Anti-Financial Crime Partnerships

Transcription

1 Anti-Financial Crime Partnerships

2 Agenda Main Theme: ANTI-FINANCIAL CRIME PARTNERSHIPS 13:30 13:45: Quick intro on the Chapter and possibly the AML/CFT news in the region First Sub-topic: Intra-national public/private cooperation 13:45 14:05: Keynote - The UK s Joint Money Laundering Intelligence Taskforce (JMLIT) 14:05 14:25: Keynote - Latvian achievements on the informal sharing of information 14:25 15:00: Panel discussion - Intra-national public/private cooperation in the Baltics and elsewhere 15:00 15:15 : Coffee break Second Sub-topic: National registers & technical implementation 15:15 15:45: Keynote - Financial institutions cooperation with national registers 15:45 16: 30: Panel discussion - National registers & technical implementation in the Baltics and elsewhere 16:30 16:50: Wrap-up & Closing remarks 16:50 18:00: Networking & Cocktail

3 Welcome word & Chapter s update Uldis Upenieks Member of the Management Board, Chief Compliance AS "Citadele Banka & Co-chair, ACAMS Baltics Chapter Alexandre Pinot Head of AML & Simplex & Co-chair, ACAMS Baltics Chapter

4 The UK s Joint Money Laundering Intelligence Taskforce (JMLIT) Charles Richiardi Senior Financial Intelligence Officer, National Economic Crime Centre, UK

5 JOINT MONEY LAUNDERING INTELLIGENCE TASKFORCE

6 Co-operation with the financial sector provides mutual benefit, particularly where expertise is decentralised Non-judicial outcomes and detection/disruption tactics assist to mitigate the threat

7 The Threat & Background to JMLIT Strategic Defence & Security Review Illicit finance one of top 5 S&SOC threats Key commitments to enhance response National Risk Assessment JMLIT aligned to prioritised risks High end money laundering Cash money laundering Professional enablers Terrorist Financing Financing of other priority crime areas (eg Modern Slavery) JMLIT addresses issues raised in 2015 Improving information sharing Improving awareness of ML risks And those reiterated in 2018 SOC strategy

8 What is the JMLIT? A Public-Private Partnership between Law Enforcement, Government and the Financial Sector A Collaborative approach to the sharing of financial information A mechanism to: - allow the banking sector to work with law enforcement in line with their regulatory requirements and improve the collective understanding of the money laundering threat (Detect) - improve prioritisation of risks by financial institutions and inform the strengthening of banks systems and controls (Protect) - inform the prosecution and disruption of money laundering activity and allow law enforcement to establish a comprehensive understanding of financial information relating to a case (Disrupt)

9 Overview: JMLIT Structure

10 Overview: The Experts Groups 1) Trade Based ML 2) 2) ML Through Markets 3) OIC / MSHT 4) Proceeds of Corruption 5) Terrorist Finance 6) Future Threats Bank led (one exception) Recognised experts Wider membership Bimonthly Alerts shared widely (UKF Portal) Common language Changes to transaction monitoring rules Improved SARs (using JMLIT code) RBA: better targeting of resource

11 JMLIT Operations Group Live requests for intelligence 1) Operational context 2) Intelligence gaps 3) Operational objectives Weekly case briefings 1) Do banks have points of clarification? 2) Do banks have additional 3) capabilities/suggestions for the SIO? Proportionality & Justification Investigation Potential

12 Overview: JMLIT Operations Group Members

13 Overview: The Operations Group Benefits Case officers have access 17 UK Financial Institutions (covering 93% of the UK retail market and a wide range of international correspondent banking networks) as well as a number of public sector bodies One request to multiple institutions = efficient means to develop a comprehensive intelligence picture Follow up s7s - a virtuous circle Efficient targeting of evidential enquiries (saves LE, courts and banks time and money) Sharing of expertise, knowledge and awareness (eg correspondent banking, IP address data) Forum for member referrals tasking into LE (eg Op R, Op P) Inform and enhance financial sector understanding of risk / resource deployment Infrastructure to link tactical and strategic intelligence and response

14 Linking the Ops and Experts Groups Case Study: Human Trafficking Over 50 individuals trafficked for exploitation in dozens of brothels 4 previously unknown suspects identified by Ops JMLIT Multiple previously unknown accounts identified and closed. These accounts also identified new victims, allowing them to be safeguarded. 5 UK arrests, including 1 professional enabler Further 15 Romanian arrests in coordination with UK team

15 Case Study (cont): Alerts and the Link Between Operations and Experts Groups Indicators Flights to / from eastern Europe No corresponding economic activity in eastern Europe Regular cash deposits in UK Payments to adult services websites Rental of high end apartments Analysis of transaction patterns New individuals identified Intel Developed JMLIT / ECC Referral to UKHTC for Action

16 SAR Impact 2015 TBML EWG launches June/July TBML alerts October rd party payment alert May 2016 Major TBML product with case studies and red flags June 2017 Corporate client alert August 2017 Trade finance alert

17 A complex case CFA? Funds Associations

18 Summary of outcomes 486 cases developed 18.5m under restraint 125 Arrests 3700 accounts identified that were not previously known to law enforcement 3500 bank led investigations begun 3000 accounts closed / under heightened monitoring 35 Alerts 2200 JMLIT SARs (many from non-jmlit banks) 140 Enhancements to bank AML SYSC Collaboration / mutual understanding / efficiency

19 PPP The Future? Data and Analytics Project Athena Private to private sharing? Criminal Finance Act Co-location? National Economic Crime Centre Follow the money exercises Expansion & cross sector engagement? Insurance? Accountancy? Audit? Wealth banks? Impact on current operations model International engagement between PPPs Global network (Singapore, HK, US, NZ, NL etc)

20 Co-operation with the financial sector provides mutual benefit, particularly where expertise is decentralised Non-judicial outcomes and detection/disruption tactics assist to mitigate the threat

21 Questions?

22 Information Sharing Partnerships in Fighting a Financial Crime Latvian experience and achievements Jānis Brazovskis, CAMS Member of the Board ACAMS Baltics Chapter Finance Latvia Association

23 Safe Harbor Arrangements for Information Sharing Partnerships Forging of robust AML/CFT related information sharing arrangements is demanding commitment in any jurisdiction Latvian legislation along with other jurisdictions was kept for long years as a bulletproof safe box of banking secrecy Vital role of the Parliament, Government, Prosecution Office, Latvian FIU, Ministry of Justice, Ministry of Finance, State Revenue Service, Ministry of Interior, Corruption Prevention and Combating Bureau and Financial and Capital Markets Commission in enshrining of Safe Harbour Arrangements in legislation Significant input from Rick McDonell, ACAMS Executive Director and Former Executive Secretary of FATF and Angela Salter, Head of Europe, ACAMS in a better understanding of effectiveness and importance of private-public sector partnerships to prevent financial crime during our previous High-Level AML/CFT workshop on November 8, 2017 in Riga Thank you to our working partners from UK and USA for the sharing of experience in setting-up of public private information sharing partnerships

24 Towards Highest AML/CFT Compliance Standards Council of the Finance Latvia Association approved Policy Guidance and Guidelines on AML/CFT in October, 2017 Re-confirmed commitment to reach the highest AML/CFT compliance standards within the next 2 to 3 years, effectively fight financial crime and reduce inherent risks and risk appetite AB&C and Information sharing policies were added to Guidelines in October, 2018

25 Private Private Information Sharing Arrangements Among financial institutions (FI): within a FI s consolidated group; on STR/SAR submitted to FIU in relation to a customer s transactions; regarding the cut-off customers or refused to on-board customers due to suspicions on possible involvement in ML/TF or other serious FC; within Coordination Platform governed by FIU (UK JMLIT model).

26 Finance Latvia Association private private information sharing guidelines Provide accurate and concise information and ensure that it is up-to-date Share only ML/TF risks related information Exclude straight forward use of the received information as a sole basis for off-boarding of the customer or refusing to begin cooperation with a potential customer Do not share information if the customer refuses to submit any documents or in case of derisking demanded by the legislation or performed due to risk appetite of FI The information provided should allow unambiguous identification of the person, argumentation and a short substantiation of identified ML/TF risks The FI also indicates the persons associated with the customer: UBO, authorized representatives and other persons associated with the customer, in case they have aggravated ML/TF risks in the specific case (to be properly disclosed)

27 Co-operation with State Revenue Service (SRS) Co-ordination group between Finance Latvia Association and SRS has been established Appointed liaison officers from Finance Latvia Association, FIs and SRS to facilitate communication Regular expert meetings Tailored legal framework for information sharing partnership adopted on November 1, 2018 Three ways for information sharing: a. by submitting a SAR to SRS; b. by providing additional data on the particular already submitted SAR; c. voluntary co-operation and information sharing partnership with SRS to fight tax evasion (SAR s submission is not a precondition for co-operation). Example, SRS might ask FI to analyze customers with certain parameters (pre-discussed and coordinated in the co-ordination group) and communicate analysis out-come to SRS for further indepth analysis. SAR is filed, if the analysis commands it

28 Various Public Private Information Sharing Arrangements Filing of SARs/STRs Account register Company Register (information on UBOs) Coordination Platform governed by FIU (UK JMLIT model)

29 Evolving Role of State Registries in Information Sharing Account Register (operated by SRS): FIs share information with statutory authorized governmental agencies regarding UBOs identified by them during KYC/CIP processes Company Register: holds records of UBOs of companies filed by companies on their own. Submitting of inaccurate information is a criminal offence. Information on UBO is available to general public Registers are populated with required data. Smooth and effective interaction and cross-reference between these two databases would be beneficial for further enhancement of verification of customers, improvement of investigation of financial crime and serve as a trusted an reliable source of information for KYC Utilities

30 Latvian Public-Private Information Sharing Partnership Model FIU co-ordinates proper information sharing, may take part in information sharing as a full flagged partner Information is shared within designated co-operation group Cooperation group is allowed to share information on particular case and persons involved, and discuss typologies as well Its a two way traffic members of the group are bind to share information in good faith. Pure scooping of information is not legitimate Trust is a key for successful operation of the group/partnership Group enables faster investigation, reduces administrative burden, but still requires high level of accuracy and records trail

31 Latvian Public-Private Information Sharing Partnership Who is involved? Police intelligence units, investigatory authorities, Office of the Prosecutor, the SRS and any obliged entity. Participation of Latvian Regulatory Authority FCMC is optional one The FIU is entitled to select participants What is the scope? The involved institutions and entities upon their initiative are entitled, within the scope of the coordination group, to share information related to ML/TF, attempt to comit ML/TF, another criminal offence or suspicious transaction. Involved institutions are authorized to even examine information obtain in the course of investigation of specific cases

32 Key Tasks to be Resolved while Operationalize the Public Private Information Sharing Partnerships Continuous building of trust! Risk-based and focused training of the participants Education of officials and general public Expansion of the span of entities involved in partnerships Vetting of the private sector representatives involved in partnerships Regular and focused communication of the achievements of partnerships to professional audiences and general public

33 KYC Utility Perspective The Government has decided to assess introduction of KYC utility as a effective and reliable information sharing platform among obliged entities, firms and state registries KYC Utility may not be operational without proper, legally certain information sharing arrangements in place KYC Utility might raise unhampered information sharing among the FIs and the state from an exception to the general rule

34 Thank You!

35 Panel discussion Intra-national public-private, private-private cooperation in the Baltics and elsewhere Panelists: Charles Richiardi, Senior Financial Intelligence Officer, National Economic Crime Centre, UK Ilze Znotiņa, Head of Financial Intelligence Unit, Latvia Laila Medin, Deputy State Secretary, Ministry of Justice, Latvia Juris Bogdanovs, Head of GSI Investigations in Latvia, Swedbank Che Sidanius, Global Head of Financial Crime & Industry Affairs, Refinitiv Moderator: Jānis Kauliņš, Director & Financial Crime Practice Leader at Deloitte Central Europe

36 Coffee Break brought to you by

37 Financial institutions cooperation with national registers Vytautas Danta, CAMS Member of the Board ACAMS Baltics Chapter Head of Compliance, Swedbank Lithuania

38 Trends Requirements Tools Challenges

39 Financial institution are given by the laws a very important and mandatory role to prevent money laundering and terrorist financing know your customer know your customer activity prevent money laundering and terrorist financing report to authorities How does it fit with the new services such as digital onboarding?

40 How we act? Clients with doubtful and/ or non-transparent activities are not served Questions to the customers: Business activities performed? Jurisdictions operated in? Transactional activities performed? Who are the UBOs? Who are the key partners? Who are the target clients and partners? What control measures are implemented within the paying institution? Other

41 The most important thing in KYC process is information Information about customer Information collection and verification Information collection from ID documents, KYC questionnaire and verification in external data sources IT solution / employee Information screening Positive Data screening False Sanction lists PEP list Negative publicity IT solution / employee Risk scoring Depends on activity, geographical factors, etc. High Medium Low IT solution / employee Enhanced due diligence More detail analysis for the decision Decision regarding risk mitigation measures and possibilities to maintain business relations Employee REPORT TO FIU

42 Almost all KYC related information is available from state registers or institutions Data provider State register directly or intermediary Private individuals data Corporate customers data ID details, including picture, Shareholders Activity Official contact details Data collection Financial institution Data use for the onboarding and ongoing due diligence Financial institution

43 The main challenges and areas for the improvements Almost all mandatory KYC data is available in state registers, therefore it is common goal to ensure that financial institutions could be able to use it Cooperation between financial institutions are not effective so far, however there are some good examples There is no common information exchange standard on country level and cross border between state registers and financial institutions State registers should develop effective information exchange solutions which would allow all market participants to connect in the same way without expensive IT developments High data quality should be ensured in state registers, for example PEP and beneficial owners data Data exchange pricing (especially having in mind the current quality of data) is too high for the financial institutions and should be reviewed since financial institutions are implementing mandatory legal requirements

44 Expectations and potential next steps Key expectations: Machine readable / structured data available Key aspects / elements of data being collected (e.g., PEP status, sanctions, etc.) Timeliness of data / more frequent updates of data Centralized collection of data in 1 central point (centre of registers) Cross-country cooperation between (at least?) Baltics Changes required: Change of laws & requirements for companies? More strict monitoring of data quality? (including bigger fines to companies not providing data on a timely basis and/ or providing inaccurate data?) Cross-governmental agreements regarding exchange of data?

45 Thank You!

46 Panel discussion Cooperation amongst national registers and financial institutions - Technical tools in the Baltics and elsewhere Panelists: Laima Letiņa, Deputy Head of the Legal Department, Register of Enterprises, Latvia JMLIT, the UK model for PPP: Results achieved so far, lessons learned The Latvian approach to PPP View from the industry The way forward, given emerging technologies, trends and threats Moderator: Liudas Jurkonis, Member of the Board ACAMS Baltics Chapter, Leader of EY s forensic & integrity practice for the Baltic States

47 Wrap-up & Closing remarks Vytautas Danta, CAMS Member of the Board ACAMS Baltics Chapter Head of Compliance, Swedbank Lithuania

48 Networking & cocktail brought to you by