Dow Jones - Compliance:Screening

Report
Evolving Sanctions Landscape and its impact
on AML Compliance
Executive Briefing – Lloyds of London –
29th February 2012
Dan
Mendelsson;
Solution Specialist
Jeremy Doyle;
Content Integration
Specialist
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2
2011 - Arab Spring
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3
2012 - Syria
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4
2012 - IRAN
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5
The Arab Spring – Ramifications
• Attractive growth opportunity has
transformed to a damage limitation
exercise
• 15% of the $1.5 trillion deposited from
the region in foreign bank accounts is
generated from corruption*
• Calls to recover public assets stolen by
corrupt politicians
*Source: MyPrivateBanking - Switzerland
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Increasing volume and scope of sanctions data
OFAC, EU, UN sanctions updates, Jan-10 to Dec-11
• 114% YOY increase in sanctions (2010 versus 2011):
• 2010 – 2,512 updates
• 2011 – 5,738 updates
• New measures targeting Iran and Syria continue to add scale
and complexity to sanctions screening
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Dow
Jones
& Company
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Dow
Jones
& Company
12
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Today’s evolving Sanctions landscape
Arab Spring: new sanctions regimes introduced or
extended overnight
New US Executive Order targeting Syria quickly followed
by new EU and Swiss sanctions
Aggressive US enforcement of CISADA sanctions regulations against Iran
Sanctions requirements growing in scope, complexity and size, extending to a range of
state controlled companies:
- Banks and insurers
- Petroleum companies
- Shipping companies
- Industrial conglomerates
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State-Owned Entity information for AML/CTF screening
•
New “Enhanced Country Risk” category that identifies companies associated with
governments from sanctioned jurisdictions
– 3,500+ state-owned companies from Libya, Iran and 7 other jurisdictions
– ~ 40% of these companies are not yet on sanctions lists
– Includes profiles of companies fully or partially-owned by sovereign wealth
funds
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Sanctions compliance and vessel information
• Imo
– Ships lists specifically on OFAC list; details now included in details of EU sanctions targets
• Identification of sanctions risk is a specific compliance challenge
– Flag, Name and other identifying features may change
– Complex/paper-based Trade Finance documentation
• Concern that Iran is circumventing sanctions régimes by re-naming and reflagging vessels
• International Maritime Organization (IMO) number is a unique characteristic of a vessel
– IMO remains constant; valuable as the compliance key to identification of sanctions risk
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Increasing cost of sanctions compliance
Achieving Global Sanctions Compliance: Challenges and Solutions
• Regulatory developments are adding to the existing pressures faced by compliance
departments
• Compliance Consequences
- More risks to be identified & managed
- Significant and sustained operational impact
- Increased visibility and accountability to senior executives
- Threat of substantial penalties and reputation damage
• So how are institutions managing?
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Cost of Watchlist Operations at Large Financial
Insitutions
Maintenance
Management
Technology
Analysis
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AML challenges facing organisations
46%
45%
Properly trained staff
38%
Additional Regulations
50%
38%
Increased enforcement of current regs
49%
38%
41%
Understaffed AML department
36%
35%
Technology concerns
33%
30%
Too many false positive results
27%
30%
Understanding regs outside of home country
16%
19%
Understanding regs in home country
15%
Avoiding sanctions
Lack of senior management engagement
18%
11%
12%
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2011
2012
Key findings – AML workloads increasing
76%
Reason for increase
70%
Most important reason
61%
43%
37%
29%
24%
29%
19%
5%
Increased senior New or expanded Company growth
management
government
focus on AML
regulations
Expanded into
new markets
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8%
3%
Merged with
another
organization
Had suspicious
activity
False positives are still an area of concern
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Too few are confident in data accuracy
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HMT screening & Chinese language names
賴英照 =
In-Jaw Lai
Ying-Jaw Lai
Yingzhao Lai
Difficult to screen OFAC lists against names data in Chinese script
– Many ways to transcribe Chinese characters into Roman scripts
– Taiwan had 4 different official standards in 10 years
– Unofficial standards are common
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Introducing Dow Jones Risk & Compliance
Objective: To be a leading provider of risk identification
information and research services that protect our customers
from regulatory, commercial or reputation risk
Anti-Money
Laundering
Anti-Corruption
Identify
Data
Anti-Fraud
Investigate
News &
Analysis
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Payments
Monitor
Research
19
Closing thoughts
• The adoption of Sanctions as a means of political and economic influence
is on the increase.
• Such increases are putting additional pressure on regulated organisations
with increased work load and desire for more resources at a time of austerity.
• Using the correct type of sanction content for specific business needs is an
effective way of improving operational efficiency with out jeopardising
compliance integrity.
• Businesses with exposure to China or those looking to expand into this
region are now seeking support with the challenges associated with Chinese
Commercial Code and sanction screening of transactions.
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Connect with us
• Jeremy Doyle
• Dan Mendelsson
• Content Integration Specialist
• Solution Specialist
• [email protected][email protected]
0203 217 5135
0203 217 5281
©2010 Dow Jones & Company

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