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Session 5

A n ti - M o n e y L a u n d e r i n g & F i n a n c i a l C r i m e

Conducting or Supporting the Investigation Process

Presented by

ERM Institute

Monday , 24 February 2014

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Session 5 | Conducting or Supporting the Investigation Process

Session Objectives

• Understand the triggers and components of an AML Investigative Process.

• Explain how an AML Investigative Process takes place and how to respond to it.

• Identify the benefits of having an internal Investigative Process.

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Session 5 | Conducting or Supporting the Investigation Process

LAW ENFORCEMENT INVESTIGATIONS

• Law enforcement investigations can be triggered by several factors including the receipt of suspicious transaction report (STR), information from other cases and tips (inside or outside government).

• Once such investigation is commenced, the law enforcement agencies (LEA) might request information from the financial institution to obtain evidence.

• Request for information can come in several forms including subpoenas and search warrant.

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Session 5 | Conducting or Supporting the Investigation Process

STEPS FOR CONDUCTING ML INVESTIGATIONS

• Follow the money• Identify the unlawful activity• Document the underlying activity and transactions

– (flow of funds through various banks)

• Review databases– Public records, Licensing and registration files

• Analyse the financial transaction and account activity• Review STRs for potential linkages to target• Conduct computer-based searches• Seek international assistance where necessary.

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Session 5 | Conducting or Supporting the Investigation Process

DECISION TO PROSECUTE

• If the institution has a criminal history.• If the institution cooperated with the investigation.• If the case was discovered and self-reported.• Whether there is a comprehensive AML program• Whether the institution has taken timely and effective

remedial action.• If there are civil remedies available for punitive

measures.• Deterring wrongdoing by others

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Session 5 | Conducting or Supporting the Investigation Process

RESPONDING TO AN INVESTIGATIVE PROCESS

• The first rule is to respond quickly and completely to all request.

• However if a request is overly broad, the institution may attempt to narrow it or even seek to contest the request.

• The financial institution needs to ensure that the appropriate senior management is informed and someone designated to respond to all request.

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Session 5 | Conducting or Supporting the Investigation Process

RESPONDING TO AN INVESTIGATIVE PROCESS

• If the institution is the target of investigation, then the Board should be informed as well.

• Reports of investigations should not be provided to any employees or directors implicated in the proceedings.

• When an investigation is directed at the institution, consideration should be given to the retention of qualified, experienced legal counsel.

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Session 5 | Conducting or Supporting the Investigation Process

RESPONDING TO AN INVESTIGATIVE PROCESS

• The counsel may guide the institution through the inquiry, contest request and negotiate settlements if necessary.

• However, it is necessary for the investigated institution to carry out an internal inquiry to determine the facts and the exposure the firm faces.

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Session 5 | Conducting or Supporting the Investigation Process

ORDERS TO RESTRAIN /FREEZE ACCOUNTS OR ASSETS

• The institution should obtain a copy of the order and comply with it.

• Generally, the order is obtained based on a sworn affidavit which may provide clues about why a customer’s information is being requested.

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Session 5 | Conducting or Supporting the Investigation Process

ORDERS TO RESTRAIN /FREEZE ACCOUNTS OR ASSETS

Monitoring the response Financial institutions should ensure that all

information request are reviewed by senior management, an investigative group or counsel to determine how best to respond.

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Session 5 | Conducting or Supporting the Investigation Process

DEALING WITH INVESTIGATORS

• The most effective strategy is to cooperate with investigators and prosecutors.

• Cooperation may include making employees, including corporate officers available for interview, producing documents and voluntary reports.

• The institution should also learn how the investigators/prosecutors view facts.

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Session 5 | Conducting or Supporting the Investigation Process

OBTAINING COUNSEL FOR INVESTIGATION

• In-house counsel will have a better knowledge of the institution, its personnel, policies and procedures.

• However an outside counsel may be more appropriate if the investigation could involve indictment.

• The counsel should be experienced and knowledgeable with the factual and legal issues.

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Session 5 | Conducting or Supporting the Investigation Process

NOTICE TO EMPLOYEES

• Employees should be instructed not to produce corporate document directly unless senior management/counsel have been informed.

• Documents should be provided to investigators/prosecutors for production.

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Session 5 | Conducting or Supporting the Investigation Process

MEDIA RELATIONS

• If the facts are not on the institution’s side, ‘no comment’ may be the best response it can offer.

• Misleading statements such as - “We have no problems and have done nothing wrong.” – can worsen the situation

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Session 5 | Conducting or Supporting the Investigation Process

INTERNAL INVESTIGATIONS

The following may warrant the conduct of internal investigation:• Information from third parties, such as customers.• Information from employees.• Information derived from monitoring systems.• Receipt of government search warrant or subpoenas.• Report of examination from the regulators.• The filing of civil lawsuit against the institution.

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Session 5 | Conducting or Supporting the Investigation Process

CLOSING THE ACCOUNT

• Based on its internal investigation, the institution should make an independent determination as to whether to close the account or file an STR.

• Factors that may be considered before any such closures may include the ff:– The legal basis – The institution's stated policies and procedures.– The seriousness of the underlying conduct.– If the account is to be kept open, a written request should be

received from the law enforcement on a proper government agency letterhead with the appropriate authorized signature.

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Session 5 | Conducting or Supporting the Investigation Process

CONDUCTING THE INVESTIGATION

• In the course of conducting an internal investigation, the institution will normally review documents, interview employees and generate written reports.

• The institution may deal with law enforcement investigators or to what extent to involve a counsel.

• Procedures should also be established to keep senior management, board of directors apprised on the internal investigations.

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Session 5 | Conducting or Supporting the Investigation Process

CONDUCTING THE INVESTIGATION

• Meta search – a number of different search engines.

• Specific search engines focusing on keywords such as individual habits, education, interest and the use of the internet.

• The internet may review location of target, income levels, population statistics, crime rates etc.

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Session 5 | Conducting or Supporting the Investigation Process

GATEWAY FOR AML COOPERATION

• Mutual legal assistance • Financial Intelligence Units• The supervisory channels

• FATF Recommendations 36-40 also deals with mutual legal assistance treaties, extradition, confiscation of assets and mechanism to exchange information.

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Session 5 | Conducting or Supporting the Investigation Process

CONCLUSION• Conducting investigations related to AML could be very

complex and sometimes could span over several years.• It is therefore essential to recognise that the

investigative process requires the collaborative efforts of all relevant institutions.

• Financial institutions are however to ensure maximum cooperation with the law enforcement/investigators in order to collectively succeed in the fight against ML/TF.

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Session 5 | Conducting or Supporting the Investigation Process

QUESTIONS?

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