KEY FINDINGS AML THEMATIC REVIEW Abraham Alutuli Manager Market Supervision

Transcription

1 KEY FINDINGS AML THEMATIC REVIEW 2017 Abraham Alutuli Manager Market Supervision 1

2 Contents 1. Background 2. Methodology 3. Key licensee statistics 4. Findings 5. Conclusion 6. Recommendations 2

3 Background The Commission is recognized as a Supervisory Authority (SA) Section 2 of the FIC Act No. 46 of 2010 ( Act ) Duties of a SA are covered under Section 36 of the FIC Act & include: Monitoring and ensuring compliance by reporting entities with their obligations under the FIC Act. A reporting entity ought to comply with the Act, FATF recommendations and UN Resolutions 3

4 Background cont. Pursuant to s36 of the Act and the Commission s strategic goal no. 2, SEC conducted a thematic review of reporting entities operating in the capital markets in 2017 Objective assess capital markets operators compliance with the Zambian AML regime Assessment was based on 6 AML Focus areas: Does the regulated entity have an AML/CFT policy? Does the reporting entity have an AML/CFT risk assessment tool? 4

5 Background cont. Does the reporting entity have a designated AML/CFT Compliance Officer? Is the AML/CFT testing, if any, performed by a person independent of the reporting entity s compliance staff? Does the reporting entity have a customer identification policy (CIP)? Does the reporting entity have a suspicious and/or cash transactions (ST/CT) reporting framework? 5

6 Methodology Initial 18 reporting entities were selected out of which 8 entities were picked for detailed review 8 entities were arrived at based on the entities past compliance levels Final sample was representative review was carried out on dealers, investment advisors and asset managers. Review was conducted by a joint team composed of inspectors/staff from SEC and FIC 6

7 Licensee Statistics Licence type Number Dealers 32 Investment Advisors 11 Securities Exchanges 3 Total licensed institutions 46 Dealer s Representatives 160 Investment Advisor s Representatives 46 Total licensed representatives 206 7

8 Licensee Statistics cont. There are currently: 6 Stock broking firms* 9 Collective Investment Schemes (CISs)** 2 Trustee Companies 2 Custodians* * Licensed as dealers ** Fund managers licensed as dealers 8

9 Findings No. Focus Area Compliance Out of Does the regulated entity have an AML/CFT policy? 2. Does the reporting entity have an AML/CFT risk assessment tool? 3. Does the reporting entity have a designated AML/CFT Compliance Officer? 4. Is the AML/CFT testing, if any, performed by a person independent of the reporting entity s Compliance Officer? 5. Does the reporting entity have Customer Identification Policy (CIP)? 6. Does the reporting entity have an ST and/or CT reporting framework? 49 61% 20 25% 37 46% 6 8% 46 58% Total Score % Percentage compliance 9

10 Findings cont. Focus Area No Non Focus Area No. 1 13% 87% Non-compliant 10

11 Findings cont. Focus Area No Noncompliant Focus Area No. 2 0% 100% Non-compliant 11

12 Findings cont. Focus Area No Noncompliant Focus Area No. 3 37% 63% Non-compliant 12

13 Findings cont. Focus Area No Noncompliant Focus Area No. 4 0% 100% Non-compliant 13

14 Findings cont. Focus Area No Noncompliant 25% Focus Area No. 5 75% Non-compliant 14

15 Findings cont. Focus Area No Noncompliant Focus Area No. 6 13% 87% Non-compliant 15

16 Conclusion 1. Most capital markets operators do not have robust AML/CFT compliance framework overall compliance was averaging 42% 2. Operators are yet to implement requirements of the FIC Act & the SEC AML/CFT or Proliferation Directives 3. Operators are yet to start implementing the NRA recommendations 4. The AML/CFT roles of COs are not well defined 16

17 Recommendations 1. Reporting entities must appoint COs and clearly define their AML/CFT roles 2. REs should immediately review and update their AML/CFT compliance frameworks 3. SEC and FIC should continue conducting awareness programs 4. REs found wanting should be penalized 17

18 . Questions? 18

19 Thank you 19