risk assessment and due diligence a global perspective · acams and lexisnexis survey 10 product...
TRANSCRIPT
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Risk Assessment and Due Diligence – A Global Perspective
Presenters: John J. Byrne, Esq., CAMS, Executive Vice President, ACAMS
Sheryl Austin, CAMS, LexisNexis Market Planning – AML/Compliance
18th Annual International AML & Financial Crime Conference
March 18-20, 2013
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Geographic Footprint
Financial Institution’s Asset Size
Respondent’s Title
Demographic Composition
ACAMS and LexisNexis Survey
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Time Consuming and Complex
Lack of Standardization
Inconsistent Regulator Expectations and
Management Support
What do you believe is the most difficult industry-wide challenge in the BSA/AML Risk Assessment Process?
ACAMS and LexisNexis Survey
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The BSA/AML Risk Assessment Process is challenging because it is: Time Consuming and Complex
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Product Development
Customer Experience
BSA/AML Survey Highlights The “VOICE” of the AML Audience
“The risk assessment is a very large task and each year gets larger. The time involved to complete the assessment is often overlooked…”
“BSA is no longer genuinely risk-based. There are so many things that MUST be done regardless of the risk assessment, it is exhausting.”
“[The most complex issue is] combining expectations from different regulators/countries”
• 65% spend more than 1 month on their risk assessment (18% spend 4 months or longer)
• 62% use a manual spreadsheet or document for their risk assessment
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The BSA/AML Risk Assessment Process is challenging because it: Lacks Standardization
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Product Development
The “VOICE” of the AML Audience BSA/AML Survey Highlights
“…there are unclear expectations as to the preferred format, frequency and purpose of the risk assessments”
70% see a need for an industry-wide standard risk assessment
“There is no standard; the entire assessment is subjective… and once the process is complete, it is time for a NEW auditor to review it”
“Lack of standardizing along with lack of time and staff internally to properly attend to these requirements”
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The BSA/AML Risk Assessment Process is challenging because of: Unknown Regulator Expectations AND Lack of Management Support
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Product Development
Customer Experience
The “VOICE” of the AML Audience
“One of the largest concerns is that this assessment will be reviewed in hindsight by regulators…”
“[Lack of] management understanding of the risks that the compliance staff see and their buy-in to the importance of the risk assessment”
“[Lack of] consistency of standards applied by examiners/regulators”
“The Risk Assessment Exercise often does not elicit support [from management]”
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Unavailable data
Reluctance to gather AND share information
A manual process and unintegrated systems
What do you believe is the most difficult industry-wide challenge in the Enhanced Due Diligence (EDD) Process?
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The most difficult industry-wide challenge in the EDD Process is: Reluctance to Gather AND Share Information
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Product Development
Customer Experience
Over 60% use a dialogue between a customer and a bank employee as their PRIMARY method for collecting EDD data
“Maintaining a balance between the Financial Institution's responsibility to protect the bank and customer's expectation for financial privacy“
The “VOICE” of the AML Audience BSA/AML Survey Highlights
“Getting the line of business to ask/gather information on the
customer”
“The customer is reluctant to provide detailed information and the front line employee has difficulty with asking the EDD questions”
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The most difficult industry-wide challenge in the EDD Process is: Lack of Available Data
Lack of Available Data was described as:
• Lack of general EDD data
• Lack of information across foreign jurisdictions
• Lack of beneficial ownership
“Getting clear answers and detail when [data is] unavailable”
“Information is scarce… [and] may be in a foreign language”
“Obtaining negative news from all foreign countries on a continuous basis”
“The lack of transparency in the various jurisdictions in terms of corporate ownership”
“Determining the beneficial ownership when companies use Corporate Vehicles that distort [information]…”
The “VOICE” of the AML Audience
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Product Development
Customer Experience
The most difficult industry-wide challenge in the EDD Process is: A manual process and un-integrated systems
The “VOICE” of the AML Audience BSA/AML Survey Highlights
• 40% on disparate systems which at best are partially integrated with each other
• Only 5% have a fully automated system
“Few vendors offer CDD/EDD software solutions that can be integrated into BSA/AML systems”
“The real pain is to collect the right information, to store it in the same place and to have updating processes”
“There are too many manual processes in place to manage the EDD process”
“[lack of]…information and mapping the relationship together to identify the risks associated with the relationship”
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11 ACAMS and LexisNexis Survey
Next Steps / Contacts
• ACAMs and LexisNexis will develop a more thorough report related to the results of the survey.
• This report will be published and made available to ACAMS members and survey participants by April/May.
ACAMS John Byrne Executive Vice President [email protected]