Enhancing the Elements of Your Risk Assessment Methodology

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.

  • Vasilios Chrisos, Moderator, Principal, Fraud Investigation and Dispute Services,  Ernst & Young
  • Richard Small, CAMS, Senior Vice President, Enterprise-Wide AML, Anti-Corruption and International Regulatory Compliance, American Express | Chair, ACAMS Advisory Board
  • Meg Zucker, Global AML Officer, Royal Bank of Canada Capital Markets

HeaderRisk Assessment is key to a successful Compliance Program. This panel discussion talks about the issues surrounding the development, implementation, execution, review and management of the various risk assessments necessary. Here are ten takeaways from this session:

  1. In large financial institutions, multiple risk assessment could be performed on clients for different lines of businesses. Good communication between the two risk assessment programs regarding the same client is key to reducing risk assessment friction, cost overruns, and addressing the uniqueness of each client.
  2. Number of Suspicious Activity Reports (SARs) is not a good measure of the need for additional elements in Risk Assessment because it is not an indicator. however, it might be one of the good places to start for developing the risk assessment when looking for issues.
  3. Lower level executives are still surprised by the requirement to attend compliance training for them, not just for their staff.
  4. Big firms are highly aware of the need for training and compliance since regulators are primarily focused on big firms. It is the medium size firms that might be lacking in Compliance awareness.
  5. Many regulators want to see Audit Reports and Risk Assessments as their starting point in an exam, review or an investigation.
  6. Dealing with businesses within a firm is harder than dealing with AML or Sanctions because businesses often are not as aware of regulatory risks as AML or Sanctions are.
  7. Geographic risks cannot be painted in broad strokes. An example: A client regulated in Hong  Kong is likely very low risk while client in Hong Kong but not regulated are likely very high risk.
  8. Technology is great for efficiency but not always good for developing methodology or for  troubleshooting risks, even for those who are technologically savvy.
  9. Cooperative environment is the best environment for getting cooperation in Risk Assessment, as with anything else. Cooperative environment should be the goal of the whole firm, not just with Compliance.
  10. Regulators are starting to pin down senior leaders to their risk appetite, asking for explicit declarations. Firms generally shy away from this as much as possible.

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

 

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