AntiMoney Laundering Compliance Overview - PowerPoint PPT Presentation

Loading...

PPT – AntiMoney Laundering Compliance Overview PowerPoint presentation | free to download - id: 48c8c-OWI0M



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

AntiMoney Laundering Compliance Overview

Description:

Violations of international regulatory regimes: FCPA, export control violations, ... any futures commission merchant, commodity trading advisor, or commodity pool ... – PowerPoint PPT presentation

Number of Views:561
Avg rating:3.0/5.0
Slides: 26
Provided by: silveruser
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: AntiMoney Laundering Compliance Overview


1
Anti-Money Laundering Compliance Overview
  • Michael L. Burton
  • James G. Tillen
  • Miller Chevalier Chartered
  • May 18, 2005

2
WHAT IS MONEY LAUNDERING?
  • Process by which one conceals the existence,
    illegal source, or illegal application of
    incomes, and disguises that income to make it
    appear legitimate
  • Money laundering represents between 2 and 5
    percent of global gross domestic product (800
    billion to 2 trillion annually)

3
THE U.S. ANTI-MONEY LAUNDERING FRAMEWORK
  • Money Laundering Control Act
  • Bank Secrecy Act
  • USA PATRIOT Act

4
MONEY LAUNDERINGCONTROL ACT (MLCA)
  • Transfers of money derived from specified
    (predicate) offenses
  • Transactions with proceeds of specified offenses
  • Similar to mail fraud and wire fraud

5
PREDICATE OFFENSES
  • Literally hundreds of predicate offenses
  • Traditional organized crime offenses murder,
    arson, robbery, extortion, drug trafficking,
    RICO, etc.
  • White collar crimes fraud and other financial
    crimes
  • Violations of international regulatory regimes
    FCPA, export control violations, customs
    violations, foreign law (e.g., currency controls)
    (note PATRIOT Act additions)

6
MLCA PENALTIES
  • Criminal penalties imprisonment up to 20 years
    and/or fines totaling the greater of 500,000 or
    twice the value of the property involved in the
    transaction
  • Civil penalties greater of 10,000 or the value
    of the property involved in the transaction

7
BANK SECRECY ACT (BSA)
  • Reporting and record-keeping obligations for
    financial institutions
  • Pre-PATRIOT Act generally targeted only
    activities of banks
  • PATRIOT Act expanded definition of financial
    institutions
  • Suspicious transaction reporting requirements for
    certain financial institutions
  • Cash reporting (gt10K) for non-financial trades
    and business

8
BSA PENALTIES
  • Criminal penalties up to 10 years imprisonment
    and/or 1 million fines
  • Civil penalties the greater of amount involved
    in transaction (not to exceed 100,000) or
    25,000
  • 500 for negligent violations (50,000 for
    pattern of negligence)
  • up to 1 million in cases of international
    counter money laundering violations

9
BSA FINANCIAL INSTITUTIONS
  • Financial institutions (including PATRIOT Act
    additions)
  • an insured bank (as defined in the Federal
    Deposit Insurance Act)
  • a commercial bank or trust company
  • a private banker
  • an agency or branch of a foreign bank in the U.S.
  • any credit union
  • a thrift institution
  • an SEC-registered broker/dealer
  • a securities or commodities broker/dealer
    (including introducing brokers)

10
BSA FINANCIAL INSTITUTIONS(contd)
  • an investment banker or investment company
  • a currency exchange
  • an issuer, redeemer, or cashier of travelers
    checks, checks, money orders, or similar
    instruments
  • an operator of a credit card system
  • an insurance company
  • a pawnbroker
  • a loan or finance company
  • a travel agency
  • a licensed money-sender or others that engage in
    the business of transferring money

11
BSA FINANCIAL INSTITUTIONS (contd)
  • a telegraph company
  • a business engaged in vehicle sales
  • a real estate broker
  • a casino
  • the U.S. Postal Service and other U.S. government
    agencies carrying out similar functions
  • any futures commission merchant, commodity
    trading advisor, or commodity pool operator
    registered, or required to register under the
    Commodity Exchange Act (added by the PATRIOT Act)

12
BSA FINANCIAL INSTITUTIONS (contd)
  • a dealer in precious metals, stones, or jewels
  • others designated by regulation

13
RECENT U.S. ANTI-MONEY LAUNDERING DEVELOPMENTS
USA PATRIOT ACT
  • Passed on October 26, 2001
  • Expanded BSA requirements to many more financial
    institutions
  • Expanded predicate offenses to include violations
    of international regulatory regimes

14
PATRIOT ACT AMENDMENTSTO BSA
  • Prohibits and regulates certain types of accounts
    relationships with financial institutions
  • Expanded suspicious activity reporting
    requirements
  • Expanded requirements for anti-money laundering
    compliance programs

15
PATRIOT ACT AMENDMENTSTO BSA (contd)
  • Anti-money laundering (AML) compliance program
    4 required elements
  • Internal policies, procedures, and controls
  • Designated compliance officer
  • Ongoing training program for employees
  • Independent audit function to test the program

16
PROPOSED AML COMPLIANCE PROGRAM FOR DEALERS
  • On February 21, 2003, Treasury issued a notice of
    proposed rulemaking, which would require dealers
    in precious metals, stones, or jewels to
    implement an AML compliance program
  • Sought public comment on rules
  • No action by Treasury for past two years
  • In March 2005, FinCEN issued its 2004 Annual
    Report noted that it planned to finalize rules
    this year

17
PROPOSED AML COMPLIANCE PROGRAM FOR DEALERS
(contd)
  • Applies to dealers person engaged in business
    of purchasing and selling jewels, precious
    metals, or precious stones who, during the prior
    year
  • Purchased more than 50,000 jewels, metals, or
    stones or
  • Received more than 50,000 in gross proceeds from
    transactions in jewels, metals, or stones

18
PROPOSED AML COMPLIANCE PROGRAM FOR DEALERS
(contd)
  • Exceptions to definition of dealer
  • Retailer, i.e., a person engaged in sales to the
    public other than a retailer who, during the
    prior year, purchases more than 50,000 in
    jewels, metals or stones from non dealers
  • Persons who engage in transactions for purposes
    of fabricating finished goods that contain minor
    amounts of jewels, metals, or stones

19
PROPOSED AML COMPLIANCE PROGRAM FOR DEALERS
(contd)
  • Jewel includes organic substances that have
    market-recognized gem level of quality, beauty,
    or rarity
  • Precious metal
  • Gold, iridium, osmium, palladium, platinum,
    rhodium, ruthenium or silver, having a level of
    purity over 500 or more parts per thousand and
  • An alloy containing 500 or more parts per
    thousand, in the aggregate, of two or more metals
    listed above
  • Precious stone includes inorganic substances
    that have a market-recognized gem level of
    quality, beauty, or rarity

20
PROPOSED AML COMPLIANCE PROGRAM FOR DEALERS
(contd)
  • Program requirements
  • Approved by Senior Management and in writing
  • Incorporate policies that address the entitys
    risk
  • Incorporate policies to identify transactions
    that may involve use of the dealer to facilitate
    money laundering an terrorist financing
  • Reflect BSA requirements (noted that only
    reporting of cash transactions currently apply to
    dealers)

21
KEYS TO MONEYLAUNDERING PREVENTION
  • Know-your-customer (KYC) principles
  • Customer and counterpart identification
  • Customer and counterpart due diligence
  • Screening against government lists (i.e., OFAC)
  • Transactional alertness
  • Screen transactions for red flags
  • Payment restrictions
  • Limit or prohibit cash transactions

22
KEYS TO MONEY LAUNDERING PREVENTION RED FLAGS
  • Purchases or sales that are unusual for customer
    or supplier
  • Unusual payment methods, such as large cash
    transactions or payments from third parties
  • Attempts by customer or supplier to maintain high
    degree of secrecy
  • Purchases or sales that are not in conformity
    with standard industry practice

23
RED FLAGS (contd)
  • Counterpart is reluctant to provide adequate
    identification information when making a purchase
  • Counterpart provides inaccurate identification
    information
  • Transactions that appear to be structured to
    evade reporting requirements (e.g., a series of
    transactions under 10,000)
  • Counterpart presence in NCCT or country that is
    the subject of advisories issued by FinCEN

24
COMPLIANCE BASICS
  • Make the commitment
  • Identify the risks
  • Develop compliance systems to manage risks
  • Implement compliance processes
  • Designate compliance gatekeepers
  • Train personnel
  • Monitor compliance people, paper, process

25
CONTACT INFORMATION
  • Michael L. Burton
  • James G. Tillen
  • Miller Chevalier Chartered
  • 202-626-5800 (main)
  • mburton_at_milchev.com
  • jtillen_at_milchev.com
About PowerShow.com