IMPLEMENTATION OF AML

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IMPLEMENTATION OF AML KYC FRAMEWORK Dr.
Rajeev Uberoi, Regional Head - Operational
Risk, South Asia Standard Chartered Bank
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IMPLEMENTATION OF AML KYC FRAMEWORK

• AGENDA
• INTRODUCTION
• STRATEGY
• SUCCESS CRITERIA
• AML / KYC FRAMEWORK ENABLERS
• SUMMARY

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INTRODUCTION
Enactment/ Amendment of Law Statutory/
Regulatory Authorities
Implementation of the Regime Covered
Institutions
Investigation Prosecution Law Agencies
Courts
Monitoring and Analysis Of Reports Fraud
Intelligence Unit (FIU)

• With a basic legal and regulatory framework to
  address money laundering now in
• place i.e.
• Financial Intelligence Unit (FIU) formed in
  India, in tune with FATF guidelines,
• RBI stepping up KYC compliance pressures,
• FAILURE IS NOT AN OPTION !

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INTRODUCTION

• WHY IS AML / KYC IMPORTANT ?
• Regulatory Requirement
• Reputational Risk and
• Operational Risk

This is not just a matter of satisfying our
regulators. This is about having ethical
standards and protecting the Bank's reputation in
turbulent times.

• THE CHALLENGE
• Fundamentally, the core principles critical to
  any AML programme are
• Compliance with the relevant AML laws
• Communicating the organization's AML programme
  to all Stakeholders
• Knowing all your customers all about your
  customers (KYC)
• Continuous money laundering risk-assessment

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INTRODUCTION
The consequences of non-compliance are serious
Paine Webber International (UK Limited) fined
350,000 for serious compliance failures,
including inadequate controls to prevent money
laundering Complinet 22/08/01
Crime bill cracks down on money laundering The
offence of failing to report evidence of money
laundering will be toughened Financial Times
6/3/01
Bank of Scotland .. under investigation by the
Isle of Man's financial regulator after being
sucked into a web of alleged money laundering and
bankruptcy fraud Financial Times 10/12/00
City banks handled dictators fortune.
This
is disappointing says regulator Financial Times
9/3/01
UK signs UN convention on trans-national
organised crime. establish a common legal
framework and introduce measures across Europe to
crack down on money laundering Financial
Times 14/12/00
Credit Suisse.. to be indicted in the
money-laundering scandal over 4bn plundered
from Nigeria by General Sani Abacha, the
country's former leader Financial Times 7/12/00
The designated president of the Financial Action
Task Force , Jochen Sanio, said the agency will
need a bigger budget and tough powers to impose
sanctions on countries that don't comply with its
rulings ' Everything will be overshadowed by the
task of fighting terrorism' Financial Times 3
October 2001
Source KPMG Presentation March 27, 2003
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STRATEGY
Implementation of the Regime Covered
Institutions
Minimum Requirement Standards (Seeking extensive
legal advice mapping the requirement with Law )
Policy (Development of a common compliance
policy that provides for transparent
and, consistent AML compliance procedures)
Procedure (Development of an implementation
strategy and a corresponding time bound
planexplaining how the policy will be
implemented and the controls that need to be in
place to implement the policy and provide
assurance evidence)
Processes (Controls added to processes to
implement the policy (if such controls do not
already exist). Assessment checks made to
specific Key Controls to evidence that they are
being undertaken and therefore that provide
assurance that the policy is being followed)
THE MOST CRITICAL STAGE OF THE STRATEGY IS
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SUCCESS CRITERIA

• Monitoring
• Continuously monitoring the progress until
  project moves into BAU mode

• Commitment
• Clearly defined and measurable objectives
• Ongoing monitoring

Timing Needs to be dealt with as a matter of
priority

• Management
• Project Management Team to be appointed to
  oversee implementation

• Consistency
• Guidance on approach to ensure a convergent
  approach across all branches/ entire organization

• Resources
• Appropriate resources need to be assigned to
  ensure a successful implementation

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AML KYC IMPLEMENTATION ENABLERS

• Clear Laws and Regulations
• Top Management Commitment
• Clear Accountabilities Robust Controls
• Technological Support
• Awareness Culture Building

INTEGRITY OF GOVERNANCE THROUGHOUT THE
ORGANISATION !!!
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SUMMARY

EXEMPLARY GOVERNANCE
PROJECT MANAGEMENT TEAM
Develop time bound implementation Plan
CONTROL STRUCTURE
INFORMATION COMMUNICATION
MONITORING
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THANK YOU Q A