Risk Based Approach to AML & CTF

Day 1

Setting the Stage: Anti-Money Laundering and Combatting Terrorist Financing Basics

• Current international cases, fines, and legal judgments
• AML/CTF success stories
• Corporate and economic implications of AML/CTF
• Key terms, definitions, and institutional differences
• Legal and regulatory background to AML/CTF

The Money Laundering Process

• Placement, layering, and integration
• Red flags: unique to each business line
• Relationship to terrorist financing and blocked assets
• Roles: who’s responsible for what?

Terrorist Financing Operations

• Funds generation
• Transactions
• Legal and illegal means
• Relationship to money laundering

Case Study and Simulation Exercise 1:Delegates will, through review of a case, be assigned roles (customers, business line, middle and back office, compliance and legal, regulators) to analyze transaction data for possible money laundering activity/terrorist financing, escalation, reporting, investigating, and resolution)

Where It All Starts: The AML and CFT Rubric: Establishment

The Anti-Money Laundering and CFT Program

Design of an AML/CTF Policy

Effective Elements of the AML/CTF Program Policy

Identifying the Effective Elements

• Designation of an AML and CTF Compliance Officer (s)
• Auditing for AML and CTF: internal and external
• Ongoing training
• Due diligence and customer identification
• Scenario, control, and systems testing
• Supervision
• Reporting and information flow: suspicious activity reports
• Surveillance, systems, and investigations
• Staffing, credentials, experience, and characteristics
• Escalation
• Record keeping

Day 2

Combating Terrorist Financing

CTF Goal: to aggressively identify, escalate and deter terrorist organizations’ funding and transactions networks

FATF Recommendations

FATF Global Money Laundering and Terrorist Financing Threat Assessment (GTA)

Risk Assessment Methodologies

FATF: Inclusion vs Exclusion

CTF Resources

• Intelligence analysis
• Sanctions administration
• Enforcement
• Financial regulatory action
• Policy expertise

Implementation and Application of the Rubric

Policies, Procedures, and Controls: Implementation

• Designation of an AML Compliance Officer
• Auditing for AML: internal and external
• Ongoing training
• Due diligence
• Customer identification
• Supervision
• Reporting and information flow: suspicious activity reports
• Surveillance, systems, and investigations
• Staffing, credentials, experience, and characteristics
• Escalation
• Record keeping

Risk Based Approach

• Geography and country risk
• Business risk
• Product risk
• Reputational risk
• Transaction risk
• Client risk
• Process risk

Suspicious Activity Reporting

• Trigger areas
• Information flows
• Preventing terrorist financing through AML 

Case Study and Simulation Exercise 2:Response to Regulatory Review and Implementation of Follow Up Measures. Delegates will simulate A) regulator’concluding a review of a faulty AML Programme at a mid-sized financial institution and B) the financial institution’s response to the AML review and sanctions

Danger Zones: Failures

• AML/CTF compliance policy
• Faulty testing
• Unsatisfactory training and non-compliance with training requirements
• Insufficient resources: systems, technology, and staff
• Lack of follow up: connect the dots

Organizational Settings

• Laws, rules and regulations
• International organizations
• Information sharing
• Industry organizations

Forensic Review of Surveillance and Investigation

• Dissecting an AML/CTF Investigation
• A day in the life of an AML/CTF surveillance team
• Identification of red flags
• Business line specific AML/CTF issues
• Technology and AML/CTF: technology-based schemes, and technology-based monitoring, surveillance, and detection

Day 3

Know Your Customer Best Practices

• Policy statement
• Rationale
• Customer identification programme
• Application of the customer identification programme
• Covered customers
• Data collection: individuals, institutions, official/governmental organizations
• Verification: documentary vs non-documentary
• Logical consistency
• Additional measures
• Lack of verification
• Data from external financial institutions
• Service providers
• High risk accounts

Special Topics

• Shell banks
• Politically exposed persons
• Correspondent banks and foreign banking relationships
• Enhanced due diligence
• Identity theft
• Charitable organizations
• Volume

Monitoring Customer Relationships

• Consistency
• Pattern analysis
• Systems
• Aggregation
• College knowledge vs flagrant indifference
• Risk rating
• Monitoring credit relationships

AML/CTF IN Practice: Implications for Business Lines

• Internet gambling
• Insurance fraud
• Tax evasion
• Wire transfers
• Check collection
• Funds transfer and money transmittal
• Card dystems
• Currency and monetary systems

Class Exercise and Simulation 3:Development of an AML Program Policy

Round Robin: AML/CTF and Sanctions Regulation Development

Course summary and close