The ABA Advantage: Bank Secrecy Act & Anti- Money Laundering Update & Resources BANKERS aba.com

Transcription

1 The ABA Advantage: Bank Secrecy Act & Anti- Money Laundering Update & Resources BANKERS aba.com

2 Meet today s speakers Rob Rowe VP & Associate Chief Counsel Regulatory Compliance Center for Regulatory Compliance Bill Boger SVP & Chief Legislative Counsel Office of Legislative Affairs & Chief Counsel Ryan Rasske SVP, Risk & Compliance Markets Professional Development Group Leslie Callaway MA,CRCM,CAFP,CAMS Director of Compliance Outreach & Development Center for Regulatory Compliance

3 Expert update Rob Rowe VP & Associate Chief Counsel Regulatory Compliance Center for Regulatory Compliance

4 Customer Due Diligence Background How Did We Get Here? International criticism Panama Papers April 2016 The Rule A seemingly simple requirement Designed to encourage transparency Applies to Legal Entity Customers Requires banks to collect information on: A control person Any owners that hold 25% or more of the equity interest of the company Effective July 11, 2016 (compliance mandatory May 11, 2018)

5 Certification and Verification Certification of beneficial owners Verification of status is not required Verification of identify is required Builds on a bank s existing Customer Identification Program One key difference: a bank can accept copies of documents when conducting documentary verification of identity Many ways to verify identity Challenge with credit reports

6 Challenges Looks are deceiving As with any new rule, the application of the requirements can be challenging Guidance requested FAQs issued by FinCEN in July 2016 Second set issued in April 2018 Examination procedures still pending Questions remain

7 ABA Resources Link to the Final Rule Staff Analysis of the Rule Staff Analysis of the Most Recent FAQs ABA FAQs to supplement current guidance

8 Communication with Customers The model certification ABA resources: Sample letter to customers Sample lobby notice Talking points ABA.com/Compliance/Pages/Topics

9 Issues Ownership Percentages Renewals of Loans and Certificates of Deposit Recertification Trigger Events Premium Finance and Private Label Card Programs Aggregation for filing Currency Transaction Reports Sanctions Compliance

10 Government Registries Currently, there are no government registries Several bills in Congress would create registries State registries with federal back-up Federal registry

11 Expert update Bill Boger SVP & Chief Legislative Counsel Office of Legislative Affairs & Chief Counsel

12 AML Legislation in the 115th Congress ( ) House Discussion Draft - The Counter Terrorism and Illicit Finance Act, sponsored by Representatives Pearce and Luetkemeyer. ABA strongly supports and joined other financial trades in a letter to the sponsors

13 Key Points Targets anonymously owned shell companies by establishing a beneficial ownership reporting requirement to FinCEN. Provides financial institutions with access to reported information to assist with customer due diligence (CDD). Coordinates definition of beneficial ownership with FinCEN s rule and would reduce burdens of complying with the rule. Banks would be able to rely on information reported by businesses to FinCEN reducing reporting for both banks and businesses.

14 Other Helpful Provisions Raises CTR threshold to $30,000 and SAR threshold to $10,000. Clarifies complex regulatory structure by requiring Treasury to set clear national priorities for AML regulation and enforcement. Facilitates information sharing and feedback among financial institutions and law enforcement. Encourages the use of technology and AI within AML programs of financial institutions.

15 Prospects for Passage by House? Discussed at a AML hearing held by the House Financial Services Committee (Nov. 29, 2017). Includes elements of two AML bills H.R (Representative Maloney) and H.R (Representative Royce). So main vehicle for AML in Committee. Next steps and timing uncertain.

16 AML Legislation in the 115th Congress ( ) Senate More complex situation than the House. Two major Committees involved Banking and Judiciary. Some overlapping jurisdiction.

17 Senate Banking Committee The Corporate Transparency Act (S. 1717) by Senators Wyden and Rubio. Requires disclosure of beneficial owners by applicant forming a business entity. Publicly held companies and certain others are exempt. Filing is made with the Secretary of State where the business is formed, if already required. If not, must file with FinCEN.

18 Senate Judiciary Committee The True Incorporation Transparency for Law Enforcement Act (S. 1454) by Senators Whitehouse, Feinstein and Grassley. Similar to S. 1717, requires disclosure of beneficial owners. Would require filing with the Secretary of State of the formation state. Any state that receives Federal anti-crime funding is required to put BO registration in place within three years of enactment. In addition to any state penalties, Federal civil and criminal penalties may apply for non-compliance or fraud (up to $1 M and up to three years in prison). Some Federal funding for states to comply.

19 Senate Judiciary Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017 (S. 1241) by Senators Grassley and Feinstein) Modifies various prohibitions on money laundering and establishes various criminal offenses pertaining to money services businesses. For example, if a person is charged with an offense under the federal criminal code, title 31, or the Controlled Substances Act for which forfeiture is authorized, the government may apply for an ex parte order freezing the person's bank accounts. Treasury or Justice may issue a subpoena to any foreign bank that maintains a correspondent account in the United States. Makes it unlawful to knowingly conceal to a financial institution a material fact concerning the ownership of an account with a financial institution.

20 Prospects? Judiciary hearing (Feb. 6, 2018) held on S and the Committee could move to a markup. Senator Grassley is Chairman of the Committee and has bipartisan support from Senators Wyden and Feinstein. Banking has held two general hearings on AML issues not legislative hearings. Appears to be developing a record for future legislation rather than moving on a specific bill e.g., the sponsors of S. 1717, Senators Wyden and Rubio, are not on the Committee so not likely to take it up. Senate passage of AML legislation unlikely this year.

21 Expert update Ryan Rasske SVP, Risk & Compliance Markets Professional Development Group

22 ABA Certificate in BSA and AML Compliance Online Training Certificate Course Titles 1. Introduction to BSA/AML 2. SARs and Information Sharing 3. Currency and Correspondent Banking Accounts 4. Electronic Banking and Funds Transfer Activities 5. Higher Risk Accounts and Activities 6. BSA Requirements for Business Accounts 7. BSA Requirements for Foreign Customers and Accounts 8. Components of an AML Compliance Program 9. International Partners in AML 10.Office of Foreign Assets Control (OFAC) for Compliance Professionals The estimated time to complete these 10 courses is approximately 7 hours. Your Instructor Barbara I. Keller, CAFP, CAMS, CFCS Independent Consultant, BIKConsulting LLC Barbara I. Keller is an independent anti-money laundering/financial crime consultant. Her experience includes: Serving as an economic crimes advisor on contract with the U.S. Treasury Department's Office of Technical Assistance, Overseeing the activities of the compliance and enforcement offices with the Financial Crimes Enforcement Network (FinCEN) And 26 years with the U.S. Government Accountability Office (GAO)

23 ABA Certificate in Fraud Management Online Training Certificate Course Titles 1. Introduction to Fraud Management 2. Establishing a Fraud Prevention Program 3. Types of Fraud and Prevention Strategies 4. Operating a Fraud Prevention Program 5. Maintaining a Compliant Fraud Prevention Program The estimated time to complete these 5 courses is approximately 5 hrs and 20min. Your Instructor Kevin D. Eack J.D., CAFP, CPP Principal, The Brannan Group, LLC Kevin D. Eack is a former Special Agent for the FBI, former Illinois prosecutor, and spent 23 years as an Illinois State Police Investigations Commander (Assistant Deputy Director, LTC). Master's degree in Security Studies from the US Naval Postgraduate School. He was an FBI Director's Fellow at the National Counter Terrorism Center, Prior to starting The Brannan Group, LLC he oversaw Security for State Farm Bank.

24 Certified AML & Fraud Professional Position Yourself as a Financial Crimes Leader Recognizing your practical experience in complying with U.S. laws and regulations. Demonstrating your ability to respond to a wide variety of financial crimes threatening your institution. Proven knowledge in program design and governance, regulatory requirements, and understanding of existing and emerging money laundering and fraud risks.

25 Advantages of ABA s CAFP Designation Exam Features CAFP Others 100% Bank Focused Only Applicable U.S. Laws and Regulations Combines AML & Fraud Requires Banking Experience Targets Specific Bank Scenarios U.S. Laws and Regulations Takes Holistic Approach Requires Minimum of 2 years Addresses multiple industries Includes international laws Targets AML or Fraud separately Does Not Require Banking Experience

26 Advantages of CAFP Designation Exam Features CAFP Others 100% Bank Focused Only Applicable U.S. Laws and Regulations Combines AML & Fraud Requires Banking Experience Targets Specific Bank Scenarios U.S. Laws and Regulations Takes Holistic Approach Requires Minimum of 2 years Addresses multiple industries Includes international laws Targets AML or Fraud separately Does Not Require Banking Experience

27 Advantages of CAFP Designation Exam Features CAFP Others 100% Bank Focused Only Applicable U.S. Laws and Regulations Combines AML & Fraud Requires Banking Experience Targets Specific Bank Scenarios U.S. Laws and Regulations Takes Holistic Approach Requires Minimum of 2 years Addresses multiple industries Includes international laws Targets AML or Fraud separately Does Not Require Banking Experience

28 Advantages of CAFP Designation Exam Features CAFP Others 100% Bank Focused Only Applicable U.S. Laws and Regulations Combines AML & Fraud Requires Banking Experience Targets Specific Bank Scenarios U.S. Laws and Regulations Takes Holistic Approach Requires Minimum of 2 years Addresses multiple industries Includes international laws Targets AML or Fraud separately Does Not Require Banking Experience

29 Achieve the CAFP Designation Earn the CAFP To earn the Certified AML and Fraud Professional (CAFP) designation, candidates must: Meet the eligibility requirements; Submit completed application and fees for desired exam date; Pass the 150 question CAFP examination.

30 ABA s Reference Guide To Financial Crimes The Reference Guide to Financial Crimes is a first-of-its-kind: Cyber-enabled crimes threating U.S. banks Fraud, Money laundering, and Terrorist financing methodologies. Knowledge areas include: Governance and Oversight Financial Crimes Methodologies Program Strategy Monitoring, Detecting, Responding, and Reporting Processes Training and Education Other Supporting Regulations and Guidance

31 Access to ABA s Briefings Choose suite of twelve 2018 recorded briefings or PLUS option, which includes: 2018's briefings Plus ten highlyrated briefings from 2017

32 Upcoming Conferences Regulatory Compliance Risk

33 ABA/ABA Financial Crimes Enforcement Conference Brought to you by two powerhouse organizations at the forefront of financial crimes: American Bankers Association American Bar Association New Name, Same In-Depth Coverage Formerly known as the ABA/ABA Money Laundering Enforcement Conference, this conference delivers banker-focused solutions covering: BSA/AML/CFT Fraud OFAC Compliance and Sanctions Cyber-enabled financial crimes

34 Podcasts on Conference Experience Listen to brief interviews from the conference s exhibit hall featuring ABA bank members, staff experts and industry thought leaders.

35 35 Navigating ABA.com to Training & Events

36 Expert update Leslie Callaway, MA,CRCM,CAFP,CAMS Director of Compliance Outreach & Development Center for Regulatory Compliance

37 Compliance Hotline ABA s team of dedicated compliance professionals Contact the ABA s Compliance Hotline: compmail@aba.com

38 Compliance Hotline Questions Turnaround time Examples Beneficial Ownership CIP CTR Completion: How do I complete a CTR for an IOLTA account? CTR for cash purchase of cashier s check SARs 314(a) and (b) DOEP- timing for Phase II Contact the ABA s Compliance Hotline: compmail@aba.com

39 Compliance Hotline FAQ Database: Provide answers more quickly Ensure continuity Create FAQs Contact the ABA s Compliance Hotline: compmail@aba.com

40 Compliance Network Compliance Hotline + Compliance Network There are some questions ABA refers to the Compliance Network Risk Assessment Policies and procedures What are other banks doing? Member Banks only No vendors, regulators File Cabinet for policies, procedures, disclosures ABA.com/Networking

41 Frontline Compliance Training A Sample of FREE Online Courses for ABA Members: BSA/AML: Beneficial Ownership and Customer Due Diligence BSA/AML: CIP Advanced BSA/AML: CIP Basics BSA/AML: Communicating with Customers about CTRs BSA/AML: Completing the CTR BSA/AML: Complying with the BSA BSA/AML: Exempting Customers from CTR Reporting BSA/AML: Overview BSA/AML: Recordkeeping - Wires, Money Orders, and other Challenges BSA/AML: Reporting BSA/AML: Risk Assessment and Customer Due Diligence BSA/AML: SAR Filing BSA/AML: USA PATRIOT Act Office of Foreign Assets Control (OFAC)

42 Compliance Job Role

43 Answers when you need them: ABA Experts On Call BANKERS ABA.com/Experts ABA s 300+ staff experts are available at no cost to ABA members Vehicle for identifying issues bankers are struggling with and exam trends aba.com BANKERS

44 Endorsed Solutions aba.com BANKERS aba.com/endorsed

45 Global Visions Systems, Inc. Helps banks efficiently and accurately manage the BSA, AML and ATF functions Provides a comprehensive scope of protection against losses and damages caused by fraud and financial crimes Solutions offered for Patriot Officer and Guardian Officer aba.com BANKERS

46 Make the most of your ABA member benefits aba.com BANKERS ABA.com/GetStarted

47 Q&A Rob Rowe VP & Associate Chief Counsel Regulatory Compliance Bill Boger SVP & Chief Legislative Counsel Ryan Rasske SVP, Risk & Compliance Markets Leslie Callaway MA,CRCM,CAFP,CAMS Director of Compliance Outreach & Development aba.com BANKERS

48 Questions about your ABA benefits? Contact: aba.com BANKERS Maureen Onda Kim Michael