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Caribbean Indigenous Banks Anti-Money Laundering Survey. An analysis of the local challenges. Patricia Hamilton CEO Caribbean Association of Indigenous Banks Inc. -. Know your customer (KYC) . Account Opening. -. Anti. money laundering standards and procedures. An Integrated Approach.

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Caribbean indigenous banks anti money laundering survey l.jpg

Caribbean Indigenous Banks Anti-Money Laundering Survey

An analysis of the local challenges

Patricia Hamilton

CEO Caribbean Association of Indigenous Banks Inc.


An integrated approach l.jpg

-

Know your customer (KYC)

Account Opening

-

Anti

money laundering standards and procedures

An Integrated Approach

Compliance Requirements

International, Regulatory, Industry, Third Party, Internal

Anti-Money Laundering Strategy

Business and organisation

Processes & Initiatives

.

Investment suitability

Risk assessment

Security & technology usage

Tax etc.

Investent suitability

Training and Awareness Program

Management Commitment

-

Administrative and end

user

policies and procedures

-

Data

KYC

Transaction Monitoring/

Tactical short term

AML Reporting

Tracking Processes

solutions

Access/Mining

Cost of Compliance




Management support l.jpg
Management Support

AML is a key value; a function of the integrity of the company and as such must be promoted by directors and management.

Key values are supported by management behavior:

- Visible attention and appreciation

- Agenda item in board meetings

- Element of staff assessments

- Available budgets for IT, training etc.

- Status & powers of the AML officer


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The “tone on top”

Most consider management to be supportive.



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Centralized vs. Decentralized Compliance Function

Centralized

Advantages

  • Limits differing interpretations

  • Limits data entry error

  • Quality Control is easier

    Disadvantages

  • Skills required of staff

  • Backlog

Decentralized

Advantages

  • Skill set applied to entry

    Disadvantages

  • Quality Control

  • Enforcement


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Management of AML efforts should come from throughout the organization

  • Establish a “culture of compliance”

    • Set tone at the top

      • Top management is ultimately responsible for compliance

    • Business is responsible for day-to-day compliance

    • Compliance management plays a key role in corporate governance, monitoring and advisory functions




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Technology as a compliance enabler organization

Rules Refinement

Customer Profiling

Manual

Workflow

Where most Caribbean banks are

Enterprise Profiling

Integrated Organization

The above maturity model depicts how Compliance systems can evolve

Advanced Monitoring


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Support systems organization

Just above half report adequate manual & technological support.


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Use of Technology for AML organization

77% have either invested or have plans to invest in the future.


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Capabilities of Transaction Monitoring Software organization

A= Client Profiling

B= Transaction Profiling

C= Historic Client Behaviour

D= Pattern Recognition of Transactions

E= Peer Grouping

F= All of the Above

Most respondents report that their transaction monitoring system has all 5 features.



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Impact of Software organization


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Challenges: Training organization





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Accountability- A necessity organization

  • The key challenge for many financial institutions is to sustain the effectiveness of their AML programs on an ongoing basis.

  • An AML Accountability Review addresses issues related to corporate risk management and the legal liability of corporate directors, officers, supervisors and staff in managing the reporting cycle for suspicious transactions.



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Familiarity with consequences for breaches organization

Most staff are considered to be familiar with consequences for breaches.



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How do we rank? organization

Experience in other jurisdictions shows that a common problem is a lack of skilled and experienced staff with anti-money laundering expertise.

How do we rank?


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Numbers of staff dedicated to AML organization

Most banks employ 1-5 staff whose primary duty is AML. The majority of these are responsible for Transaction Monitoring.


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The skill-set of staff organization

Although in small numbers, staff are considered to be adequately skilled in AML & CFT.



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The ideal operational infrastructure organization

Maintenance

Governance

Account / Transaction

Monitoring

Policy & Procedures

Risk Assessment

Organization & Controls

Threads

RiskProfile

People

Process

Record Keeping / Retention

AML

Regulatory

Requirements

Technology

Reporting

Structure

Testing

Training / Testing


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Budgetary Expenditure organization

33% have spent over US $100,000 on Transaction Monitoring.


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Specific Use of Budgetary Funds organization

A= Increase in staff

B= Enhancements to existing transaction monitoring system

C= Implementation of automated transaction monitoring system

D= Training

E= Conferences

F= Other

Most respondents reported a combination of methods B, D & E.


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Methods for indentifying suspicious activity organization

Least

Used

A= Reliance on employees’ vigilance

B= Review of exception reports

C= Internally developed transaction systems/exception reports

D= Vendor supported automated transaction monitoring system

Most respondents (28%) reported a combination of methods A, B & C while 17% reported using all four methods.


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Policies & Procedures organization

However, 50% of these apply only to the Compliance department.


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To conclude… organization


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Essential Elements of Effective AML organization

  • Management support, commitment, accountability, “tone at the top”

    2. Effective governance structure to oversight line of business functions

    3. Comprehensive and actionable policies and procedures to reflect global and country specific requirements

    4. Appropriate compliance communication, awareness, reporting, and education plan

    5. Process to identify and implement regulatory requirements timely and effectively


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Essential Elements of Effective AML, cont’d. organization

  • Monitoring/self-assessment programs to effectively detect violations and weak control systems

  • Reporting and communication processes to ensure the status of significant compliance issues are communicated

  • Tracking process for corrective actions required due to results from monitoring programs, complaints, Internal Audit, and regulatory reports

  • Effective training programs

  • 10. Involvement of compliance function in the development of new products and services


Questions l.jpg

Questions? organization


Caribbean indigenous banks anti money laundering survey39 l.jpg

Caribbean Indigenous Banks organizationAnti-Money Laundering Survey

An analysis of the local challenges

Patricia Hamilton

CEO Caribbean Association of Indigenous Banks Inc.


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