Larc2013 - Regulatory Plenary
Transcript of Larc2013 - Regulatory Plenary
1 SWIFT Latin American Regional Conference - 11-12 July 2013
Jim
Wills
SWIFT
USA
Silvana
Mesquita
Mark
Samara
BTG Pactual
Brazil
OFAC
Colombia
The Evolution of Central Counterparty in Latin America and
the Need for More Oversight (Spanish)
@swiftcommunity
#LARC2013
Regulatory Plenary
OFAC Sanctions: Who, What, Where…
…and Iran and TBML too!
“Instead of being a secondary measure, as in the past, economic sanctions have become a centerpiece of national security policy.” - Washington Post 03/23/2011
Who is OFAC?
OFAC administers and enforces economic and trade sanctions against targeted:
Foreign governments
Individuals
Entities
Vessels
Practices
OFAC is Not a Bank Regulator
OFAC cannot mandate compliance
We can (and do) impose penalties for violations
We work with regulators to ensure compliance
by U.S. financial institutions
Jurisdiction – To Whom Does OFAC Apply?
• Individuals located anywhere in the world, doing business in the United States or through U.S. persons
• Corporations located anywhere in the world, doing business in the United States or through U.S. persons
• Transactions:
– Transactions by foreign persons to extent they involve the United States;
– Transactions in property of blocked person within the United States;
– In limited circumstances, transactions involving
controlled U.S.-origin goods or technology.
OFAC Terminology: Blocking v. Rejecting
BLOCKING
“Freezing” assets under U.S. jurisdiction
Across-the-board prohibitions against transfers or transactions regarding the blocked property
Title of blocked property remains with sanctioned target
REJECTING
Underlying transaction that is prohibited, but contains no “blockable” interest
U.S. person must simply refuse to process the transaction
Specially Designated Nationals (SDN) List
OFAC’s prohibited parties list
Over 6,000 individuals and
entities identified by OFAC
Individuals, entities, vessels,
banks all over the globe who are
owned, controlled by, or acting
on behalf of targeted
governments or groups
UPDATED FREQUENTLY!!
Active Sanctions Programs (23)
Sanctions Programs
Balkans Iran North Korea
Belarus Iraq Sudan
Burma Lebanon Syria
Cote d’Ivoire Liberia Somalia
Cuba Libya2 Transnational Criminal Organizations
Congo Kingpin Narcotics Yemen
Diamond Trading Narcotics Trafficking Zimbabwe
Global Terrorism NPWMD
Comprehensive Sanctions Programs
• Cuba
• Iran
• Sudan
• Syria
These countries have trade
restrictions!
Limited Sanctions Programs
• Burma
• North Korea
• Diamond
Trading
List-Based Sanctions Programs: Regimes
• Balkans
• Belarus
• Congo
• Ivory Coast
• Iraq
•Liberia
• Libya
• Zimbabwe
List-Based Sanctions Programs
• Terrorism
• Proliferation
• Narcotics
Trafficking
• Lebanon
•Yemen
• Somali Piracy
•Transnational Criminal
Organizations
Sanctions Impact Iran – OFAC designated 360+ names linked to Iran
(Weapons of mass destruction, support for terrorism, and Iran’s energy and trade).
o As a result of U.S. sanctions and outreach:
• Most foreign financial institutions have dramatically reduced their business w/ Iran.
• Those foreign financial institutions that run afoul of U.S. sanctions risk having their access to the U.S. banking system restricted or being cut off
– Pursuant to CISADA, in July 2012 Treasury identified two foreign banks:
Kunlun Bank in China // Elaf Islamic Bank in Iraq.
• Reports indicate that Iranian oil-revenues have dropped by 50%
Burma –Sanctions targeted Burmese regime’s repression of democracy.
o As Burma made progress in political reform Treasury has eased sanctions
• Sanctions no longer prohibit U.S. persons from engaging in new investment in Burma
• Sanctions no longer prohibit U.S. banks from exporting financial services to Burma
Iran Sanctions: Is there even more now??
First East Export Bank PLC
Labuan, Malasia
Vobster Shipping Company Ltd.
Malta
Cobham Shipping Company Limited
Isle of Man
Banco Internacional de Desarrollo C.A.
Caracas, Venezuela
Eleventh Ocean Administration GMBH
Hamburg, Germany
Galliot Maritime Inc.
Panama
International Safe Oil
Malasia
Hercules International Ship
Atenas, Grecia
Cylinder System LTD
Croacia
MCS Enginerring
Alemania
Kont Investment Bank
Tajikistan
Golden Resources Trading Company LLC
Dubai, UAE
One Class Properties (PTY) LTD.
Sudafrica
Overview
1. IFCA
2. E.O. 13645
AML Compliance & Onboarding Controls
July, 2013
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Money Laundering Phases Money laundering refers to the process of concealing the source of legally, illegally, and grey area obtained monies.
Layering (means separating the illegally
obtained money from its source
through a series of financial transactions
that makes it difficult to trace the origin)
Integration (means converting
the illicit funds
into a seemingly legitimate form)
Placement (physically placing
illegally obtained money
into the financial system)
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How to Mitigate AML Risks
Deals
With 3rd parties?
What is THIS source of funds?
Compatible with income and wealth?
Compatible with business activity?
Suspicious transactions must be reported
Corporate Governance
Knowledge constant update
AML involvement in new products and structures
Training Sessions and Communication Memos
KYC
Who is the customer?
What is the source of funds?
Are there Negative News?
PEPs?
Sanctioned?
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High Risk Customers
PEPs (Politically Exposed Persons),
SIAPs (Sensitive Industry Affected Persons),
SCAPs (Sensitive Country Affected Persons),
Media (Persons involved in scandals and proceedings).
IDENTIFICATION
APPROVAL
MONITORING
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Onboarding Controls
Background Checks
Documentation Review
Systems
Digital Files/ Archives
Powers/ Signatures
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AML Compliance main attributions
High Risk Names
Approval
Monitoring
Annual Review
Transactions
Individual Limits
Monitoring
Review and Approval of
Alerts
Due Diligences
Documents verification
AML Policies review
Register on Regulators
Internal Approvals
Policies and Procedures
Annual Review
Internal Memos
Market Best Practices
Training
Basic AML (for all employees)
Account Opening
Foreign Exchange
Background Checking
Senior Management
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Contact and Questions
E-mail to:
DL-AML-Brazil
Silvana Mesquita – Tel . 55 11 33832536
Q&A
?
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