The AML Challenges Facing Bankers

1
Volatility - The New Norm?

• The AML Challenges Facing Bankers
• Moderator Dan Taylor, IFSA
• Susanne Keough, SunTrust Bank
• Craig Stevenson, Commerce Bank, N.A.
• Michael Yavorsky, The Royal Bank of Scotland
  Group

Bankers Association for Finance and Trade
2
Topics

• Trade Finance Red Flags
• Susanne Keough, SunTrust Bank
• AML Challenges from the viewpoint of the Mid Size
• Regional Bank
• Craig Stevenson, Commerce Bank, N.A.
• Wolfsberg Trade Finance Paper
• Michael Yavorsky, The Royal Bank of Scotland
  Group

Bankers Association for Finance and Trade
3
Trade Finance Red Flags

• Obvious over/under pricing
• Documentation showing a higher or lower value or
  cost of merchandise than that which was declared
  to customs or paid by importer
• Significantly amended letters of credit without
  reasonable justification

Bankers Association for Finance and Trade
4
AML Challenges from the viewpoint of the Mid
Sized Regional Bank

• The growing organization structure
• Growth of compliance group
• Education of compliance officers
• Cost of running a compliance office
• Educational requirements for account managers and
  clients
• Teaching correct principles
• Warnings concerning obligations

Bankers Association for Finance and Trade
5
AML Challenges from the viewpoint of the Mid
Sized Regional Bank

• The expanding need for correct AML policing for
  all clients not just in International
• Were domestic why do we have to do this stuff?
• Correct record keeping and monitoring
• Monitoring down stream correspondent banks on
  their business with regionals

Bankers Association for Finance and Trade
6
Wolfsberg Trade Finance Paper

• Purpose of the Wolfsberg effort
• Develop guidelines for common approach
• Educate regulators to manage their expectations
• Expand scope to include non-proliferation of
  weapons of mass destruction

Bankers Association for Finance and Trade
7
Money Laundering and Terrorist Financing

• Banks deal in documents governs ability to
  detect unusual activity.
• Specific bank role determines what information is
  available.
• 80 of international trade handled on an open
  account basis.
• Money laundering, terrorist financing requires
  collusion of the parties involved.
• Best way to determine terrorist financing is
  through identification of individuals and
  organizations and notification to financial
  institutions.

Bankers Association for Finance and Trade
8
Non-proliferation of WMD

• Non-proliferation involves the use of
  intermediaries to disguise the end user.
• Sanctions currently target specific individuals,
  entities.
• Trade based sanctions also embargo certain goods,
  services or expertise to certain countries.
• Proliferation can take advantage of the
  fragmented nature of international trade.
• Ability of any one financial institution to know
  the identity of the end buyer is very limited.

Bankers Association for Finance and Trade
9
Suggested Areas for Further Cooperation

• Provision of up to date lists of sanctioned
  entities and individuals.
• Details of products that have dual use
  properties.
• Technical help desks to answer dual use
  questions.
• Greater uniformity across jurisdictions covering
  AML, sanction, and NPWMD regimes.
• Publication of names of those denied export
  licenses, or involved in criminal activities.
• Continued development and dissemination of
  trade-related typologies and pre/post event risk
  indicators.
• Up to date information regarding latest
  techniques used for money laundering, terrorist
  financing, breach of NPWMD sanctions.

Bankers Association for Finance and Trade