Compliance: policy and implementation

1
Compliance policy and implementation
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Table of Contents

• slide
• Table of Contents 2
• AML General Overview 3
• Latvian Laws Regulations on AML 4
• Internal Guidelines and Procedures
• Overview 5
• Policies and Regulations 6
• Scheme 7
• Internal Guidelines and Procedures
• Compliance for Clients Banks 8
• Compliance for Corporate and Private
  Clients 9
• Policy Highlights
• Client Preferences 10
• Disclosure 11
• Transactions Monitoring 12
• Changes Modifications 13
• Educational Approach 14
• Compliance Department 15
• Executive Summary 16

3
AML General Overview

• In 2004 Latvia became a full member of EU
• Current Latvian legislature on AML, to which AS
  Latvijas Biznesa banka (LBB) fully adheres, is
  one of the most up to-date and complete
  international standards
• LBB and its major shareholder Joint Stock
  commercial bank Bank of Moscow (open joint
  stock company), one of the leading Russian
  commercial banks, have joined forces in
  implementing AML policies and monitoring clients.

4
Latvian Laws Regulations on AML

• The AML legislature of the Republic of Latvia is
  one of the most up to-date and strictest in
  Europe
• Credit Institutions Law
• Law on Prevention of Laundering of Proceeds
  Derived from Criminal Activities (Anti-Money
  Laundering Law)
• Criminal Law
• Recommendations of Latvian Financial Capital
  Market Commission (FCMC) on Development of
  Control Systems for Prevention of Laundering of
  Proceeds Derived from Criminal Activities and
  Counter-measures for Financing Terrorism
• Rules adopted by the Ministry Cabinet of The
  Republic of Latvia on Signs of Suspicious Deals
  and Transactions and Reporting on Thereof.
• Latvian Banking Association Guidelines

5
Internal Guidelines and Procedures Overview

• LBB has a complete set of procedures and
  regulations in place that are in accordance to
  the guidelines and regulations of the overseeing
  authorities
• All the compliance policies and regulations are
  inspected by independent international auditors
  Deloitte
• FCMC constantly monitors audits compliance
  related performance and clients activities
  throughout the year
• Internal Audit Department performs thematic
  checks in accordance to the plan, approved by the
  bank Executive Board.

6
Internal Guidelines and Procedures Policies
and Regulations

• The major document that regulates LBB AML
  activity is Policy for Prevention of Laundering
  of Proceeds Derived from Criminal Activity. The
  following documents have been developed and/or
  modified in accordance to the Policy
• Set of operational Regulations and Procedures
• General Rules of Client Servicing
• Account Opening Regulations for Clients
  Non-banks
• Account Opening Regulations for Clients Banks
• Regulation on Payments Processing.
• General Code of Practice (binded)
• Compliance Committee Guidelines
• Compliance Department Procedures.

7
Internal Guidelines and Procedures Scheme
Prevention of Laundering of Proceeds Derived from
Criminal Activity (AML) Control Organisation
Scheme
8
Internal Guidelines and Procedures Compliance
for Clients - Banks

• In order for the bank (or any other designated
  financial institution) to open a correspondent
  account with LBB, its required to produce valid
  and properly legalised copies of the following
  documents
• Statutes
• General banking or financial license, and
  licenses for particular operations
• Registration Certificate
• Authorised Signatures List with signatures
  specimen of authorised personnel as well as seal
  specimen
• Documents that confirm the rights of the
  authorised personnel to represent correspondent
  Bank and act on correspondent Banks behalf
• Latest available Annual Report
• Latest Financial Statements.
• Apart from the above mentioned standard
  documentation, LBB requests the client to provide
  the following papers

9
Internal Guidelines and Procedures Compliance
for Corporate and Private Clients

• In order for the private or corporate client to
  open current account with LBB, its required to
  produce valid and properly legalised copies of
  the following documents
• Identification Document (passport or ID card)
• Account Application Form.
• Apart from the above mentioned standard
  documentation, LBB requests the client to fill-in
  the following papers

10
Policy Highlights Client Preferences

• LBB is NOT servicing
• Companies and/or individuals involved in Money
  Laundering, criminal or fraudulent activities
• FATF blacklisted countries, companies and
  individuals
• Companies and individuals of questionable
  reputation, or, being of residence/origin from
  countries with questionable reputation
• Shell banks
• Specifically, LBB does not open or service
  Anonymous or Numbered accounts.

11
Policy Highlights Disclosure

• LBB adheres to strict control rules with
  regards to ultimate beneficiary disclosure
• accounts are opened only on the basis of
  eye-to-eye client identification every client
  and ultimate beneficiary is PERSONALLY known to
  the bank
• performs documentary check on the clients
  financial statement
• scheduled clients visits.

12
Policy highlights Transactions Monitoring

• Unusual suspicious transactions
• Strict control procedures allows for the
  monitoring of client day-to-day business
  activities using provided or additionally
  requested documentation
• Bank does not perform transactions by order of
  third parties

13
Policy Highlights Changes Modifications

• Policy correction and reviews
• Compliance Policy is reviewed and amendments to
  it are proposed by the Board throughout the year
  
• Council of the Board approves amendments to
  Compliance Policy once per year
• Regulatory documents are changed in accordance to
  the changes in LR, European International Laws.

14
Policy Highlights Educational Approach

• Obligatory staff training allows for
• Thorough understanding of compliance procedures
  achieved through training of both new and current
  employees
• Testing is done with the direct involvement of
  LBB management
• Training is conveyed on a quarterly basis, or,
  in case of changes in internal or external
  regulations ad hoc.

15
Policy Highlights Compliance Department

• Established in 07.2004
• Basic functions
• Client documents appraisal on account opening
• Monitors account transactions, incoming and
  outgoing deals
• On the basis of monitoring informs the Bank
  management and advises appropriate actions
• Personnel Compliance training
• Side-by-side working relations with governmental
  institutions that are involved in AML effort.

16
Executive Summary

• Latvijas Biznesa banka AML policy is fully intact
  with Latvian, European International
  Regulations
• Policy is strictly enforced by internal
  mechanisms
• Permanent monitoring is conveyed by FCMC,
  external auditors and shareholders.