MONEY LAUNDERING PREVENTION SYSTEM AT

BBVA INVESTMENTSGroups Members: Chun-Lu

Chuang, Dana Portley, Dora Chen, Eduardo Vieyra, Kara Schmitz,

Hsing Fang Wei

INTRODUCTION: DORA Introduction of the team members -

Dora BBVA Background – Dana Development History – Eduardo Company Analysis – Chun-Lu Industry Analysis – Hsing Fang Compliance Department Value Chain -

Dora Recommendation – Kara

BACKGROUND Money Laundering Definition Three processes of money laundering

1.From illegal to legal2.Many transactions3.Finance more illegal activities

Prevention

BBVA INVESTMENTS A subsidiary of BBVA, the eighth

largest bank in the world. Major clientele in Mexico and South

America. Established compliance department

and anti-money laundering policies

DEVELOPMENTAL HISTORY

DEVELOPMENTAL HISTORY

BBVA Investments, Inc. was incorporated in the United States in 1993 as a brokerage firm.

It is regulated by the Securities and Exchange Commission (SEC).

BBVA Investments is a member of the Financial Industry Regulatory Authority (FINRA)

The Company is located in Houston, Texas, in "The Galleria" Financial Center and has branches in Laredo, San Antonio, El Paso McAllen, and Tucson (to open in 2009).

BBVA Investments Inc. has specialized in providing brokerage services to international clients

DEVELOPMENTAL HISTORY

The anti money laundering systems in BBVA Investments consists of two systems- OFAC and Assist. OFAC is a proprietary system developed by the Information Technology department in BBVA Investments, and Assist was purchased from a third party vendor.

OFAC: This system comply with The Office of Foreign Assets Control regulations of the US Department of the Treasury administers.

ASSIST: Americas Software - TranSactIonS MoniToring- compliance software tool that allows a user to analyze suspicious activity

through account and transaction trend monitoring.

COMPANY ANALYSIS

STRENGTHS Strong ethical and compliance standard

since 1990. ASSIST and OFAC are flexible enough so

that it allows the IT department to perform some customization.

The OFAC system was developed by BBVA.

WEAKNESSES Not fully automated. May out grow the company needs.

SUCCESSES Assist: processing a large number of transactions.

OFAC: preventing people with poor reputation from laundering money.

No major system crash.

DIFFICULTIES It is really hard to keep the systems and

computer equipment up-to-date. Technology keeps changing. Terrorists are always trying to find a new

way to launder money.

MANAGEMENT LEVEL Operational Management level. First line of defense against

money laundering

IMPLEMENTATION EFFECTIVENESS Much more cost effective using

compliance information system OFAC security system : 1. minimizes human error2. more convenient and saves time ASSIST security system:1. user-friendly and easy to navigate

around 2. Keep current with newest regulation

INDUSTRY ANALYSIS

BBVA ANALYSIS Clients for BBVA Investment in South

America & Mexico. New entrants are a threatening force for

BBVA. Anti-Money Laundering System- Assist &

OFAC.

SECURITY SYSTEM FOR BBVA Assist: Assist is for detecting

transactions that deviate from the client’ profiles.

OFAC: OFAC System prevents BBVA Investments from conducting business with the individuals on the government’s and BBVA Group’s lists.

COMPETITORS UBS Investment Bank: Three global core

businesses are included wealth management, asset management and investment banking, and securities trading

Santander Bank: International financial services. It is also engaged globally in wholesale banking means of payment, asset management, insurance and private banking.

VALUE CHAIN

VALUE CHAIN MODEL Michael Porter invented the model in 1985.

Using manufacturing firms business processes.

Primary activities - directly add value to the firm.

Secondary activities - support and optimize the primary activities.

COMPLIANCE DEPARTMENT VALUE CHAIN Steps and Processes

Compliance Review

ComplianceTraining

OFAC List

FinanceInformation Technology

Public Affairs

Legal Services

Human Resources

Customer Score

Customer Profile

RECOMMENDATION

RECOMMEDATIONS Training needs. Investigate system from the acquired

firm Enterprise system The proposed system would include:

Customer Identification Program, OFAC system, Customer Due Diligence Program and Suspicious Activity Report system.

QUESTIONS