Day 1 at ACAMS Conference Offers Wealth of Tips
This week I am at the ACAMS 16th Annual AML & Financial Crime Conference and the event is offering a wealth of tips for those concerned about combatting money laundering. While Fred Kaplan, author of the Dark Territory: The Secret History of Cyber War, delivered a keynote address that was a sober reminder that cybersecurity should be a serious concern for all, it was the roundtable discussion afterwards that spurred many comments from the audience.
The discussion around risk ratings was a reminder that a rating based on one category, like country, is not adequate. Two customers who live in the same country but have different transaction patterns are likely to have different risk profiles. Instead, institutions need to look at various aspects of a customer’s profile including transactions, products and business volumes to determine their risk profile. They also need to continually update the risk scores of customers and document the rationale of how risk scores are calculated.
The panel also spent some time discussing the new rule on customer due diligence (CDD), which outlines explicit CDD requirements and imposes a new requirement for financial institutions to identify and verify the identity of beneficial owners who own directly or indirectly 25% or more of the equity interest of a legal entity.
When looking at the casino industry, the panel noted that the number of suspicious activity reports (SARs) being filed by the gaming industry has more than doubled between 2013 and 2016. But some organizations in the industry still need to pay more attention to know your customer (KYC) activities, follow documented procedures, keep AML compliance officers involved in corporate policies, and look for patterns of activities in customers (and include this information in SARs).
The discussion on data integrity challenged the audience with a number of questions including:
What are the data inputs? Have they been revisited recently?
Were groups of customers/accounts excluded from the program?
What parameters are used in the risk profile and have they been reviewed?
How are alerts triggered?
Are the outputs of the system what you are supposed to get? Are there too many false-positives?
Is there delegation to operations and new accounts departments? Are they doing what they are supposed to be doing?
Are you testing/meeting to look at delegations to see if they are working?
Do people understand their roles and responsibilities?
Ensuring that people understand their AML roles and following procedures correctly will go a long way to making sure that the appropriate data is collected and maintained.
One last comment from the panel that is worth noting is that institutions should see their AML/CFT department as a cost containment center, not a cost center. Identifying potential bad actors and bad activities in advance makes financial sense.
Stay tuned for more observations from this great event!
About Anu Sood:
Anu Sood is the Director of Product and Corporate Marketing at CaseWare Analytics and is responsible for the company’s global marketing strategy. Prior to CaseWare Analytics, Anu worked in various roles in the high-tech industry and her accomplishments range from writing software for telephone switches to launching a new global satellite communication service. Anu has extensive experience in strategic marketing, corporate communications, demand generation, content marketing, product management, product marketing and technology development.
Connect: Anu Sood