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The Money Transmitter Compliance Program A Quick Training for Compliance Officers Presented by: Juan Llanos , CAMS - Alan Unangst , CAMS - Fabio Fernandez , CAMS - Juan Llanos, CAMS

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Structural Prerequisites

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The Money Transmitter Compliance ProgramA Quick Training for Compliance OfficersPresented by:Juan Llanos, CAMS - juanbllanos@hotmail.comAlan Unangst, CAMS - aunangst@crowechizek.comFabio Fernandez, CAMS -


Juan Llanos, CAMS

Structural Prerequisites

© 2006 Juan Llanos


Juan Llanos, CAMS


Handbooks, written policies, talk

(lawyers, public relations)


Operationalization, quality, walk

(compliance officers, managers, leaders)

© 2006 Juan Llanos


Juan Llanos, CAMS

How L+C+H Interrelate

  • Leaders and founders role model acceptable behavior and influence hiring, i.e., their actions and omissions create…
  • Culture, in turn, is assimilated by employees through socialization and observation, and is reinforced via…
  • HR practices and omissions: selection, performance evaluations, training, promotion, etc.

Bad leadership = unhealthy culture

Unhealthy culture = Enron, Riggs, AmSouth, etc…

© 2006 Juan Llanos


Juan Llanos, CAMS

Principles / Beliefs

  • Compliance
      • must be a C-level position
      • is cross-functional / -hierarchical
      • is an investment center
      • must be operationalized in business processes
      • is more about attitude and behaviour than about knowledge of laws and facts
  • Leaders’ actions and omissions –the tone they set from the top– have an enormous impact on the organization
  • Leaders must actualize commitment by providing authority, resources and public support
  • Ultimate responsibility lies with the Board

© 2006 Juan Llanos


Juan Llanos, CAMS




Minimum Standards

As little as can get away with

Unthinking, mechanical


Enforcement lesson

Basic training

Compliance Culture

By the book


Supervising / Educating

Look for early warnings

Themed, focused visits

Beyond Compliance

Risk focused, self-policing

Ethical business

Educating / Consulting

Culture development

Lighter touch


Spirit, not just letter

Focus on prevention

Strong learning

Mature relationship

Reinforce best practice


Reallocate resources to problem firms

© 2006 Juan Llanos

Source: Financial Services Authority, UK

using the risk assessment to drive your aml program
Using the Risk Assessment to Drive your AML Program
  • Identify Specific Inherent Risk Categories
  • Products/Services and related entity agreements - complexity
  • Agents – training, experience, supervision/compliance reviews, record keeping and contractual agreements
  • Customers – identification requirements, recordkeeping and volume
  • Geographic Locations – regional/national vs. international
  • Transaction monitoring systems – automated/manual, aggregation
  • Transaction Volume – frequency, amount and tracking capabilities
  • Investigations and filing Suspicious Activity Reports (SARS)
  • OFAC – compliance, review and timeliness of reporting requirements, SDN lists
  • Organizational factors including your size, market share, structure and complexity of your business
  • Correspondent Accounts – documentation and settlement
using the risk assessment to drive your aml program8
Using the Risk Assessment to Drive your AML Program
  • Risk Rank Each Category
    • Use available data and document workflows
    • Interview process
    • Identify greatest inherent risk categories
    • Risk rank high/medium/low
  • Gap Analysis
    • Review status of outstanding independent audit findings/exams
    • Identify new issues
    • Non-compliance with internal policy or regulations
    • Violations of law (VOL)
using the risk assessment to drive your aml program9
Using the Risk Assessment to Drive your AML Program
  • Managing Risk
    • Project Planning/Execution
    • Written Policies and Procedures
    • Monitoring/Self Testing
      • Internal controls
      • Transaction Monitoring Systems
      • Agent location compliance reviews
      • Reporting and record keeping
    • Training
      • Initial and periodic updates and documentation
      • Adequacy - Does it work/Did you test it
    • Remediation
      • System and procedural enhancements
      • Allocation of resources
      • Enhanced Due Diligence
    • Independent Audit
      • Frequency
      • Scalability
using the risk assessment to drive your aml program10
Using the Risk Assessment to Drive your AML Program
  • Questions to ponder
    • Is your organization actually taking a risk based approach to it’s AML program?
    • Is the AML Risk Assessment at a granular enough level that the business can actually use it to balance risk, operational efficiency and profitability?
    • Has the unique AML risk profile for each business unit been reviewed as to high risk agents (customers), services and geographies?
    • Are AML training, testing and monitoring programs based on your AML Risk Assessment?
    • Is management involved in your AML program?
    • Is your Risk Assessment periodically updated?
    • Are AML Risks reviewed for all agents/customers?
    • Are AML Risks considered in the development and pricing of new services before they are implemented?

Juan Llanos, CAMS

© 2006 Juan Llanos


Critical Elements of AML Supbrograms

AML Compliance sub-programs are, in essence, independent components of your company-wide AML Program that establish a reasonable and practicable framework for acceptance, monitoring and termination /reporting of:

  • Clients: Customer Identification Program or Know Your Customer
  • Agents: Know Your Agent (KYA)
  • Correspondent Banks: Know Your Correspondent Bank (KYCB)
  • Employees: (KYE)
  • Also others such as independent auditors, acquisition targets, etc.
critical elements of your kyc sub program

Critical Elements of Your KYC Sub-program

Step 1 (Ground ‘0’):Establish a “reasonable” and “practicable” customer identification program (CIP) or Know Your Customer (KYC) policies, procedures and internal controls that…Step 2:Properly identify and verify customers before every transactionStep 3:Monitor activitiesStep 4:Report suspicious transactionsStep 5:Decisions to terminate, to block or to include a customer in the company personal SDN listIn all steps and throughout the customer life cycle: KEEP RECORDS!

critical elements of your kyc sub program14

Critical Elements of Your KYC Sub-program

The CIP must be used in connection to your firm’s Suspicious Activity monitoring, investigation, determination and reporting process


Critical Elements of Your KYC Sub-program

Common Weaknesses Found in KYC Sub-programs

  • No written program, improper training or communication to key staff
  • Culture of circumventing the system
  • Program fails to collect minimum identifying information or only requires minimum information above a certain threshold amount
  • EDD based solely on requesting more documents without proper verification and authentication of information provided
  • Client “constellations”: By altering few letters on his/her first or last name, same individual creates different sender/receiver accounts in your system, sometimes even using fraudulently altered IDs and wrong information.