The independent world forum for central bankers and financial supervisors Training course/seminar series 2012 How to Implement a Risk-Based Framework to AML and CFT 4-day intensive residential programme 23 – 26 April 2012 Cumberland Lodge, Windsor Course chairman: Richard Pratt Consultant and former Director General Jersey Financial Services Commission Series adviser: Charles Goodhart, CBE Professor Emeritus London School of Economics Financial Markets Group www.centralbanking.com/events Hosted by Central Banking Publications Dear Delegate, In their response to the financial crisis, the G20 leaders in Cannes in November 2011 issued a challenge to the Financial Action Task Force (FATF) and their member central banks and regulators. “We urge all jurisdictions to adhere to the international standards in AML/CFT area and strengthen their AML/ CFT systems in cooperation with FATF. The FATF and international organisations should work closely together to enhance transparency and facilitate cooperation between tax and law enforcement agencies in the implementation of these standards.” It is clear from this statement that anti-moneylaundering and countering terrorist financing remains a major priority for global leaders. Not only that, but the importance of cooperation between central banks and FATF was stressed in an increasingly globalised economy where money and assets can be moved near instantaneously across borders with 24-hour, electronic markets. This call comes at a time of the publication of new typologies for specific threats and at a time when the FATF are reviewing the 40+9 recommendations themselves, with a view to developing closer integrated standards. The combination of evolving standards and challenges creates a moving target for resource-constrained central banks and regulators. Meeting the practical day-to-day challenges of central banks and regulators is the focus of this fourday residential seminar, held in closed roundtable format to allow delegates to share the experiences with each other. Monetary Fund and others, the elite panel of speakers includes: • T heodore Greenberg, Senior Financial Specialist, World Bank • N adr El Banna, Lebanon Representative, FATF’s Africa and Middle East Review Group Member of Permanent Technical Committee, MENAFATF • M arcus Killick, CEO, Gibraltar Financial Services Commission • D avid Thomas, Former Head, UK Financial Intelligent Unit • S ally Scutt, Deputy Chief Executive, British Bankers Association Each session affords participating supervisors and central bankers an opportunity to “benchmark” their work against international practice and to exchange views with their peers in an informal setting. This format, as more than 3,500 central bankers and regulators can attest, encourages delegates to quiz panellists, raise issues and discuss solutions to the specific challenges they face. For more information about the programme, please take a few moments to look at the detailed course contents presented on the pages which follow. I look forward to welcoming you to Windsor. Yours sincerely, This seminar pinpoints not only what financial policymakers must do to prevent the misuse of their financial system for money laundering or other criminal purposes, but how to put in place a regime to identify new threats – and tackle them. Led by Chairman Richard Pratt, a former Director General of the Jersey Financial Services Commission, and now a regulatory consultant to the International Robert Pringle Chairman, Central Banking Publications The course was well organised and run, with knowledgeable speakers with real life examples. Keep up Linnette Wilson, Head of Department – Banking, Bank of Jamaica the good work How to Implement a Risk-Based Framework to AML and CFT Spring 2012 Monday 23 April The fundamentals of an AML/CFT regime Introduction: chairman’s welcome session Richard Pratt, former Director General, Jersey Financial Services Commission This session will introduce the course and invite delegates to consider the main challenges their organisations face, drawing on the wide range of expertise and experiences present. Discussion will focus on the new demands facing regulators and central banks in implementing a risk-based approach to anti money laundering and combating the financing of terrorism (AML & CFT) in light of the G20 statements and recent FATF reports. Participants will also be offered the opportunity to express their main areas of interest for discussion during the course. Key elements of an AML & CFT framework Theodore Greenberg, Senior Financial Specialist, Financial Market Integrity Unit, World Bank Regulation varies from country to country due to differences in the national legal framework and in the regulator’s powers, duties and the constraints it faces. Yet all regulators have to commit to a professional approach – to transparency, objectivity, a methodical approach, strong technical knowledge, continuous learning and high standards. In this session, led by a leading expert and world renowned specialist from the World Bank, discussion will focus on the core elements in AML/CFT regulation and the latest thinking on their implementation. Obligations on designated financial institutes Sarah Runge, Corruption Policy Adviser, Department of Treasury US (invited) Understanding the requirements of customer due diligence, building a solid customer profile, and establishing an effective internal control and audit system are essential to a successful anti-moneylaundering regime. It is regulators’ obligation to introduce effective supervision of compliance using appropriate regulations, guidance, inspections, and sanctions. This session, led by a policy adviser to the US Treasury, will discuss the enhanced and simplified requirements, the threshold of suspicion, and use case studies to illustrate how to fulfil the obligations on designated financial institutions. The FATF recommendations: the new agenda Badr El Banna, Senior Compliance Examiner, Special Investigation Commission, Lebanon The FATF is undertaking a review of its standards, with any changes expected to be adopted at the FATF plenary meeting in February 2012. In addition, recent years have seen a series of typology documents focusing on a variety of areas ranging from human trafficking to new payments methods. All this adds up to a formidable agenda for national regulators and central banks charged with keeping laws up to date and demonstrating compliance to international assessors. Drawing on his experiences with FATF and MENAFATF, the speaker will review developments in the FATF’s agenda, including changes to the standards, analyse the implications from the regulator’s perspective, and assess the impact on the day to day work of regulators. Group discussion will consider likely future directions for the standards. Well planned, co-ordinated and a greatly resourceful workshop with neatly selected and balanced world class professionals on subject matters. A central bank delegate Tuesday 24 April Building the risk-based framework A risk-based approach – issues of implementation Marcus Killick, CEO, Gibraltar Financial Services Commission Financial centres have different characteristics which give rise to different money-laundering and terroristfinancing risks. Understanding the sources, methods and extent of money laundering and terrorist financing in a particular country or jurisdiction is essential for supervisors and regulators to combat financial crime and prioritise resources. However, the implementation of a risk-based approach presents an array of challenges to central banks, regulators and the institutions they supervise. In this session, the speaker will discuss these and how they can best be met. A risk-based approach – the view from an international bank Hans-Peter Bauer, former Head of Regulatory Relations. UBS and Chairman, Wolfsberg Group Senior Advisor, Basel Institute of Governance (invited) Modern, global banks face immense regulatory and reputational risk in connection with money laundering. In response, they have allocated substantial resources to anti-money-laundering controls, and have also developed risk-based approaches to deploying these resources. This session will offer delegates a “risk manager’s eye view” of how international banks in practice defend against money laundering, the implications of regulatory requirements and how the actions of regulators can help or hinder these efforts. Relations between the supervisor and the financial intelligence unit (FIU) David Thomas, Consultant and former Head, UK FIU, Serious Organised Crime Agency Financial intelligent units are a crucial element of the anti-money-laundering regime. They have a national responsibility for receiving, analysing and disseminating financial intelligence submitted through the suspicious activities reports (SAR) Regime. Cooperation is a key element of a country’s fight against AML and CFT, and it is important good relations between financial supervisors and their respective FIU’s are maintained. This session, led by a former head of UK FIU, will focus on the role of FIU, the uses of FIU intelligence, and the sharing of information between an FIU and regulators. Identifying and managing risks in the payment systems and wire transfers Tina Blocksidge, Nominated Officer, Lloyds Banking Group The vulnerabilities of domestic and cross-border wire transfers to money laundering and terrorist financing have been acknowledged by the international community in a series of increasingly arduous recommendations and guidance.Yet striving to trace all wire transfers and minimise thresholds place considerable burdens on regulators and the financial system itself. Moreover, the process of designating and withholding a payment deemed to be suspicious can place the financial agents in complex legal and client-relation situations. A number of recent high-profile cases involving cover payments and the emergence of mobile phone payments have highlighted the potential for risks arising from the payment systems to crystalise. This session, led by a leading expert from the Lloyds Banking Group, looks at how a bank can mitigate such risks against a backdrop of international guidelines and national regulations. How to work with the private sector Sally Scutt, Deputy Chief Executive, British Bankers Association What is the role of the private sector in developing rules? This session will focus on examples of where the private sector can provide added value in devising workable proportionate rules, commenting on new initiatives and working in partnership with regulatory and supervisory authorities. The speaker, from the British Bankers Association, will discuss the work of the Joint Money Laundering Steering Group, a trade-association based group, in providing practical assistance in interpreting regulations and spreading good practice in countering money laundering. How to Implement a Risk-Based Framework to AML and CFT Spring 2012 Wednesday 25 April Combating threats and demonstrating compliance Politically exposed persons: rules and reality James Maton, Partner, Edwards Angell Palmer & Dodge Combating money laundering and the financing of terrorism requires that regulatory authorities compile and keep up-to-date lists of suspicious persons and organisations in identifying corruption. FATF recommendations require supervisors to pay particular attention to “politically exposed persons” (PEPs, ie, high-risk individuals who may be conduits for looted funds). This session will consider the challenges of preventative action, as well as issues with reconciling the different needs of civil and common law systems, the use of asset seizure and confiscation, and the use of AML/CFT reports to identify corruptions. Identifying and tackling threats from designated non-financial businesses and professions Andrew Le Brun, Director of International Policy, Jersey Financial Services Commission with Colin Powell, former Chairman, Jersey Financial Services Commission FATF recommendations require countries to implement measures that oblige financial institutions and nonfinancial business and professions (DNFBP) to prevent the misuse of their businesses in money laundering and terrorism financing. This session draws on the experience of a regulator in a jurisdiction with extensive experience in this area to discuss the role of designated non-financial businesses and professions and the risk of money laundering through trust and company service providers. Andrew Le Brun will be joined by Colin Powell, who as a member of the UK’s money-laundering advisory committee, will also discuss the method of using self-regulatory organisations for ensuring compliance. Demonstrating success John Aspden, CEO, Financial Supervision Commission, Isle of Man Today, financial supervisors themselves are expected to submit to evaluation by international examiners. Such evaluations now focus not only on the financial regulatory regime in general, but specifically on how well the regime works to combat money laundering and terrorist financing. How are these evaluations conducted, and what do supervisors need to understand about the evaluation process? How can financial market authorities best cooperate with this scrutiny to achieve the most positive outcome? This session takes a comprehensive approach to look at how authorities can best prepare for, and get the most from, an external assessment. Workshop: Know-Your-Customer (KYC) Led by the Chairman, Richard Pratt The strongest check against misuse of the banking system, whether in terms of fraud or other financial crime such as money laundering, is for banks and businesses more broadly to “know their customers”. But banks differ about what they mean by KYC, and what they have to do in practical terms to carry this out. This can lead to a significant range of interpretation and practice. This session, led by the chairman, will look at KYC from a practical perspective, and a series of case-study scenarios will draw out concrete steps authorities can take to tackle issues related with KYC. This was the best motivation and incentive my employer could have given me this year.” Myriam Penninckx, Commission Bancaire, Financière et des Assurances (CBFA, Belgium) Thursday 26 April Typologies: understanding and implementation How to combat trade-based money laundering and carousel fraud Bill Cleghorn, Director of Financial Crime & Corporate Recovery, Kinetic Partners In this session, an experienced forensic accountant will focus on significant risks of carousel fraud and tradebased money laundering which central banks need to be aware of. Though the subject was discussed in the subject of typology and best practice papers, they remain poorly understood. The speaker will explain the nature of carousel fraud, how trade-based money laundering works and the methods of tracing the funds drawing on a series of international case studies. Recent work by FATF and money laundering typologies Richard Pratt From 2010 to 2011, the FATF conducted five research projects which resulted in the publication of key typologies studies: new payment methods, human trafficking, maritime piracy, laundering the proceeds of corruptions, and free trade zones’ impact on AML and CFT. These new documents set the agenda that regulators will need to implement and this session, led by an experienced former regulator, will highlight the important areas of change, likely flashpoints and challenging areas for implementation. Special attention will be given to areas where cooperation within or across jurisdictions may be needed. About the course chairman Richard Pratt is a consultant on financial services regulation. He conducts assessments of, and provides advice to, a range of regulatory authorities on anti-money-laundering defences, on capital market regulation, on governance and operational issues for financial services regulators, on international regulatory cooperation, and on other regulatory issues. Mr Pratt was previously director general of the Jersey Financial Services Commission. He was a member of the implementation committee of IOSCO and of the task force that drafted the IOSCO multilateral MoU, and participated in the FATF review of its recommendations on money laundering and terrorist financing. CBP training course/seminar series, Spring 2012 include: Strategic Planning and Change Management for Central Banks New Developments in Banknote and Currency Management Financial Stability: Designing and Implementing Macroprudential Policy Central Bank Governance: the Role of the Board Current Challenges and the Future of Central Bank Statistics Effective Internal Audit for Central Banks For detailed programmes and a fax-back registration form for each of these key courses, please visit: www.centralbanking.com/events Booking details How to book Course fee: £2,700 (VAT at 0% for delegates employed by government in furtherance of its sovereign activities) Please complete and return the registration form overleaf to: Central Banking Publications Incisive Media Haymarket House 28 – 29 Haymarket London SW1Y 4RX UK telephone: +44 (0) 20 7968 4530 fax: +44 (0) 20 7504 3730 email: [email protected] website: www.centralbanking.com/events 4-Day (3 nights) residential course Course fee includes: en-suite accommodation, meals, refreshments, course documentation and a complimentary copy of the most recent issue of the Central Banking journal. Substitute delegates can be accepted should the registered delegate be unable to attend; please let us know prior to the event. The venue Cumberland Lodge is one of the Royal Houses in The Great Park at Windsor and was formerly used by members of the Royal family and their households. Occupying a superb position, it provides a unique setting for conferences where participants find they can work easily in tranquil and gracious surroundings. Most bedrooms are spacious and each has its own en-suite bathroom. About Central Banking Publications Central Banking Publications’ events division is the leading independent organiser of public policy seminars/training courses for the official sector. Since 1997, CBP has hosted roundtable seminars and training courses for over 3,500 senior policymakers from central banks, ministries of finance and financial regulatory agencies around the world. Senior officials from more than 120 countries have attended these meetings over the past ten years. 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