How to Implement a Risk-Based Framework to AML and CFT

The independent world forum for
central bankers and financial supervisors
Training course/seminar series 2012
How to Implement a
Risk-Based Framework
to AML and CFT
4-day intensive residential programme
23 – 26 April 2012
Cumberland Lodge, Windsor
Course chairman:
Richard Pratt
Consultant and former Director General
Jersey Financial Services Commission
Series adviser:
Charles Goodhart, CBE
Professor Emeritus
London School of Economics
Financial Markets Group
www.centralbanking.com/events
Hosted by Central Banking Publications
Dear Delegate,
In their response to the financial crisis, the G20
leaders in Cannes in November 2011 issued a
challenge to the Financial Action Task Force (FATF)
and their member central banks and regulators.
“We urge all jurisdictions to adhere to the international
standards in AML/CFT area and strengthen their AML/
CFT systems in cooperation with FATF. The FATF and
international organisations should work closely together to
enhance transparency and facilitate cooperation between
tax and law enforcement agencies in the implementation
of these standards.”
It is clear from this statement that anti-moneylaundering and countering terrorist financing remains
a major priority for global leaders. Not only that, but
the importance of cooperation between central banks
and FATF was stressed in an increasingly globalised
economy where money and assets can be moved
near instantaneously across borders with 24-hour,
electronic markets.
This call comes at a time of the publication of new
typologies for specific threats and at a time when
the FATF are reviewing the 40+9 recommendations
themselves, with a view to developing closer
integrated standards. The combination of evolving
standards and challenges creates a moving target for
resource-constrained central banks and regulators.
Meeting the practical day-to-day challenges of
central banks and regulators is the focus of this fourday residential seminar, held in closed roundtable
format to allow delegates to share the experiences
with each other.
Monetary Fund and others, the elite panel of speakers
includes:
• T
heodore Greenberg, Senior Financial
Specialist, World Bank
• N
adr El Banna, Lebanon Representative, FATF’s
Africa and Middle East Review Group
Member of Permanent Technical Committee,
MENAFATF
• M
arcus Killick, CEO, Gibraltar Financial Services
Commission
• D
avid Thomas, Former Head, UK Financial
Intelligent Unit
• S
ally Scutt, Deputy Chief Executive, British
Bankers Association
Each session affords participating supervisors
and central bankers an opportunity to
“benchmark” their work against international
practice and to exchange views with their
peers in an informal setting.
This format, as more than 3,500 central bankers and
regulators can attest, encourages delegates to quiz
panellists, raise issues and discuss solutions to the
specific challenges they face.
For more information about the programme, please
take a few moments to look at the detailed course
contents presented on the pages which follow.
I look forward to welcoming you to Windsor.
Yours sincerely,
This seminar pinpoints not only what financial
policymakers must do to prevent the misuse of
their financial system for money laundering or other
criminal purposes, but how to put in place a regime to
identify new threats – and tackle them.
Led by Chairman Richard Pratt, a former Director
General of the Jersey Financial Services Commission,
and now a regulatory consultant to the International
Robert Pringle
Chairman, Central Banking Publications
The course was well organised and run, with
knowledgeable speakers with real life examples. Keep up
Linnette Wilson, Head of Department – Banking, Bank of Jamaica
the good work
How to Implement a
Risk-Based Framework
to AML and CFT
Spring 2012
Monday 23 April
The fundamentals of an AML/CFT regime
Introduction: chairman’s welcome session
Richard Pratt, former Director General, Jersey Financial Services Commission
This session will introduce the course and invite delegates to consider the main challenges their
organisations face, drawing on the wide range of expertise and experiences present. Discussion will focus
on the new demands facing regulators and central banks in implementing a risk-based approach to anti
money laundering and combating the financing of terrorism (AML & CFT) in light of the G20 statements
and recent FATF reports. Participants will also be offered the opportunity to express their main areas of
interest for discussion during the course.
Key elements of an AML & CFT framework
Theodore Greenberg, Senior Financial Specialist, Financial Market Integrity Unit, World Bank
Regulation varies from country to country due to differences in the national legal framework and in the
regulator’s powers, duties and the constraints it faces. Yet all regulators have to commit to a professional
approach – to transparency, objectivity, a methodical approach, strong technical knowledge, continuous
learning and high standards. In this session, led by a leading expert and world renowned specialist from
the World Bank, discussion will focus on the core elements in AML/CFT regulation and the latest thinking
on their implementation.
Obligations on designated financial institutes
Sarah Runge, Corruption Policy Adviser, Department of Treasury US (invited)
Understanding the requirements of customer due diligence, building a solid customer profile, and
establishing an effective internal control and audit system are essential to a successful anti-moneylaundering regime. It is regulators’ obligation to introduce effective supervision of compliance using
appropriate regulations, guidance, inspections, and sanctions. This session, led by a policy adviser to the US
Treasury, will discuss the enhanced and simplified requirements, the threshold of suspicion, and use case
studies to illustrate how to fulfil the obligations on designated financial institutions.
The FATF recommendations: the new agenda
Badr El Banna, Senior Compliance Examiner, Special Investigation Commission, Lebanon
The FATF is undertaking a review of its standards, with any changes expected to be adopted at the FATF
plenary meeting in February 2012. In addition, recent years have seen a series of typology documents
focusing on a variety of areas ranging from human trafficking to new payments methods. All this adds
up to a formidable agenda for national regulators and central banks charged with keeping laws up to
date and demonstrating compliance to international assessors. Drawing on his experiences with FATF
and MENAFATF, the speaker will review developments in the FATF’s agenda, including changes to the
standards, analyse the implications from the regulator’s perspective, and assess the impact on the day to
day work of regulators. Group discussion will consider likely future directions for the standards.
Well planned, co-ordinated and a greatly resourceful
workshop with neatly selected and balanced world class
professionals on subject matters.
A central bank delegate
Tuesday 24 April
Building the risk-based framework
A risk-based approach – issues of implementation
Marcus Killick, CEO, Gibraltar Financial Services Commission
Financial centres have different characteristics which give rise to different money-laundering and terroristfinancing risks. Understanding the sources, methods and extent of money laundering and terrorist financing in
a particular country or jurisdiction is essential for supervisors and regulators to combat financial crime and
prioritise resources. However, the implementation of a risk-based approach presents an array of challenges to
central banks, regulators and the institutions they supervise. In this session, the speaker will discuss these and how
they can best be met.
A risk-based approach – the view from an international bank
Hans-Peter Bauer, former Head of Regulatory Relations. UBS and Chairman, Wolfsberg Group
Senior Advisor, Basel Institute of Governance (invited)
Modern, global banks face immense regulatory and reputational risk in connection with money laundering. In
response, they have allocated substantial resources to anti-money-laundering controls, and have also developed
risk-based approaches to deploying these resources. This session will offer delegates a “risk manager’s eye view” of
how international banks in practice defend against money laundering, the implications of regulatory requirements
and how the actions of regulators can help or hinder these efforts.
Relations between the supervisor and the financial intelligence unit (FIU)
David Thomas, Consultant and former Head, UK FIU, Serious Organised Crime Agency
Financial intelligent units are a crucial element of the anti-money-laundering regime. They have a national
responsibility for receiving, analysing and disseminating financial intelligence submitted through the suspicious
activities reports (SAR) Regime. Cooperation is a key element of a country’s fight against AML and CFT, and it is
important good relations between financial supervisors and their respective FIU’s are maintained. This session,
led by a former head of UK FIU, will focus on the role of FIU, the uses of FIU intelligence, and the sharing of
information between an FIU and regulators.
Identifying and managing risks in the payment systems and wire transfers
Tina Blocksidge, Nominated Officer, Lloyds Banking Group
The vulnerabilities of domestic and cross-border wire transfers to money laundering and terrorist financing
have been acknowledged by the international community in a series of increasingly arduous recommendations
and guidance.Yet striving to trace all wire transfers and minimise thresholds place considerable burdens on
regulators and the financial system itself. Moreover, the process of designating and withholding a payment deemed
to be suspicious can place the financial agents in complex legal and client-relation situations. A number of recent
high-profile cases involving cover payments and the emergence of mobile phone payments have highlighted the
potential for risks arising from the payment systems to crystalise. This session, led by a leading expert from the
Lloyds Banking Group, looks at how a bank can mitigate such risks against a backdrop of international guidelines
and national regulations.
How to work with the private sector
Sally Scutt, Deputy Chief Executive, British Bankers Association
What is the role of the private sector in developing rules? This session will focus on examples of where the
private sector can provide added value in devising workable proportionate rules, commenting on new initiatives
and working in partnership with regulatory and supervisory authorities. The speaker, from the British Bankers
Association, will discuss the work of the Joint Money Laundering Steering Group, a trade-association based
group, in providing practical assistance in interpreting regulations and spreading good practice in countering
money laundering.
How to Implement a
Risk-Based Framework
to AML and CFT
Spring 2012
Wednesday 25 April
Combating threats and demonstrating compliance
Politically exposed persons: rules and reality
James Maton, Partner, Edwards Angell Palmer & Dodge
Combating money laundering and the financing of terrorism requires that regulatory authorities
compile and keep up-to-date lists of suspicious persons and organisations in identifying corruption. FATF
recommendations require supervisors to pay particular attention to “politically exposed persons” (PEPs,
ie, high-risk individuals who may be conduits for looted funds). This session will consider the challenges of
preventative action, as well as issues with reconciling the different needs of civil and common law systems,
the use of asset seizure and confiscation, and the use of AML/CFT reports to identify corruptions.
Identifying and tackling threats from designated non-financial businesses
and professions
Andrew Le Brun, Director of International Policy, Jersey Financial Services Commission
with Colin Powell, former Chairman, Jersey Financial Services Commission
FATF recommendations require countries to implement measures that oblige financial institutions and nonfinancial business and professions (DNFBP) to prevent the misuse of their businesses in money laundering
and terrorism financing. This session draws on the experience of a regulator in a jurisdiction with extensive
experience in this area to discuss the role of designated non-financial businesses and professions and the
risk of money laundering through trust and company service providers. Andrew Le Brun will be joined by
Colin Powell, who as a member of the UK’s money-laundering advisory committee, will also discuss the
method of using self-regulatory organisations for ensuring compliance.
Demonstrating success
John Aspden, CEO, Financial Supervision Commission, Isle of Man
Today, financial supervisors themselves are expected to submit to evaluation by international examiners.
Such evaluations now focus not only on the financial regulatory regime in general, but specifically on how
well the regime works to combat money laundering and terrorist financing. How are these evaluations
conducted, and what do supervisors need to understand about the evaluation process? How can financial
market authorities best cooperate with this scrutiny to achieve the most positive outcome? This session
takes a comprehensive approach to look at how authorities can best prepare for, and get the most from, an
external assessment.
Workshop: Know-Your-Customer (KYC)
Led by the Chairman, Richard Pratt
The strongest check against misuse of the banking system, whether in terms of fraud or other financial
crime such as money laundering, is for banks and businesses more broadly to “know their customers”. But
banks differ about what they mean by KYC, and what they have to do in practical terms to carry this out.
This can lead to a significant range of interpretation and practice. This session, led by the chairman, will
look at KYC from a practical perspective, and a series of case-study scenarios will draw out concrete steps
authorities can take to tackle issues related with KYC.
This was the best motivation and incentive
my employer could have given me this year.”
Myriam Penninckx, Commission Bancaire,
Financière et des Assurances
(CBFA, Belgium)
Thursday 26 April
Typologies: understanding and implementation
How to combat trade-based money laundering and carousel fraud
Bill Cleghorn, Director of Financial Crime & Corporate Recovery, Kinetic Partners
In this session, an experienced forensic accountant will focus on significant risks of carousel fraud and tradebased money laundering which central banks need to be aware of. Though the subject was discussed in the
subject of typology and best practice papers, they remain poorly understood. The speaker will explain the
nature of carousel fraud, how trade-based money laundering works and the methods of tracing the funds
drawing on a series of international case studies.
Recent work by FATF and money laundering typologies
Richard Pratt
From 2010 to 2011, the FATF conducted five research projects which resulted in the publication of key
typologies studies: new payment methods, human trafficking, maritime piracy, laundering the proceeds
of corruptions, and free trade zones’ impact on AML and CFT. These new documents set the agenda
that regulators will need to implement and this session, led by an experienced former regulator, will
highlight the important areas of change, likely flashpoints and challenging areas for implementation.
Special attention will be given to areas where cooperation within or across jurisdictions may be needed.
About the course chairman
Richard Pratt is a consultant on financial services regulation.
He conducts assessments of, and provides advice to, a range
of regulatory authorities on anti-money-laundering defences,
on capital market regulation, on governance and operational
issues for financial services regulators, on international
regulatory cooperation, and on other regulatory issues. Mr
Pratt was previously director general of the Jersey Financial
Services Commission. He was a member of the implementation
committee of IOSCO and of the task force that drafted the IOSCO
multilateral MoU, and participated in the FATF review of its
recommendations on money laundering and terrorist financing.
CBP training course/seminar series, Spring 2012 include:
Strategic Planning and Change Management for Central Banks
New Developments in Banknote and Currency Management
Financial Stability: Designing and Implementing Macroprudential Policy
Central Bank Governance: the Role of the Board
Current Challenges and the Future of Central Bank Statistics
Effective Internal Audit for Central Banks
For detailed programmes and a fax-back registration form for each
of these key courses, please visit: www.centralbanking.com/events
Booking details
How to book
Course fee: £2,700
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by government in furtherance of its
sovereign activities)
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4-Day (3 nights) residential course
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meetings over the past ten years.
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a Risk-Based Framework for AML
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