NORDIC FRAUD OSLO CONFERENCE 2016

Transcription

1 NORDIC FRAUD CONFERENCE 2016 OSLO Trends and Developments regarding operational risks and regulatory changes related to Financial Crime, Money Laundering, Corruption and Bribery October 26, 2016 Helge Kvamme Partner, Investigations & Compliance

2 Agenda Trends and developments What are the actual operational risks and regulatory changes related to financial crime, money laundering, corruption and bribery. Risk assessments is critical to the effective management of the risks and to identify suspicious patterns regarding customers and transactions - How to build a platform for the assessment based on your own data merged with relevant and updated trends and developments information. Advokatfirmaet Selmer DA Doc. ref.:

3 Trends and developments Whats is new? Advokatfirmaet Selmer DA Doc. ref.:

4 Corruption is a severe impediment to economic and democatic growth and a significant challenge for developed, emerging and developing countries [Photo: Reuters] Advokatfirmaet Selmer DA

5 Grand Corruption Grand corruption is the abuse of high-level power that benefits the few at the expense of the many, and causes serious and widespread harm to individuals and society. It often goes unpunished. Corruption leads to: Greater unequal distribution of wealth Lower standards of living and education levels Weak legal protection Poor infrastructure Low tax revenue Lower investments Barriers to do business increase Higher prices Inneficient public sector Unnecessary bureaucracy Hiring not on merit Advokatfirmaet Selmer DA Doc. ref.:

6 Yara International case Libya issue Based on description in Oslo Tingrett verdict 7 July 2015 Integrity matters Advokatfirmaet Selmer DA Doc. ref.:

7 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 The Vimpelcom Case USD from TeliaSonera and Vimpelcom to Takilant Ltd Speed of mobile broadband internet in Uzbekistan (megabits per second - mbps) Social and economic cost of corruption: Nearly USD 900 million have been siphoned out of public finances, which accounts for 7 % of the annual state budget, or a half of budget line for health care The quality of telecom services seriously declined Aliser Ilkamov, Antikorrupsjonskonferansen 2016 Advokatfirmaet Selmer DA Doc. ref.:

8 Operation Lava Jato an overview Background Money laundering case Petrobras' political exposure Legal framework on anti-corruption Petrobras' of anti-corruption program The investigations: On-going and growing The use of phases Plea bargains, depositions and cooperation Targeting international companies Lavo Jato has reached Norway/Scandinavia Advokatfirmaet Selmer DA Doc. ref.:

9 Lava Jato The Processes proceedings initated 654 searches and seizures 76 preventive arrests 92 temporary detentions 112 international cooperation requests 70 plea bargains 46 criminal charges against 207 accused R$ 38,1 billion requested in reimbursement R$ 3,6 billion already recovered through cooperation agreements 106 criminal convictions Advokatfirmaet Selmer DA Doc. ref.:

10 Lava Jato Modus Operandi Kick back schemes Executives from 20 engineering firms (suppliers) have inflated the value of service contracts Fund channelled to Petrobras executives and political parties Politicians Petrobras Third party involvements Third parties ( Operators ) channel payments to Petrobras employees, politicians and political parties Executives/ bagmen Supplier Cartel schemes Agents/ consultants "Legitimate" political campaign donations Advokatfirmaet Selmer DA Doc. ref.:

11 Lava Jato - The Consequenses By the end of 2016 Brazil`s economy is 8 % smaller than in % of Petrobrascontracted workers lost their jobs 13 % unemployment Profits have disappeared into tax havens, invested in state bonds and spent on real estate development Advokatfirmaet Selmer DA Doc. ref.:

12 Third party Risk Integrity matters Advokatfirmaet Selmer DA Doc. ref.:

13 Red flags "Bribes for inflated contracts scheme (1 3 % of contract value) Use of third parties Unclear and undocumented deliveries and services Contract conditions fees, use of tax havens companies and offshore accounts Advokatfirmaet Selmer DA Doc. ref.:

14 Some recent international War Stories Lavo Jato UnaOil FBI Kleptocracy Program - 1,2 billion pursued from 15 cases against former officials and businessmen Panama Papers World Bank and UNODC Stolen Asset Recovery Initiative - USD billion of allegedly stolen assets frozen, with USD million returned FCPA Investigations List Advokatfirmaet Selmer DA Doc. ref.:

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16 New Anti-Money Laundering Legislation EUs fourth directive to address the threat of money laundering Money laundering, terrorism financing and organized crime remain significant problems The need for accurate and up-to-date information on the beneficial owner is a key factor in tracing criminals NOU December 16, 2016 major changes Risk analysis Responsibilities Internal controls Rules on administrative sanctions and measures Advokatfirmaet Selmer DA Doc. ref.:

17 New European Regulatory Initiatives Switzerland New Integrity Line New Anti-Corruption legislation from July 1, 2016 UK Jurisdiction over foreign companies involved in payments of bribes through Swiss bank accounts New criminal finances bill include "unexplained wealth order" forcing suspects to disclose source of their assets France New Anti-Corruption Legislation Sapin II multi-jurisdiction focusing on compliance New Agency Agence Française Anti-corruption (AFA) Reuters, Mars 2016 Advokatfirmaet Selmer DA Doc. ref.:

18 Risk analysis Advokatfirmaet Selmer DA Doc. ref.:

19 Unrealized potential in analysing internal data to prevent and detect financial crime 3/4 said company provides compulsory anticorruption training to all employees 2/3 said their company carries out onsite anti-corruption spot checks or third party audits >1/2 said their company analyses internal data to identify anomalies and flag potential risks >1/2 of the respondents who analyse internal data were from financial services an industry which is typically better equipped to collect and manage large amounts of data for regulatory reasons such as monitoring for fraud and money laundering Source: Kroll Legal Week Benchmarker Report 2016 Advokatfirmaet Selmer DA Doc. ref.:

20 AML/CTF framework Main purpose to identify Suspicious Transactions High-level risk analysis Risk analysis: customers, products & services, geography, transactions, channels Customer classification Transactions Customer Due Diligence List of Characteristics Enhanced Customer Due Diligence Metrics for Transaction Monitoring Ongoing Customer Due Diligence Identification of Suspicious Transactions Advokatfirmaet Selmer DA Doc. ref.:

21 On-going feedback loop Risk analysis KYC procedures Transactions monitoring Advokatfirmaet Selmer DA Doc. ref.:

22 Risk reduction = identifying risk and controlling risk RISK ANALYSIS Current risk trends Generic risks Specific risks External sources: National / international risk assessments and risk trends External sources: Generic industry risk assessments Internal sources: Quantitative system generated statistics Qualitative company information Analysis Inherent risks Controls Residual risks Advokatfirmaet Selmer DA Doc. ref.:

23 Quantitative risk analysis based on your own data Quantitative analysis - examples Number of customers Customers with address in Norway Customers with address outside Norway Direct PEPs PEPs registered as beneficial owners PEP nationality is a "high risk country" Customers incorporated in high-risk countries Customers with address in "high risk countries" Enity type (ASA, AS, ENK, NUF etc.) Number of cash transactions Number of transit transactions (rapid movement of funds) Clients with beneficial owners with address in offshore financial centers Transactions to offshore financial centers Transactions from offshore financial centrs Corporate clients Household clients Advokatfirmaet Selmer DA Doc. ref.:

24 Advokatfirmaet Selmer DA Doc. ref.:

25 Kontaktinformasjon Oslo Advokatfirmaet Selmer DA Postboks 1324 Vika 0112 Oslo Besøksadresse: Tjuvholmen allé 1 T: Trondheim Advokatfirmaet Selmer DA Postboks Trondheim Besøksadresse: Kjøpmannsgata 52 T: E: selmer@selmer.no W: selmer.no Doc. ref.: