Investment Operations

Anti-Money Laundering for Back-Office

Categories Compliance, Intermediate

Course Instructor

Course Level

Intermediate

Certification

Certificate

Delivery

Via Zoom

Hours (EST)

1:00 pm - 5:00 pm​

Description

*This course can be offered upon request and can be customized to fit your team’s needs.

Date: May 2-3

Learning Objectives

  • Have a deep understanding of money
  • How money laundering works
  • Keys to the recognition of money laundering
  • Proper investigations and reporting
  • Common errors to avoid

Prerequisite: None

Day 1

What is Money?

  • When do you think of money laundering, what pops into your mind?
  • When you ask a person what money is, 99% put their hand in their pocket and pull out some currency. While they are correct, there are hundreds, without exaggeration, of other forms of money.
  • Origin of the term money laundering – one of the very first cases – even before the BSA in 1970!
  • The 3 plus levels of money laundering: placement, layering, integration, and a non-bank wealth sink. The money laundering whirlwind.

Why Is Money Laundering a Problem? Why should we care and act?

  • Money Laundering allows crimes to be profitable, such as drugs, smuggling, weapons, financial fraud, blackmail and extortion, corruption, etc.
  • AML’s aim is to take the profit out of crime.
  • AML also addresses the financial markets and their security and insulation against manipulation.
  • The trends in money laundering are the money is moving faster, better insulated from view, and making detection harder.
  • The global cost of money laundering – and shadow economies.

Regulations Overview – US

A simple, clean definition of money laundering to use each and every day.

The list is for your reference, and we will skim over these laws.

1970 Bank Secrecy Act

1986 Money Launder Control Act

1988 Anti-Drug Abuse Act

1992 Annunzio-Wylie Anti-Money Laundering Act

1994 Money Laundering Suppression Act

1998 Money Laundering and Financial Crimes Strategy Act

2001 Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)

2004 Intelligence Reform & Terrorism Prevention Act

Most regulations on AML originate with the OECD and the FATF. There is a great deal of input from the BIS. Also, Wolfsburg Group, an association of 12 global banks, develops frameworks and guidance for the management of financial crime risks.

Examples of Money Laundering

 (I’ll share part of the story, and you will tell me what should be done and what are the tells or clues)

Real case histories – mine and others

  • Client deposits between $900K to $1.2 mil in cash every week.
  • Local Carpet Cleaner deposits about $2,500 each week
  • LA Jewelry and gold broker importing and selling 10kg gold per week.
  • Canadian stock broker funds a private placement for 2 to 4 million every 2 months.
  • One of your California Broker-Dealers raises $35 million from 35 investors and loses it all in 7 months. Has asked to do another for even more money.
  • Explain the empty buildings in Dubai, Miami, NYC.
  • An investor places several trades over three months and makes over $100,000 from a $4,000 investment. Only Cattle Futures were traded – no other commodity. 90% of all trades were profitable in the 3 months.

Laundering money, trade-based, intangibles, digital, crypto, NFTs

What is Offshore?

Day 2

  • Three Colossal Disasters: Deutsche Bank and Mirror Trading, BNC Paribas, Danske Bank
  • What were the tells something was wrong?

Getting the back-office set and ready

  • 80% of AML Red-faced moments could be prevented by fit and proper intake KYC due diligence
  • 10% can be prevented if your KYC is not once and done

Know Your Client Due Diligence

  • Inherent friction between CSRs and compliance

Entities, common and exotic

  • The individual, normal, the wealthy, the PEP
  • The company, LLC, partnerships limited and general
  • The Trust or Foundation
  • Controlling Parties, by voting, proxy, power of attorney, discretionary authority
  • Financial Companies such as broker-dealers, insurance companies, check cashing, and payment processors
  • Large company treasury functions
  • Non-profits
  • Correspondent Banks
  • Public Companies
  • Governments – city, state, federal, NGOs, and NGOGO
  • Scrubbing all persons and transactions

Reporting

  • The client denied
  • Red flags computer or individual
  • Time to investigate – red flag or false flag?
  • KYC File, History, behavior, PEP, account changes, gray or blacklisted countries
  • Time to choose, red flag or false flag – document the choice

Time for the SAR

  • Introduction
  • Account Information
  • Due Diligence/Investigation
  • Dates and Activity
  • Closing Statement and Conclusion.

Write in short sentences, avoid adjectives and adverbs, and stick to the facts for the first 4 parts – the 5th, draw a clear conclusion(s).

May also have to file a CTR

Tells you have a client problem

  1. Poor documentation
  2. Half answered questions
  3. Belittles the compliance function
  4. Is in a hurry – Is a name dropper
  5. Easily upset by any probing
  6. Accounts funded and drained within days – change in account usage called seasoning

How To Get It Wrong

  • The most common fine is failure to follow your own compliance manual
  • Under–staffed and under-trained
  • Too few tools to conduct due diligence or red flag investigations
  • A prohibition from consulting with or speaking to all divisions of the company
  • Stealing your compliance manual from another entity and modifying it
  • Failure to review, edit and update the compliance manual
  • Not paying attention to the body of transactions

How To Make It Worse

  • Violate Sanctions
  • All remaining questions of the students and the last thoughts of the presenter

Summary & Questions

In-House Training

Custom Training can help you achieve your corporate training goals while staying on budget and focusing the content on the needs of your group. Email your questions regarding corporate training to training@investmentoperations.net.

2024 Training Calendar

Training Catalogue

Course Instructor

Course Level

Intermediate

Certification

Certificate

Delivery

Via Zoom

Hours (EST)

1:00 pm - 5:00 pm​

Description

*This course can be offered upon request and can be customized to fit your team’s needs.

Date: May 2-3

Learning Objectives

  • Have a deep understanding of money
  • How money laundering works
  • Keys to the recognition of money laundering
  • Proper investigations and reporting
  • Common errors to avoid

Prerequisite: None

Day 1

What is Money?

  • When do you think of money laundering, what pops into your mind?
  • When you ask a person what money is, 99% put their hand in their pocket and pull out some currency. While they are correct, there are hundreds, without exaggeration, of other forms of money.
  • Origin of the term money laundering – one of the very first cases – even before the BSA in 1970!
  • The 3 plus levels of money laundering: placement, layering, integration, and a non-bank wealth sink. The money laundering whirlwind.

Why Is Money Laundering a Problem? Why should we care and act?

  • Money Laundering allows crimes to be profitable, such as drugs, smuggling, weapons, financial fraud, blackmail and extortion, corruption, etc.
  • AML’s aim is to take the profit out of crime.
  • AML also addresses the financial markets and their security and insulation against manipulation.
  • The trends in money laundering are the money is moving faster, better insulated from view, and making detection harder.
  • The global cost of money laundering – and shadow economies.

Regulations Overview – US

A simple, clean definition of money laundering to use each and every day.

The list is for your reference, and we will skim over these laws.

1970 Bank Secrecy Act

1986 Money Launder Control Act

1988 Anti-Drug Abuse Act

1992 Annunzio-Wylie Anti-Money Laundering Act

1994 Money Laundering Suppression Act

1998 Money Laundering and Financial Crimes Strategy Act

2001 Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)

2004 Intelligence Reform & Terrorism Prevention Act

Most regulations on AML originate with the OECD and the FATF. There is a great deal of input from the BIS. Also, Wolfsburg Group, an association of 12 global banks, develops frameworks and guidance for the management of financial crime risks.

Examples of Money Laundering

 (I’ll share part of the story, and you will tell me what should be done and what are the tells or clues)

Real case histories – mine and others

  • Client deposits between $900K to $1.2 mil in cash every week.
  • Local Carpet Cleaner deposits about $2,500 each week
  • LA Jewelry and gold broker importing and selling 10kg gold per week.
  • Canadian stock broker funds a private placement for 2 to 4 million every 2 months.
  • One of your California Broker-Dealers raises $35 million from 35 investors and loses it all in 7 months. Has asked to do another for even more money.
  • Explain the empty buildings in Dubai, Miami, NYC.
  • An investor places several trades over three months and makes over $100,000 from a $4,000 investment. Only Cattle Futures were traded – no other commodity. 90% of all trades were profitable in the 3 months.

Laundering money, trade-based, intangibles, digital, crypto, NFTs

What is Offshore?

Day 2

  • Three Colossal Disasters: Deutsche Bank and Mirror Trading, BNC Paribas, Danske Bank
  • What were the tells something was wrong?

Getting the back-office set and ready

  • 80% of AML Red-faced moments could be prevented by fit and proper intake KYC due diligence
  • 10% can be prevented if your KYC is not once and done

Know Your Client Due Diligence

  • Inherent friction between CSRs and compliance

Entities, common and exotic

  • The individual, normal, the wealthy, the PEP
  • The company, LLC, partnerships limited and general
  • The Trust or Foundation
  • Controlling Parties, by voting, proxy, power of attorney, discretionary authority
  • Financial Companies such as broker-dealers, insurance companies, check cashing, and payment processors
  • Large company treasury functions
  • Non-profits
  • Correspondent Banks
  • Public Companies
  • Governments – city, state, federal, NGOs, and NGOGO
  • Scrubbing all persons and transactions

Reporting

  • The client denied
  • Red flags computer or individual
  • Time to investigate – red flag or false flag?
  • KYC File, History, behavior, PEP, account changes, gray or blacklisted countries
  • Time to choose, red flag or false flag – document the choice

Time for the SAR

  • Introduction
  • Account Information
  • Due Diligence/Investigation
  • Dates and Activity
  • Closing Statement and Conclusion.

Write in short sentences, avoid adjectives and adverbs, and stick to the facts for the first 4 parts – the 5th, draw a clear conclusion(s).

May also have to file a CTR

Tells you have a client problem

  1. Poor documentation
  2. Half answered questions
  3. Belittles the compliance function
  4. Is in a hurry – Is a name dropper
  5. Easily upset by any probing
  6. Accounts funded and drained within days – change in account usage called seasoning

How To Get It Wrong

  • The most common fine is failure to follow your own compliance manual
  • Under–staffed and under-trained
  • Too few tools to conduct due diligence or red flag investigations
  • A prohibition from consulting with or speaking to all divisions of the company
  • Stealing your compliance manual from another entity and modifying it
  • Failure to review, edit and update the compliance manual
  • Not paying attention to the body of transactions

How To Make It Worse

  • Violate Sanctions
  • All remaining questions of the students and the last thoughts of the presenter

Summary & Questions

In-House Training

Custom Training can help you achieve your corporate training goals while staying on budget and focusing the content on the needs of your group. Email your questions regarding corporate training to training@investmentoperations.net.

2024 Training Calendar

Training Catalogue

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