SUSAN NAUGHTON ACII ACOI

NOVEMBER 2016 CPD BLITZ

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

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

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

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

AN INSIGHT INTO TERRORIST FINANCING

Short Video for insight

• Money Laundering

• Terrorist Financing

• What firms are required to Do

• What firms can do

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 ?

RECENT CENTRAL BANK INITIATIVES ?

CBI WEBSITE

LETTER TO THE ULSTER BANK

INTERMEDIARY TIMES

Common Points

• Policies and procedures

• Adherence to procedures

• Proper Risk Assessment

• Training

• Reliance on Third Parties

• Previous Business

IN SUMMARY

• Procedures & Practices

• Client Identification

• Risk based Customer Due Diligence Measures

• Record Keeping

• Staff Training

• Reporting

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,

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

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.

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

CENTRAL BANK REQUIREMENTS

• Training

• Policies and procedures

• Formal approach to AML/CFT risk assessment

• Customer due Diligence

• Management Information

• Keep Records

EVIDENCE IS REQUIRED

• AML/CFT Supervisory Strategy

• Onsite inspections key areas tested:

• Corporate Governance

• Customer Due Diligence

• Ongoing Monitoring

• Suspicious Transaction Reporting

• Training

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, ‘’

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….

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.]

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.

TYPES OF DUE DILIGENCE

• Simplified Customer Due Diligence

• Customer Due Diligence

• Enhanced Customer Due Diligence

RECORD A SUSPICIOUS TRANSACTION

Report Suspicious Transactions

• Revenue

• Gardaí

REMINDER- WHY IS IT IMPORTANT

Sources of Illicit Funds

• Prostitution

• Counterfeit Goods

• Drug trafficking

• Tobacco & Fuel

• Human trafficking

• Property crimes

• Tax evasion3

Consequences

QUIZ