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11th Annual FIBA

Anti‐Money Laundering Compliance Conference

RJ Berry

Head of Compliance

Cayman Islands Monetary Authority

Disclaimer

The opinions expressed are my own and do not necessarily represent those of the Cayman Islands Monetary Authorityrepresent those of the Cayman Islands Monetary Authority.

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Regulatory Expectations 101

• Knowledge of and compliance with your regulatoryobligations:

o Regulatory Law(s)g y ( )

o Money Laundering Regulations

o Regulations

o Rules and Statements of Guidance 

Regulatory Expectations 101

• Full and frank disclosure and display willingness to cooperate.

• Provide timely responses to any queries• Provide timely responses to any queries.

• Not to engage in un‐approved business.

• Regulatory compliance should not be an afterthought.

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Regulatory Expectations 101

Onsite Inspections

• Be Prepared for the inspection:

o Availability of appropriate staffy pp p

o Documentation up to date and available

o Have work area for inspectors

• Action recommendations coming out of inspection reports.

Wayne Shah - FIBA

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Is it worth it? There is always risk

Correspondent Banking - Managing Risk

Correspondent Banking - Managing Risk

• Regulatory Environment

PAC

KYC

FIU

SECKYC

KYCC

AML

EDD

FATF

FINCEN

CATF

CRA

BASEL 

FDIC

BIS

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FINCEN

OFAC

PEP

ISO

BSA

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Are We On the Same Page?• Ownership

– Local, Foreign, Family-owned, PEPs• Compliance & AML Disposition

– How many Full Time Employees?• Updated Policies? KYC?Updated Policies? KYC?

– FATF, Wolfsberg, MT202 Cov, Travel Rule• Regulatory Environment and Governance

– When and what were recent updates by regulators?– Sanctions and findings– Audits

• Training – What, When, Where

M it i • Monitoring – Automated or Manual

• Customer Base and Products Offered – On shore, Off shore, Internet, Gaming, Checks, Wires

11th Annual FIBA Anti Money Laundering11th Annual FIBA Anti Money Laundering Compliance Conference

Presentation by Sharon Christopher

Deputy Chief Executive Officer

First Citizens Bank

24th February 2011

© 2005 First Citizens Bank. All rights reserved.© 2005 First Citizens Bank. All rights reserved.

24 February, 2011

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Caribbean Association of Indigenous Banks

Community of locally incorporated/owned banks and other financial institutions in the Caribbean/CARICOM Region.

Seeks to influence regional financial services policies and other issues which have implications for the sector, such as the AML Correspondent Banking relationship.

Facilitates Caribbean indigenous banks' and financial institutions' intervention and participation in global network of financial service

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intervention and participation in global network of financial service providers.

Caribbean Association of Indigenous Banks -54 Institutions in 15 Jurisdictions

Anguilla

Antigua

Guyana

Jamaica

Barbados

Belize

British Virgin Islands

Cayman Islands

Dominica

G d

Montserrat

St. Kitts / Nevis

St. Vincent

Suriname

Trinidad and Tobago

Grenada

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Caribbean Principles

Mitigate Caribbean banking risk and preserve the integrity of correspondent banking relationships.

Based on best practice standards and more particularly on Wolfsberg principles.

Designed to align standards used by Caribbean banks with those accepted worldwide.

Intended end result is strengthening of compliance environment in the Caribbean region.

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Recent Developments in the Caribbean Region

Increased use of automated systems for monitoring and record keeping.

Increased demand for certified compliance professionals and for compliance staff to be trained up to a certain standard.

Recent formation of compliance bodies or associations in jurisdictions such as Barbados, the Cayman Islands, the Bahamas, and Trinidad and Tobagoand Tobago.

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© 2005 First Citizens Bank. All rights reserved.

Samuel James Wilkinson

Assistant Resident Manager

Votorantim Bank Limited & Banco Votorantim S.A. - Nassau Branch

February 24, 2011

FIBA Annual AML Conference – Miami, FL

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“Ex-Swiss Banker Blows Whistle on Tax Evaders”

• Should financial entities encourage whistle blowing?

• Is whistle blowing the next best thing to suspicious activity reporting

Suspicious Activity Reporting & Whistle Blowing – Are They Related?

• Is whistle blowing the next best thing to suspicious activity reporting (STR) or better?

• Is it an effective method of reporting?

• Does it get results?

• Should whistle blowers be protected by law like persons who report suspicious transactions?

• STRs continue to challenge offshore financial centers as we grapple with doubts about what transactions are suspicious and require with doubts about what transactions are suspicious and require reporting and which are not.

• Many Caribbean bankers remain fearful of misinterpreting or misunderstanding STR process and eventual outcome of filing reports.

• Reality of sanctions for failing to report has also created some anxiety.

• Caribbean OFC’s have decided that consistent training of staff and support of top management are best methods to manage STR process.

• Caribbean bankers understand:• That penalty for non-compliance is an increase in reputational risk

and great possibility / potential to go to prison.

• That for the jurisdiction to be successful, suspicious transactions, doubts and fears notwithstanding, must be reported.

• That our jobs, reputations, economies and freedom depend on how vigilant we are and how well we execute.

• For the moment, Caribbean bankers know that if you blow the whistle, you blow it at your own risk but if you report a suspicious transaction, you are protected by the law….we hope!transaction, you are protected by the law….we hope!

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To survive and prosper in global financial community, Caribbean bankers understand that they must:

• Accept transparency, provide client confidentiality and accept that bank secrecy is dead

The Way Forward for Offshore Financial Centers

secrecy is dead.

• Develop strategies that are consistent and can be tested.

• Monitor and report suspicious activity in every instance to avoid reputational risks, sanctions, financial penalties or prison.

• Utilize internal and external auditors to gather risk intelligence for use by top management.

• Ensure that risk programs have the full support of top management. It is the only way it will work.is the only way it will work.

• Ensure that sufficient resources are allocated to risk process since consequences for non-compliance could be far greater than cost of resources.

• Be proactive, flexible and adaptable to change since change is the only constantonly constant.

John F. Kennedy once said, “In the Chinese language, the word “Crisis” is composed of two characters – one represents danger, and one represents opportunity.”

CARIBBEAN BANKERS KNOW THE IMPORTANCE OF BOTH CHARACTERS!!!

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CHALLENGES OF AML IMPLEMENTATION IN THE CARIBBEAN

’ iKaren O’BrienGlobal Compliance SolutionsGeorge Town, Grand Cayman

11th Annual FIBA AML Compliance Conference

AROUND THE REGION IN 5 MINUTES OR LESS

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CHALLENGES

Resources

Training Training

Compliance not in the Driver’s seat

Market Misunderstanding

Us vs. Them

11th Annual FIBA AML Compliance Conference

RESOURCES

Staff

Financial

Time

11th Annual FIBA AML Compliance Conference

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WHO’S DRIVING COMPLIANCE?

Global

IT

Other Departments

11th Annual FIBA AML Compliance Conference

Thank You!

Karen O’Brienkobrien@gcs.com.ky

Gl b l C li S l iGlobal Compliance SolutionsGeorge Town, Grand Cayman

11th Annual FIBA AML Compliance Conference