How to Combat Money Laundering, Financial Crime and the Abuse of Electronic Payments
HOW TO COMBAT MONEY LAUNDERING, FINANCIAL CRIME AND THE ABUSE OF ELECTRONIC PAYMENTS
Increasingly, policymakers and financial supervisors recognise that the ability to protect the financial and payment system from abuse is among their most important duties. Public officials also have to be able to demonstrate that they are both well-informed about the policies required by international organisations and complying with them. Clearly there is the natural desire to erect defences against financial criminals, but it is also essential to demonstrate the effectiveness of those defences to external evaluators.
The Financial Action Task Force on money laundering (FATF), the International Monetary Fund (IMF) and the European Union are all now working to ensure that members and non-members alike upgrade significantly their framework for combating money laundering. The IMF’s programme of country assessments, and the new stance of the US administration, means that central banks and regulatory authorities must focus as never before on how to ensure that they meet international standards in this area. All the competent authorities and institutions realise the need to upgrade skills and techniques in this area, and the need to share and disseminate knowledge and best practice.
To help officials keep in touch with this rapidly-moving regulatory environment, this training course/seminar pinpoints what financial policymakers (as financial supervisors, and as overseers of national payment systems) can do to prevent the misuse of their banking/financial/payments system for money laundering or other criminal purposes, and to address the international pressure to demonstrate compliance with standards. It is a pragmatic course, intended to provide practical solutions.
The seminar meets in roundtable format to allow an international group of delegates maximum opportunities to learn from each other. The elite panel of speakers comprises leading regulators, academics and practitioners. The seminar will be chaired by Richard Pratt, former director general of the Jersey Financial Services Commission and now a regulatory consultant to the IMF and others, and who writes and lectures on anti-money laundering issues. All discussions are held in small groups to encourage lively and informal debate. The discussions are completely private, and only public policy officials are able to attend.
Key sessions examine:
• the changing international standards for best practice in this area;
• the key steps involved in upgrading and reforming national anti-money-laundering systems;
• meeting the expectations of international evaluators;
• the practical and technical difficulties involved in preventing the misuse of electronic payments; and
• the most effective models for international cooperation between regulators and judicial and investigative authorities around the world.
Each topic allows participating supervisors and central bankers an opportunity to “benchmark” their work against best practice internationally and to exchange views with their peers in an informal setting.
For more information about the programme, please take a few moments to look at the detailed course contents presented on the pages which follow.
I look forward to welcoming you to Windsor.
Yours sincerely,
William Clarke, PhD, CBE
Chairman, Central Banking Publications
Chairman: Richard Pratt, Regulatory consultant and former director general of the Jersey Financial Services Commission
The FATF
requirements for the legal infrastructure
Introduction
In June 2003, the Financial Action Task Force
on money laundering (FATF) released a wholesale revision of its antimoney-laundering
blueprint. Coupled with new special recommendations on combating terrorist
financing, the latest agreed in October 2004, these changes represent
the most significant extension of the FATF rules since their introduction
in 1990. Financial market authorities must be aware of all the new responsibilities
imposed on them by these revised standards. In addition, supervisors
must understand how, in practical terms, FATF standards can be adapted
by them to prevailing legal and national circumstances. This session
examines the implications for central bankers and supervisors of the
FATF's evolving agenda.
Enforcing the requirements on regulated institutions
Richard
Pratt
How can regulators ensure that their requirements
are being complied with and that their AML regime is robust? This session
will look at core elements necessary for successful implementation and
enforcement, including systems, controls, training and records. What
are the key features of corporate governance that institutions should
be expected to adhere to in order to satisfy the regulator?
Complying with US extraterritorial requirements
Dr
Kern Alexander
Judge Institute, Cambridge
University
Following the terrorist attacks on America, the
US administration has placed efforts to deny funds to terrorists, and
prevent money laundering at the top of its agenda. The US Financial
Services and Modernization Act 2000 and the PATRIOT Act provide US authorities
with substantial new powers to regulate the global activities of multinational
banks. Given the significance of the US dollar in the world’s
financial system, US legislation has a profound effect on any institution
with an international presence. This session examines the implications
of this legislation for non-US supervisors.
EU directives
Richard Parlour
Financial Markets Law International
Changes to European Law will also have consequences
for regulators beyond the European Union (EU). The EU is currently consolidating
existing anti-money-laundering legislation into a new, third money laundering
directive. This will bring a wide range of non-financial firms under
the scope of the rules. This session examines the implications and obligations
for member and non-member states, and what lessons other regulators
can draw from the EU approach.
Martin Greaves
Risk Resolution International
Anti-money-laundering regulations are now supposed to cover a swathe of institutions, from banks and other financial service businesses, to lawyers and accountants, casinos, and dealers in high-value goods. In this session the speaker, himself formerly a principal financial investigator at the Serious Fraud Office and money-laundering reporting officer for Citigroup UK, will look at the particular considerations that apply when regulating these areas, and what requirements should be applied to them.
Meeting Basel committee standards
Martin Greaves
Risk Resolution International
For banking regulators, the standards issued by the Basel Committee on Banking Supervision, are critically important. In particular, the committee’s “customer due diligence” standards and those on consolidated know-your-customer (KYC) risk management, establish a detailed international benchmark for banks’ KYC practice. This session will examine the implications for banks and regulators of these requirements, and how practically banks and regulators can best implement them.
Protecting the payment system
Martin Greaves
Risk Resolution International
What can central banks and other responsible authorities do to prevent the payment system being used for criminal purposes? This session will consider the potential value of payment systems to launderers and terrorists and how technological and supervisory imperatives relate to payment system oversight, including how to apply AML requirements to payments systems service providers.
Commercial banking perspective – implementing know-your-customer rules
Sally Scutt
Deputy Chief Executive, British Bankers Association
The first line of defence against money laundering or the financing of terrorism must be the individual financial institutions that are in direct contact with customers. Many large financial institutions are undertaking root-and-branch reform of their procedures, especially with regard to certain firms and transactions – including private banking, correspondent banking relationships and shell banks –perceived as high risk. This session considers the new safeguards, which financial institutions have put in place, how this affects their foreign branches and subsidiaries, and how much of this experience is more widely applicable.
The
regulator and its relationship with the financial intelligence unit
Martin Owen
Head of financial crime policy unit,
Financial Services Authority
Mounting investigations – case studies
David Thompson
Formerly Head of Economic Crime, Northern Ireland
Cooperation between regulatory and law enforcement authorities must be at the heart of an effective AML regime. This session, drawing on the experience of the presenter as an investigator in Northern Ireland, will look at how investigations into money-laundering activities are conducted, drawing on case studies to highlight the use of information obtained through AML programmes and the role of the regulator in providing assistance.
International co-operation
Richard Pratt
International co-operation in the form of information exchange, asset freezing, taking testimony and obtaining documents is essential to a successful defence against money laundering and terrorist financing. This session examines the standards required of financial supervisors and the issues that arise when they are asked to share information with others, including FIUs and regulators from different sectors.
Managing intelligence on individuals and firms
David Leppan
CEO, World-Check
Combating money laundering and the financing of terrorism requires above all that regulatory authorities compile and keep up-to-date lists of suspicious persons and organisations. New FATF recommendations require supervisors to pay particular attention to “politically exposed persons” (i.e. high risk individuals who may be conduits for looted funds). Each of these responsibilities requires new skills and intelligence handling capabilities by banks and their supervisors. This session draws on the experience of World-Check, a private sector provider of intelligence to the financial industry, to examine how these new duties can be discharged.
Effective
evaluation of anti-money-laundering regimes
John
Aspden
CEO of the Financial Supervision Commission
in the Isle of Man
Increasingly, financial supervisors themselves are
expected to submit to evaluation by international examiners. Such evaluations
now focus not only on the financial regulatory regime in general, but
also on how well the regime works to combat money laundering. How are
these evaluations conducted, and what do supervisors need to understand
about the evaluation process? How can financial market authorities best
cooperate with this scrutiny to achieve the most positive outcome?
Course conclusion
In the final session, delegates reflect on lessons
learnt and identify priorities for action at national and international
levels.