commonalities, money laundering, compliance 8 18-14

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Slides from the CFCS Prep webinar series held on August 18th

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  • 1. Part 1: Financial Crime Commonalities Money Laundering Compliance Programs Ethics CFCS Examination Preparation Series August 18, 2014
  • 2. Brian Kindle Executive Director Association of Certified Financial Crime Specialists Miami, FL
  • 3. Certification | News Guidance | Training | Networking Global Private and Public Sector Community
  • 4. The Mark of Knowledge and Skill The Designation the Times Demand CFCS Certification
  • 5. Provide overview of material on CFCS exam Highlight key areas, subjects that appear on exam and suggestions of what to focus Offer exposure to practice questions that show structure of exam Goals of CFCS Prep
  • 6. About the Exam 145 scenario based, four choice, multiple choice questions Four hour exam session with no breaks, at one of over 730 testing centers or online proctored Passing rate is 68% Results given immediately
  • 7. Preparation Suggestions Recommended three weeks of study, if you commit 6 8 hours a week Review manual in detail, including referenced materials in appendix Prepare based on your own strengths and weaknesses Exam based on best practices, not what particular organizations do
  • 8. Financial Crime Commonalities CFCS Examination Preparation Series August 18, 2014
  • 9. Defining Financial Crime and its Permutations Crimes that have money or economic advantage as goal Non-violent action resulting in unlawful taking, moving or disguising of money or other value by artifice, corruption or deception for benefit of perpetrator or another ACFCS does not include profit-motivated crimes, like drug and human trafficking at their source But, nearly all criminals become financial criminal when they possess or control the criminal proceeds
  • 10. The Financial Crime Spectrum Money laundering Fraud Corruption Tax evasion Terrorist financing International standards Data security Asset recovery Sanctions Compliance programs Ethics Money and commodities flows Investigations
  • 11. Globalization of Financial Crime FCPA, UK Bribery Act, GAC crackdown FATCA, IGAs, multinational tax enforcement OECD automatic financial account data exchange Global push against secrecy havens G20 call for greater financial transparency, cooperation FATFs changing standards pointing to convergence
  • 12. Technology and Financial Crime Cybercrime is increasing exponentially Interplay between cybercrime and other financial crimes data breaches and fraud schemes, money laundering through virtual currencies, etc. Compliance and enforcement technology-driven Data analytics in transaction monitoring, investigations, customer due diligence Data security grows in importance for public, private sectors
  • 13. Commonalities of All Financial Crimes Require money laundering Require a financial institution Result in tax evasion Have interface with a government agency Create necessity to recover assets Often involve multiple countries Often involve public or private corruption
  • 14. 14 Benefits of Convergence Regulatory expectations, emerging best practice Government agencies doing it Leveraging data, systems, tools to access and study data Common case management system Helps manage stakeholder interests, expectations Can produce better SARs All financial crime cases have AML component Many cases involve complicit employees; security, HR Broader career choices for staffs of converged units
  • 15. 15 Practical Considerations on Convergence A single financial crime job family Sharing best practices Merge organizations or just work together? History and culture clash Skills some units have skills others lack Managing internal stakeholders expectations Managing external stakeholders expectations
  • 16. Money Laundering CFCS Examination Preparation Series August 18, 2014
  • 17. 17 Overview and Definition Actions or conduct designed to conceal source, movement, control or ownership of money illegally derived Movement of money derived through legitimate means, but which is intended or destined to further a crime Common element of all financial crimes
  • 18. 18 Stages of Money Laundering Placement First step in the process Infusion of criminal proceeds into traditional or non- traditional financial institutions Typically most vulnerable to detection at this point Moving assets away from their source Structured deposits Changing currency into other financial instruments Using non-bank institutions, like casinos Complicity of banks, brokers or other institutions
  • 19. 19 Stages of Money Laundering Layering Separates criminal proceeds from source through layers of transactions Often involves multiple participants and entities, like shell corporations, cross-border transactions More layers, more difficult it is to trace funds to perpetrator Wire transfers Asset movement among entities perpetrator controls Purchasing multiple financial instruments
  • 20. 20 Stages of Money Laundering Integration Puts laundered proceeds into legitimate economy to appear legitimately derived, allowing funds to return to financial criminal Makes it difficult to distinguish legitimate, illegitimate funds Detecting integration often requires informant, undercover agent, forensic accounting. Examples: Real estate investments Trade-based money laundering Loans, business arrangements among complicit entities
  • 21. 21 AML Compliance Programs Obviously better to prevent illicit funds from entering financial system than chasing them after the fact Key is robust anti-money laundering programs: Customer due diligence measures, including ongoing due diligence Customer profiling and risk assessment Automated transaction monitoring systems Customer screening Investigation of suspicious or atypical customer transactions and behavior Enhanced due diligence procedures for higher-risk customers Will be described in more detail in later section
  • 22. 22 Characteristics and Indicators of Money Laundering Key concept for CFCS exam - Many red flags are situation-specific, depend on type of organization, customer and scenario Key is to understand customers behavior, source of funds to establish normal behavior Create customer profile, compare activity, transactions against expectations and peer group Good KYC and customer due diligence programs, monitoring essential for detecting laundering
  • 23. 23 Characteristics and Indicators of Money Laundering Potential red flags Account activity inconsistent with customer profile Account operated by third party Funds transfers from/to tax haven Funds transfers to offshore jurisdictions with no rationale Large cash transactions over short period Multiple deposits to account by different peo

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