STR Outreach & Awareness - Exchange Houses - 10 March 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CBUAE Classification: Restricted
STR Outreach & Awareness – Exchange Houses
10 March 2021
CBUAE Classification: Restricted
STR Outreach & Awareness – Exchange Houses
Item Subject Presenter Slide # Time
1. Introduction FIU team - 10 min
2. Overview of matters related to STRs by the FIU (Financial Intelligence FIU team 3 30 min
Unit)
3. Overview of AML/CFT and STR by the CBUAE CBUAE AML/CFT supervision 18 30 min
4. Cases related to ML & Recommendations by the MOI (Ministry of MOI team 31 15 min
Interior)
5. Open Questions & Remarks All attendees 36 20 min
2
CBUAE Classification: Restricted
Overview of matters related to STRs by the FIU
(Financial Intelligence Unit)
Presented by: FIU team
10 March 2021
3
CBUAE Classification: Restricted
Exchange Houses
Introduction to Financial Intelligence Unit
10 March 2021 uaefiu.gov.ae
uaefiu.ae
4
CBUAE Classification: Restricted
Brief Introduction of FIU
• Establishment and Mandate of the FIU
• Structure of FIU
• Core Functions of the FIU
5
CBUAE Classification: Restricted
When to Report
Article 15 Federal Decree-law No. (20) of 2018 ON ANTI-
MONEY LAUNDERING AND COMBATING THE FINANCING
OF TERRORISM AND FINANCING OF ILLEGAL
ORGANISATIONS
Article 17 Cabinet Decision No. (10) of 2019 CONCERNING
THE IMPLEMENTING REGULATION OF DECREE LAW NO.
(20) OF 2018 ON ANTI- MONEY LAUNDERING AND
COMBATING THE FINANCING OF TERRORISM AND
ILLEGAL ORGANISATIONS
6
CBUAE Classification: Restricted
What to Report
As per article (15) Federal Decree-law No. (20) of 2018 On AML/CFT, all FIs and DNFBPs must file
SAR/STR upon having reasonable grounds to SUSPECT a transaction or funds representing all or
some proceeds, or suspicion of their relationship to the CRIME or that they will be used regardless of
their value.
Sources of illicit funds:
Fraud, Corruption, Arm Trafficking, Drug trafficking, Human trafficking,
Smuggling. Etc.
Suspicion of financing a terrorist act/ supporting terrorist organization
Besides transaction(s), suspicion may arise by virtue of activities which
are out of line of customer’s profile or unusual behavior or information
available which suggests negative background of the customer/client
such as adverse media, inclusion in sanctions or Persona Non Grata
Lists. Such instances must be reported as SAR(s)
7
CBUAE Classification: Restricted
How to Report
goAML – THE ONLY CHANNEL
Commensurate Report Type(s)
STR
SAR
AIF/AIFT
RFI/RFIT
8
CBUAE Classification: Restricted
Compliance Officer Tasks
9
CBUAE Classification: Restricted
Internal Procedures while filing
Timeline of filing
Data Backup for records
Validly of drafts
Acceptance/Rejection
Prioritization/Recall
Amendment of data
Correspondence with FIU
goAML Message Board
Text Text Text Text
FIUSTR@uaefiu.gov.ae
goAML@uaefiu.gov.ae
10CBUAE Classification: Restricted
Actions to be taken by FIs with respect to
an account on which an STR/SAR is filed
Securing the funds
Internal Policies, terms & Conditions
11CBUAE Classification: Restricted
How to deal with the client enquiries/orders
post filing of STR
Apprehensions of Tipping off
Article 17 Law– Confidentiality
Article 25 Law– Tipping off
Article 13 Cabinet Decision No.
(10) of 2019
12CBUAE Classification: Restricted
Best Practices for identification and
submission of STRs/SARs to FIU
Documentation/Record
Governance and
Rule Based Keeping of Escalation
Independence
Process
Monitoring/Alerts of Compliance Function
Front End Role of
Staff/Training MLRO
Keep pace with the
outreach from FIU
13CBUAE Classification: Restricted
Feedback on STRs/SARs received
Feedback Expectations
STR/SAR
Feedback
Types of Feedback Query on Feedback
14CBUAE Classification: Restricted
Type of deficiencies noted by the FIU
Timeliness
Accuracy of:
Data input in goAML fields
The relevant RFR(s)
Attachments along with reports
15CBUAE Classification: Restricted
How to register on goAML
Web pre-registration Guide
Web registration Guide
Web Submission Guide
16CBUAE Classification: Restricted
Thank You
10 March 2021 uaefiu.gov.ae
uaefiu.ae
17CBUAE Classification: Restricted
Overview of AML/CFT and STR by the CBUAE
Presented by: AML/CFT team
10 March 2021
18CBUAE Classification: Restricted
AML LAWS, REGULATIONS AND GUIDANCE
Under the Procedures for Anti Money Laundering and Combating
the Financing of Terrorism and Illicit Organizations, the below
Articles include:
Article (2)
Financial Institution and its concerned persons must comply with
the requirements mentioned in the Decree Federal Law , The
Executive Regulation, instructions, guidelines and notices issued
by the Central Bank relating to implementation of the Decree
Federal Law and the Executive Regulation.
Article (3)
The Central Bank shall supervise and examine periodically or
unexpectedly, without prior notice to the Financial Institution’s
compliance with the Decree Federal Law , The Executive
Regulation, instructions, guidelines and notices issued by the
Central Bank and shall identify any violations resulting from the
examination.
19CBUAE Classification: Restricted
1 2 3 4 5
Cabinet Decision
Anti-Money No. (10) of 2019-
Federal Decree-law
Laundering and Concerning the
No. (20) of 2018 on
Procedures for Anti- Combating the implementing
Anti-money
All documents regarding the Anti Money Laundering Financing of Registered Hawala
regulation of decree
Laundering and
and Combating the Terrorism and Illegal law no. (20) of 2018
money laundering Legislation from Providers Combating the
Financing of Organisations on anti- money
Regulation Financing Of
the year 1987 & onwards Terrorism and Illicit laundering and
Guidelines for Terrorism And
Organizations combating the
Financial Financing Of Illegal
financing of
Institutions Organisations
terrorism and illegal
organisations
20
20CBUAE Classification: Restricted
Recommendation 20
Reporting of Suspicious Transactions
If a financial institution suspects or has reasonable
grounds to suspect that:
• funds are the proceeds of a criminal activity, or
• are related to terrorist financing,
International it should be required, by law, to report promptly its
suspicions to the financial intelligence unit (FIU)”.
Standards For
Reporting
The reporting of suspicious and unusual transactions and activities is
regarded as an essential element of the anti-money laundering and
combating the financing of terrorism regime for every country
21CBUAE Classification: Restricted
Using Source of funds or wealth information
USING SOURCE OF FUNDS OR WEALTH INFORMATION
1 Where does he or she work?
It is critical to obtain meaningful,
2 What sector or industry are they employed in/ run business in comprehensive & accurate source of
funds / wealth information about a
Can you expect cross border flows of money. If so, which client
3 countries & currencies
This information should be kept up to
Is this the only means of income. What about other business date at reasonable interactions with
4 activities clients/ on a defined periodic basis
How much income/ turnover will flow through the account This will help in STR alert investigation
5 monthly to make sense of suspicious activity
Is there any anticipated ad-hoc sums of money, e.g. bonuses or
6 dividends
22CBUAE Classification: Restricted
MONITORING TRIGGERS & ALERTS IN THE BANKING SECTOR (1/3)
PRIVATE BANKING/
RETAIL CORPORATE
Corporate ASSET
Private MANAGEMENT
Banking Asset
accounts
Management
• Value • Offshore payments •Tax
Taxplanning – avoidance
planning – –
Offshore payments evasion
• Volume • Back to back
Back loans
to back loans avoidance – evasion
Offshore vs onshore
• Turnover Cash
• Cash •Back-to-back
Offshore vsloans
onshore
Too much too soon •Corporate
Back-to-back loans
funds redirected
• Mules • Too much too soon
Consultancy •Nominees used
• Smurfs • Consultancy
Too many zeros
Corporate funds
Consultancy
redirectedpayments
• Cash Too
• Too manymany zeros
payers Unusual requests
• Stupid, illogical Source
• Too many Of Wealth
payers • Nominees
Too used
many zeros
questions Source Of Funds •Multiple
Consultancy payments
transactions
• Source Of Wealth
Illogical
• Rich children Unusual
to/ requests
from same
• Source Of Funds
inconsistent party
• Too many zeros activity/business
• Too many zeros
• Illogical
• Multiple transactions
• inconsistent
activity/business • to/ from same
• party
23CBUAE Classification: Restricted
MONITORING TRIGGERS & ALERTS IN THE BANKING SECTOR (2/3)
CORRESPONDENT INTERNATIONAL
EQUITIES
Corporate
BANKING BUSINESS
Private Banking Asset
accounts
Management
• Concentration of transactions • Backdated share options • Multi-national payments –&
Tax planning – avoidance
with a small number of Offshore payments
• Churning receipts
evasion
parties Back to back loans • High value,
Offshore vs high volume
onshore
• Insider dealing
• Constantly missing customer Cash • Rapid
Back-to-back
in & outloans
movements of
• Front-running
information Too much too soon the same value
Corporate funds redirected
• Market manipulation
• Constant round figure activity Consultancy • Payments
Nominees to used
far removed/
• Multiple payment to/receipts Too many zeros unrelated
Consultancy third parties
payments
from the same parties on the Too many payers Unusual
• No publicrequests
profile - against
same day Source Of Wealth high value/volume
Too many zeros
• Illogical currency/ Source Of Funds • Multiple transactions
round figure
geographical activity Illogical payments same parties
to/ from same
• Products & services outside inconsistent •party
Illogical activity
of key business activity/business • Payments within
• Payments to high risk • complex structures
jurisdictions
24CBUAE Classification: Restricted
MONITORING TRIGGERS & ALERTS IN THE BANKING SECTOR (3/3)
POLITICIANS Corporate
Private Banking Asset
accounts CORRUPTION
Management
(PEPs/PIPs)
Tax planning – avoidance –
Offshore payments evasion
Back to back loans Offshore vs onshore
• Cash movements Cash Back-to-back
• Natural resources/ mining, wildlife
loans
Too much too soon Corporate funds redirected
• Deposits from 3rd parties Consultancy • Persons of Influence
Nominees used
• Overseas transactions Too many zeros • (cash for questions)
Consultancy payments
• Round figures Too many payers
• Cash Unusual requests
Source Of Wealth Too many zeros
• High values • Third Parties
Source Of Funds Multiple transactions
• Undisclosed/ inconsistent with role
Illogical • Corporate entities with government
to/ from same
• From corporations with government inconsistent contracts party
contracts activity/business
• Expense reimbursements
25CBUAE Classification: Restricted
MODES OF PAYMENT & ASSOCIATED RISKS
• A refusal to use safer alternative • Three legs or more
products & services • In and out
• Self-handling of high value (no use of a • High value
security company) • Round figures
• No audit trail • Repeat activity/multiple wires to/from
• Illogical given nature of business the same party
• Volumes or value seem too high • Smurfing
• Used too often • Missing information
• Used notes • Close to sanction countries
• High value denomination notes • Offshore and UK
companies/partnerships
ELECTRONIC
CASH
PAYMENTS
26CBUAE Classification: Restricted
METHODS OF MONITORING
Manual Automated
Monitoring Monitoring
Processes Processes
• Considered when volumes are low • Expensive & complex to implement
• Dependent on thorough ongoing • Ensures consistency in monitoring
training & awareness logic
• Requires appropriate quality • Reduces human dependency and
assurance room for error
• Not suitable for growing VS • Customizable commensurate with
businesses evolving business risks
• Not ideal for complex • Requires rigorous governance &
environments control
• Although economical, resources & • Should be business-wide
potential work may become otherwise ineffective
expensive
27CBUAE Classification: Restricted
TYPOLOGIES IN STRs A typical AML/CFT Program includes:
New Account Reports
• Procedures for the identification of
suspicious or unusual transactions
Monetary Instrument and/or activity using information
Notable changes in
derived from TMS alerts, customer
Logs/Reports account activity
KYCs, etc.
• Documented assessments &
STR investigations of STR instances
TYPOLOGIES
• Periodic reporting of STR filings to
Senior Management and/or Board of
Directors (BoD)
Determine structuring Check for
using aggregated cash kiting/drawing of • Adequate & ongoing AML/CFT training
transactions irreconcilable deposits programmes for personnel
Categorization of wire
transfers
28CBUAE Classification: Restricted
KEY ISSUES ARISING FROM THE FINANCIAL INSTUTITON SECTOR
• Deficiencies with Customer Segmentation • Weak controls (including for mapping across TMS) to
• Deficiencies or inadequacies with typology assessments detect money laundering & terrorism financing
Transaction • Deficiencies in the TMS alert workflow, including: activities
Monitoring
System
Lack of or poor training • Insufficient product coverage and scenario tuning in
Poor guidelines and procedures for alerts clearing (some of TMS
which did not define SLAs and investigation timeframes) • KYC data quality & completeness issues which
Lack of an automated risk scoring model for the impacted the quality of TMS output
prioritization of alerts
• Inadequate or poor AML/CFT training • Delays in alerts closure and/or reporting STRs
• Weaknesses in Policies & Procedures • Hibernation strategy (hibernation low/medium risk cases)
• Defensive STR reporting adopted post backlog issues leading to potentially
STRs • Multiple profiles for the same customer impacting quality unreported unusual/suspicious activity
of TMS output, as well as detection and reporting of STRs • Lack of clear justifications and articulation of investigations
to the FIU to address the underlying STs
• Manual identification of unusual/suspicious transactions
for certain activities
29CBUAE Classification: Restricted
End of Presentation
Thank you
30CBUAE Classification: Restricted
Cases related to ML & Recommendations by the MOI
(Ministry of Interior)
Presented by: MOI team
10 March 2021
31CBUAE Classification: Restricted
The Ministry of Interior (MOI)
2020 Statistics
• 264 Accounts involved in narcotics trafficking or money laundering or
both crimes.
• 128 natural or legal persons.
32CBUAE Classification: Restricted
The Ministry of Interior (MOI)
Red Flags
• Credit Turnover not in line with customer profile.
• Deposit times through CDM & internal transfers.
• Amounts repetition.
33CBUAE Classification: Restricted
The Ministry of Interior (MOI)
Recommendations
• Intensification of monitoring.
• Design a system which serves the discovery process.
34CBUAE Classification: Restricted
End of Presentation
Thank you
35CBUAE Classification: Restricted
Open Questions & Remarks
36You can also read
