fraud crime as predicate act to money laundering ... acfe asia pacific fraud conference thursday,...
TRANSCRIPT
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2015 ACFE ASIA PACIFIC FRAUD CONFERENCETHURSDAY, NOVEMBER 5, 2015
GUNAWAN HUSIN
Fraud Crime as Predicate Act to Money Laundering & Financing of Terrorism
Offences“Going behind recent headlines and what really went wrong”.
©2015 Association of Certified Fraud Examiners, Inc. 1
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Outline
• About Predicate Crimes• Issues and Trends – Sanctions Violations• Counter Measures – Governance
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UNODC “Circulations” (2012)
Source: www.unodc.org
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Predicate Crimes• Corruption;• Bribery;• Narcotics;• Psychotropic
substances;• Smuggling of workers;• Smuggling of
immigrants;• Banking Fraud /
Crime;• Capital market Fraud
/ Crime;
• Insurance Fraud / Crime;
• Customs Fraud;• Human Trafficking;• Illegal trade in arms;• Terrorism• Kidnapping;• Theft;• Embezzlement;• Deception;• Currency
counterfeiting;
• Gambling;• Prostitution;
• Tax Evasion;• Forestry;• Environmental;• Maritime; and / or• Other offences with
jail sentence of > 4 years
Adopted from Indonesian Legislation No. 8, 2010, on Criminalisation of ML and FT.
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Legislations, Regulations and Good Practices
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0 10 20 30 40 50 60 70 80
BOFA
Lloyds
RBS
BNP Paribas
Deutsche
Morgan Stanley
Goldman Sachs
Rabobank
Soc Generale
Bank of Tokyo
8039
2014
1110
99
55
44
2111111
US BILLIONS
Source: Thomson Reuters.
The Cost of Market Misconduct.. ( Up to 2015)
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Circumventing Sanctions
• A “Cut and Paste” or “Box Ticking” Exercise• Withholding adverse or negative information • Allocating low risk ratings to avoid case escalation• “Stripping” transaction or payment details to circumvent sanctions• “Wilful Blindness”, “Deliberate and Intentional”
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VS
Financial Incentives - Massive compensation when sales targets are metLavish Lifestyle Culture of GreedWeak Management Supervision and Controls. Rewards often tied closely with excessive risk taking
Why the Disconnect - What drives excessive Risk Taking Activities ?
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Crippling Criminal/Terrorist Funds WILL Disrupt the lifeblood and Block Criminal/Terrorist Activities and as such, lowers the risk of crime / terrorist attacks.
With no money, less harm can be done.
We all play critical roles to fight Financial Crime
We Can:• prevent criminals/terrorists from using our infrastructure, as they
plan to raise, store and move their funds • establish robust means to understand, identify, escalate and
report suspicions to the appropriate authorities.
We are not Investigators? What can We DO ?
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The estimated amount of money laundered globally in one year is 2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars.
Source: UNODChttps://www.unodc.org/unodc/en/money-laundering/globalization.html
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Risk Governance And Culture
• Policy, Procedures, Guidelines and Good Practices
• Risk governance model – drive meaningful reporting, escalation, measurement and management of risks
• Enhance risk control and regulatory management – proactive keeping abreast of legal & regulatory development
• Develop systems and people – training, networking and recognition
• Create environment with strong risk culture– Transparent, acknowledge, responsiveness against risks.
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Value Creation
• Self• Customers• Shareholders• Legal and Regulatory• Financial Sector• Entire community
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Concluding Remarks
• Senior Management still see risk management as a compliance activity rather than helping them achieve their objectives
• The ability to manage risk must be an essential management skill rather than a separate function and process
• Management of risk beyond a compliance exercise, thus contributing to an organisational success
• Management of risk includes seizing opportunities as well as avoiding hazards – A new BAU
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