Know Your Customer (and AML)

Course Content:

The Scale of the Problem:

• Global “black economy”
• Is it victimless?
• Lessons from recent scandals, including Worldcom, Parmalat, Enron and Madoff
• So what is “money laundering?”
• Exercises to demonstrate the new dimensions to money laundering.

Anti Money Laundering

• Origin
• Definition
• Techniques and impact on banks
• Structuring & integration

The Global Response:

• The FATF and its Regional Groups
• The “40 + 9” Recommendations
• The World Bank and OECD measures
• UN and related international Treaties and Agreements
• The EU response and Wolfsberg Principles
• Transparency International/Egmont/Financial Stability Forum/IOSCO/OGBS etc.

KYC

• Definition of a Customer
• Transaction profile
• Organisational structure
• Important KYC framework
• Operating guidelines
• Standards for supervisors & Banks

Essential Elements of KYC Standards

• Customer acceptance policy
• Customer identification
• General identification requirements
• The role of supervisors
• Guidelines for opening accounts
• Qualitative data
• Joint accounts
• Minor accounts
• KYC for existing accounts
• KYC for low income group customers

Specific Identification Issues

• Trust nominee and fiduciary accounts
• Corporate vehicles
• Introduced business
• Client accounts opened by professional intermediaries
• Politically exposed persons
• Non face to face customers
• Correspondent banking

Elements of a Risk Based Approach:

• Local legislation
• Assessing vulnerabilities and risk
• The Risk Matrix
• Customer due diligence
• Client take on
• Relying on the others and “equivalence”
• Monitoring people by staff and/or IT
• Reporting internal and to law enforcement/local authorities
• The role of the MLRO/Nominated Officer (NO)
• Management Information (M.I.) and oversight

Constructing the KYC Framework

• Policies
• Roles and Responsibilities
• Senior Management and M.I. requirements
• The MLRO/NO (or equivalent) challenge!
• Risk Assessments and Procedures

Constructing the Anti-Money Laundering (AML) Framework

• Exercises in constructing risk assessments
• Training and Awareness
• Monitoring and record keeping
• Reporting and dealing with the authorities
• Review and evaluation
• Customer research
• Suspicious transactions

Applying a Risk-Based Approach, to Personal and Business Customer Due Diligence

• A series of case studies
• Discussion and Questions

Applying a Risk-Based Approach to Corporate and Trust Structures Due Diligence:

• Complications of PEPs
• Enhanced due diligence
• Offshore “situations” and issues

Implementing and Managing the Total KYC & AMLs:

• Due diligence (on-going)
• Record keeping
• Training
• Monitoring
• Reporting
• Questions/Feedback/Discussion

Case Study: A practical case study to highlight the practical realities of a “joined-up” approach.

Role of Internal/External Audit, etc.

• Providing Assurance
• Adding Value
• A common understanding of risk
• Lessons from UK failures
• The contribution of H.R., Training, Risk, I.T. and others

International Sanctions

• The UN and EU and local legislation
• Purposes of Sanctions
• Linkage to ML and other financial crime
• What to do?
• How to do it? Exercises & case studies

The US Dimension

• Extra territoriality- US PATRIOT ACT
• Correspondent Banking; New York State Law
• OFAC and Enforcement
• FCPA, bribery and corruption
• US domestic AML legislation
• US civil remedies under the US Code and Anti-Terrorism Act

Illustrations and case studies

The Future – Plenary Session

• Offshore- G20/G8 etc.
• Terrorism
• Proliferation of WMD
• Proliferation of conventional arms
• Tax issues
• International Enforcement
• Questions & Final Wrap-up of course.