Building Awareness of Procedure & Practice to Recognise & Prevent Money Laundering

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1 Building Awareness of Procedure & Practice to Recognise & Prevent Money Laundering NOVEMBER 2016 CPD BLITZ SUSAN NAUGHTON ACII ACOI

2 AGENDA Opening Questions What does an AML procedure look like? Where would you find one? What does STR stand for? Who is the MLRO in your firm? Money Laundering & Counter Terrorist Financing Explained What is FATF The Fourth Directive AML & The Central Bank Customer Due Diligence Questions

3 MONEY LAUNDERING & TERRORIST FINANCING WHY IS IT SO IMPORTANT? Statistics CRIMINALS LAUNDER ANYWHERE BETWEEN $500 BILLION AND $1 TRILLION WORLDWIDE EVERY YEAR. The Global Effect Social, Economic Security Criminal activity pays off. Fraud Corporate Embezzling Drugs & drug-related crime, Law-enforcement resources stretched

4 WHO ELSE THE ACT APPLIES REGARDLESS OF REGULATORY STATUS, payment services as defined in Directive 2007/64/EC instruments, foreign exchange, futures and options, exchange rate instruments or transferable securities participating in securities issues advising on capital structure, or industrial strategy or advising on or providing services relating to mergers and the purchase of undertakings money broking portfolio management and advice safekeeping and administration of securities taking deposits lending leasing issuing or administering means of payment providing guarantees trading in moneysafe custody services issuing electronic money market

5 AN INSIGHT INTO TERRORIST FINANCING Short Video for insight Money Laundering Terrorist Financing What firms are required to Do What firms can do

6 SOME MORE QUESTIONS Why do you think it is OK to show an American Money Laundering Video to an Irish audience? How Much is Laundered Every Year? How many Money laundering Directive are there How do they find their way into Irish law Do they matter?

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8 RECENT CENTRAL BANK INITIATIVES?

9 CBI WEBSITE

10 LETTER TO THE ULSTER BANK

11 INTERMEDIARY TIMES Common Points Policies and procedures Adherence to procedures Proper Risk Assessment Training Reliance on Third Parties Previous Business

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25 IN SUMMARY Procedures & Practices Client Identification Risk based Customer Due Diligence Measures Record Keeping Staff Training Reporting

26 AML V 4MLD MLD 4 is designed to strengthen the EU s defences against money laundering and terrorist financing. Risk-based approach, Beneficial Ownership, Scope of customer due diligence requirements, Politically exposed persons ( PEPs ), Reliance on third parties, enforcement,

27 WHAT ABOUT ELECTRONIC TRANSFERS How do we know where the money is coming from? June 2015, The Wire Transfer Regulation sets out Minimum requirements essential to ensure the traceability of transfers of funds, Provisions to ensure consistency of approach between Member States

28 LAW APPLICABLE AS AT NOV 2016 The Law The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended by Part 2 of the Criminal Justice Act 2013 ( the Act ). The Act transposes European Union Law on AML and CFT (the Third Money Laundering Directive (2005/60/EC) and its Implementing Directive (2006/70/EC)) into Irish Law.

29 OBLIGATIONS UNDER THE ACT Implement appropriate policies and procedures to ensure compliance. Financial institutions must refer to the provisions of the Act to ascertain their statutory obligations. The Central Bank is responsible for effectively monitoring financial institutions compliance with their obligations by

30 CENTRAL BANK REQUIREMENTS Training Policies and procedures Formal approach to AML/CFT risk assessment Customer due Diligence Management Information Keep Records

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32 EVIDENCE IS REQUIRED AML/CFT Supervisory Strategy Onsite inspections key areas tested: Corporate Governance Customer Due Diligence Ongoing Monitoring Suspicious Transaction Reporting Training

33 22. FINANCIAL INSTITUTION MEANS (f) an insurance intermediary within the meaning of the Insurance Mediation Directive (other than a tied insurance intermediary within the meaning of that Directive) that provides life assurance or other investment related services,

34 KNOW YOUR CLIENT..aka Customer Due Diligence Key provisions include: Know Your Customer To identify and verify customers Understand beneficial owners... Monitor dealings with a customer.

35 WHEN DO THE CUSTOMER DUE DILIGENCE OBLIGATIONS OF THE ACT APPLY? New Clients a) prior to establishing a business relationship with the customer; b) prior to carrying out an occasional transaction The designated person does not have a business relationship with the customer, and The total amount of money paid by the customer in a single transaction or series of transactions is greater than 15,000.]

36 WHEN DO THE CUSTOMER DUE DILIGENCE OBLIGATIONS OFTHE ACT APPLY? Existing Clients Designated persons should monitor their dealings with existing customers, Keep CDD information up to date as warranted by the overall knowledge the person has of the customer, the nature of the business relationship and the risk of money laundering or terrorist financing.

37 TYPES OF DUE DILIGENCE Simplified Customer Due Diligence Customer Due Diligence Enhanced Customer Due Diligence

38 RECORD A SUSPICIOUS TRANSACTION Report Suspicious Transactions Revenue Gardaí

39 REMINDER- WHY IS IT IMPORTANT Sources of Illicit Funds Prostitution Counterfeit Goods Drug trafficking Tobacco & Fuel Human trafficking Property crimes Tax evasion3 Consequences

40 QUIZ