What are the top AML implementation challenges for /2008? March Update Policies and procedures Sanctions Compliance program Training and awareness (exaction) Products Risk Profiling Geography/Jurisdictions Transaction monitoring Board Oversight Employee Due Diligence KYC Importance of issue Independent Review Correspondent Banks International Fund Transfers 3 rd Party Due Diligence Change management and people Business as usual Record Keeping Delivery channels Entity Industry Implementation challenge Page 2

3 Top Five AML implementation challenges Risk Profiling entity 2. Risk Triggers 3. Compliance Programmes 4. Transaction monitoring 5. Training and Awareness 1. Transaction Monitoring 2. KYC 3. 3 rd Party Due Diligence 4. Change Management and People 5. Business as usual Page 3

4 Compliance: the challenges; the realities Is your workload increasing as your organisation s understanding increases? Do you have a full, current and accurate list of all products and services offered across your organisation? Breakdown by reporting entity Breakdown by reporting entity Other Other Page 4

5 The challenges; the realities Do you expect a significant impact on front office procedures? Do you see business benefits in the AML/CTF Legislation? Breakdown by reporting entity Breakdown by reporting entity Page 5

6 The challenges; the realities Estimation of implementation cost Do you have approval for this budget? 125m m m 21% March 10-50m 27% 5-10m 0-5m 6% 39% March Don t know Confidence of estimate: 6% LOW HIGH 0% 20% 40% 60% 100% Page 6

7 The challenges; the realities How many full time equivalents (FTE s) will you need for Business as Usual? Estimation of annual AML/CTF ongoing costs? > 10m m 1 5m < 1m Don t know 50+ Don't know Confidence of estimate: LOW HIGH Page 7

8 Peer Comparisons Is your Steering Committee effective? Are your business units actively engaged? Breakdown by reporting entity Breakdown by reporting entity Page 8

9 What have we learnt from overseas experiences? Have you taken steps to leverage overseas experience? Page 9

10 What have we learnt from overseas experiences? Training The greatest return for expenditure is in effective training programs. Electronic training is good for awareness, but the features of effective training have been: Classroom training using case studies and typologies Attendance by all those impacted eg front office, IT, internal audit, risk Attendance by senior stakeholders in the organisation Page 10

11 What have we learnt from overseas experiences? Regulation When the Regulator takes action it is normally the Compliance Officer who loses their job. The issues causing the Regulator to act usually arise from the actions of front-line staff and hence accountability needs to be more clearly defined for success Industry compliance activities accelerated after the Regulator made an example of particular organisations If your project s focus is cost, you are focussing on the wrong component to be successful Page 11

12 What have we learnt from overseas experiences? Technology Organisations all over the world have looked to derive business benefits through AML/CTF - none have yet done so Many organisations invested heavily in automated Transaction Monitoring System (TMS) solutions with complex functionality. In many cases a more basic system would have better served their needs Many organisations implemented a TMS solution to discover that the quality of data required significant remediation before meaningful results could be observed Page 12

13 Fundamentals to implementing a risk-based approach Ascertain your organisation s risk appetite Secure the engagement of top management in the AML/CTF program A risk assessment tool model is vital Don t focus entirely on IT Page 13

14 Implementation Timing Page 14

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