ABA Banking Journal - October 2009 - (Page 50)
Compliance Clinic Separating gold from garbage in BSA/AML digging A step-by-step approach to creating a Financial Intelligence Unit to better focus your bank’s efforts and expenses targeted at money laundering and terrorist finance “I not only use all the brains that I have, but all that I can borrow” — Woodrow Wilson, 28th president to make productive use of that information and to reduce waste. Information waste produced internally by banks refers to all significant events related to high-risk products, geographies, and clients, as identified through the risk assessment process, that trigger the execution of a control, but with underlying components that are not recycled or analyzed further intelligently. Here are examples of failures to capitalize on information: T he financial services industry generates vast quantities of information pertaining to money laundering, terrorism financing, and fraud. Much data is not subject to adequate intelligence analysis; in other words, there’s “information waste.” That information is produced by the banks internally, as well as by the banking community and regulatory agencies. An effective “Financial Intelligence Unit” establishes protocols and procedures 1. By Gonzalo Sanchez, director, and Carmina Hughes, executive director, Daylight Forensic & Advisory, a New Yorkbased anti-money laundering and fraud consultancy. Sanchez, based in the firm’s Miami office, spent 27 years in international banking before joining the firm. Hughes has served as special counsel for enforcement and special investigations at the Board of Governors of the Federal Reserve System and as an Assistant United States Attorney in Maryland. 50 OCTOBER 2009/ABA BANKING JOURNAL Account opening. Each time an application is rejected because the prospect fails to either comply with customer identification procedures (CIP), due diligence, or enhanced due diligence (EDD) requirements, the account is likely to be rejected. However, the factors that triggered the execution of a control, such as dubious or incomplete information; failure to provide required information; or negative information found, are not analyzed to understand what type of client, business segment, geography, or type of product were related to that event. Wire transfers. Each time a wire transfer triggers a positive hit against any of the sanctions lists, the transaction is blocked Subscribe at www.ababj.com 2.
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