Applying Lessons from Headline-Making Enforcement Actions to Solidify Your Risk Management Strategy

On Monday, January 26, Associations of Certified Anti-Money Laundering Specialists (hereon ACAMS) held its Third Annual AML Risk Management Conference at The Conrad Hotel in downtown New York. Over the course of this week, summaries and takeaways from the key notes and panel discussions will be shared in this blog.

  • Kieran Beer, CAMS, Editor-In-Chief at ACAMS at Moneylaundering.com
  • Arthur Middlemiss, Esq., CAMS, Partner, Lewis Baach Pllc
  • Jonathan Lopez, Partner, Orrick Herrington and Sutcliffe LLP
  • David Szuchman, Executive Assistant Attorney and Chief of Investigation Division, New York County District Attorney’s Office

HeaderThis panel consisted of three present or former prosecutors. Discussion topics ranged from prevention to remediation for both firms and individuals. These topics were discussed under the context of headline grabbing media reports about large banks. Here are ten takeaways:

  1. Three things for firms and individuals to do to show wrongdoing was not criminal: SELF IDENTIFY wrongdoing, SELF REPORT to regulators, and SELF REMEDIATE wrongdoing with either corrections or plan to correct. – Arthur Middlemiss
  2. Firms and individuals must keep up with the news to avoid common inadequacies that are found; it is expected for them.
  3. Risk Assessment programs are a firm’s first and best line of defense against criminal action.
  4. Criminal action against a firm used to be the said firm’s death sentence, but prosecutors have gone out of their way to make sure it isn’t by timing information flow and the market so that the criminal firm’s shareholders do not take a direct hit while firm’s cash takes a direct hit with penalties.
  5. Willful ignorance is the worst defense for an individual both just as a professional and as a defense for wrongdoing. Willful ignorance is part of the crime.
  6. Compliance Officers are asked to bear more professional risk. With it are higher compensation and higher professional risk. Try to avoid the risk from the very beginning, including negotiating during job interviews/offers.
  7. In negotiating a Deferred Prosecution Agreements, don’t over-promise because DPA’s are conditional.
  8. Compliance programs are an affirmative defense. Need to have them, need them to be implemented, and need documentation showing effort to get the rest of the firm involved.
  9. Some offenses lead to investigation and review into other issues. Such are AML-related offenses, which could trigger a review of the bank charter.
  10. Keep in mind that it is difficult to keep a firm out of compliance at the civil level, but there’s no excuse for not figuring out what it takes to keep the firm out of crimes.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.
He tweets @MoneyCompliance

 

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Managing Regulatory Risk

On Monday, January 26, Associations of Certified Anti-Money Laundering Specialists (hereon ACAMS) held its Third Annual AML Risk Management Conference at The Conrad Hotel in downtown New York. Over the course of this week, summaries and takeaways from the key notes and panel discussions will be shared in this blog.

  • John Byrne, Moderator, Former President of Condor Consulting LLC
  • Jamal El-Hindi, Associate Director, Policy Division, Financial Crimes Enforcement Network (FinCEN), US Department of the Treasury
  • Sarah Green, Senior Director, AML Compliance, Financial Industry Regulatory Authority (FINRA)
  • Denise Reilly, Managing Director, Global Head of BSA/AML Compliance, Citibank
  • James Vivenzio, Senior Counsel for BSA/AML, Office of the Comptroller of the Currency (OCC)

HeaderThis panel discussion covered topics ranging from expectations from regulators, culture of compliance in a firm, and personal liability. The following are  ten takeaways:

  1. Enterprise-wide consistency helps to mange the professionals and reduce gap risk.
  2. Regulators like to see consistency because it shows the effort an institution is putting into trying to be compliant.
  3. Communicate to Boards of Directors that OCC would like to see more focus on compliance from them
  4. Alert Suppression is okay and critical to executing priorities, but the alerts should be logged and revisited to keep the compliance programs up-to-date with the changing environment both ex-firm and intra-firm.
  5. Personal Liability of compliance officers will increase, so, keep good documentation
  6. FINRA does not target individuals, though individuals will face penalties if found willfully unaware or intentionally non-compliant. FINRA focuses on systemic risks to protect investors.
  7. FinCEN does not target individuals, especially trying to avoid dissuading the most talented compliance professionals from fleeing the most difficult problems.
  8. Intra-firm talent development is key to today’s labor market where supply of veteran compliance officers are small compared to demand.
  9. OCC intends to staff lead experts on all exams in the future.
  10. The new OCC Exam Manual, published November 11, 2014, does not have much substantive changes, mostly it is an administrative update to make sure changes to exams since the last major update are documented.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.
He tweets @MoneyCompliance

 

Adam Szubin’s Key Note

On Monday, January 26, Associations of Certified Anti-Money Laundering Specialists (hereon ACAMS) held its Third Annual AML Risk Management Conference at The Conrad Hotel in downtown New York. Over the course of this week, summaries and takeaways from the key notes and panel discussions will be shared in this blog.

Adam Szubin is the exiting director of Office of Foreign Assets Control (OFAC) in the Department of Treasury. Soon, he will be the acting under secretary for Terrorism and Financial Intelligence, another office in the Treasury.

HeaderSzubin has a history of speaking at Financial Crimes-related conferences because of his long held position as the director of OFAC. Applauded members of ACAMS for doing their best to make Anti-Money Laundering profession a serious endeavor. Then he alerted to three nuanced risks for the profession.

CUBA was his first concern. As the United States lifts nearly all of its sanctions against the communist island nation this year, it opens up another route for corruption to take place.

RUSSIA was his second concern. OFAC’s Magnitsky Sanctions List enumerates targets explicitly, but not all activities are sanctioned and not all enumerated have been sanctioned the in the same manner. The theme of this sanction is debt and equity financing, or the limit thereof. This is a target on a crucial source of currency for Russia in order for it to succeed. The capital markets have also worked against Russia by lowering the price of oil, the primary source of revenue for Russia. It’s an additional wind behind OFAC’s sanctions.

IRAN was his final enumerated concerns. Even more nuanced than the previous two examples. Iran’s domestic politics indicate the type and length to which the regime is willing to evade western powers to fund terror.

Transparency is the key to successful sanctions compliance. Breach of compliance is often accidental. Finding breaches are difficult because often the breaches are in omnibus accounts. Also global trade cannot stop for complex business areas, like re-insurance of trans-ocean ships.

Because of the human nature of business, financial crimes will occur in some form or another. Professionals Certified Anti-Money Laundering Specialists greatly reduce the efficacy of criminal activities.


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.
He tweets @MoneyCompliance