dennis o'connor's pep presentation on peps (30th april 2004)
TRANSCRIPT
An Update on PEPS
Denis O'Connor30 April 2007 mlros.com
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Hillary Benn – Secretary of State for International Development(26 October 2006 – House of Commons)
“Good governance is about ensuring the rule of law….Bad governance can be caused or made worse by the actions of rich countries and their companies. For every bribe
taken – there has to be a bribe giver; for every stolen dollar that is spirited out of a developing country, there has to be a bank account somewhere for it to go into.”
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Hillary Benn – Secretary of State for International Development(9 December 2006 – International Anti-Corruption Day)
“Tackling corruption wherever we find it – whether here or abroad – is essential to send a strong message to those choose to extort, corrupt and deceive that it will not be tolerated.
Together we can make progress and I welcome the efforts of the anti-corruption movement for raising awareness of the issue. But awareness is one thing; action is another. And it is down to all of us to do
something, not just on one day, but every day.”
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Serious Fraud Office(14 December 2006 – Press Release)
“The Director of the Serious Fraud office has decided to discontinue the investigation into the affairs of BAE Systems PLC as far as they relate to the Al Yamamah defence contract with the government of Saudi Arabia.
This decision has been taken following representations that have been made both to the Attorney General and the Director of the SFO concerning the need to safeguard national and international security.
It has been necessary to balance the need to maintain the rule of law against the wider public interest.
No weight has been given to commercial interests or to the national economic interest.”
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JMLSG Guidance – January 2006
„Natural persons who are or have been entrusted with prominent public functions and immediate family members, or persons known to be close associates, of such persons.“ (3MLD)
Non UK
Head of State or Government
Senior politicians, government / judicial / military officials
Senior executives of publicly owned enterprises
Important political party officials
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JMLSG Guidance – January 2006
Risk based approach
Procedures for identifying PEPs
Appropriate senior management approval – take on & ongoing
Reasonable measures to establish source of wealth & funds
Enhanced ongoing monitoring
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JMLSG Guidance - January 2006
Retail banking
Credit cards
Wealth management
Financial advisers
Investment fund products
Discretionary & advisory investment management
Correspondent banking
PEPs linked to:-
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Draft 2007 Money Laundering Regulations
As per JMLSG Guidance
Person who is current PEP or within last 12 months
Resident outside the UK
Prominent public function by
Any state except the UK
The European Community
An international body
Immediate family member or known close associate
Schedule 2 (4): definitions
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FSA Thematic Review – 2006: Areas for Improvement
Senior management approval – plan for Directive compliance
Training on PEPs – consider specific training for relevant staff
Maintain a list of PEP accounts
Formalise ongoing PEP checks
PEP databases - not all staff & depts aware of limitations
Reputational risk ≠ financial crime risk
Internal Audit review of PEP systems & controls
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FSA Thematic Review – 2006: Good Practice
Regular committee meetings:- transactions, new clients, SARs
Take on: CEO led committee, standard forms & checklists
MLRO Report: specific mention of PEP systems & controls
No automatic de-classification of PEPs
Remuneration policy
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Practical Issues
Is your client a relevant office holder?
What are the office holder’s official responsibilities?
What salary accrues to the office holder?
What authority does the office holder have?
What access is there to significant public assets & funds?
Turnover of office holders
Is he/she high, medium or low ranking official?
Common names / naming conventions
Unique identifiers (e.g. date of birth)
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Practical Issues
Existing clients – do they have any PEP links?
Ongoing checks on PEP status
What level of senior management approval is required?
Identifying beneficial owners
Identifying relatives
Curriculum Vitae
Access to reliable independent information
Limited intelligence on scale of PEP corruption via UK firms
Costs – time / labour / systems (RIA – £20 million)
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Practical Issues
Establishing country risk
Transparency International’s Corruption Perception Index
World Bank’s Governance Indicators & Reports
UN / EU / US sanctions lists
Ex NCCT?
FATF / IMF country reports
International Narcotics Strategy Control Report (State Dept)
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Public Sector Initiatives on PEPs & Corruption
SOCA coordinating & supporting law enforcement agencies
HM Treasury developed an early warning system for PEP risk
City & Met Police teams
- Proceeds of Crime Unit (12 officers) – UK focus on foreign PEPs
- Overseas Anti-Corruption Unit (10 officers) - UK persons & foreign bribery
- £35mn of Nigerian assets restrained
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Denis O’Connor
Deputy MLRO
Commerzbank AG London
Tel: 0207-469-3154
Fax: 0207-653-7416
Email: [email protected]