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Agenda for the presentation

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Agenda for the presentation

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  1. Anti-Money Laundering and Countering Terrorist Financing etc – overview.Relation between Terrorism and its financing Presentation for workshop Ankara, Turkey19-20/2 2009 (JHA 32267)Thomas Grahn, Senior AdvisorAML Consulting, Stockholm, Sweden (former Swedish Financial Supervisory Authority)

  2. Agenda for the presentation • Introduction – selected international standards/bodies involved in anti-money laundering (AML), countering the financing of terrorism (/CFT) and countering terrorism (CT) • Overview interrelations AML- CFT – CT standards and measures • The EU third directive - overview and selected core issues • CT and CFT – recent developments • Case al-Aqsa Spannmål – Hamas – alleged terrorist financing

  3. Introduction - Selected international AML/CFT/CT standards/bodies • FATF 40 + 9 recommendations 2003, 2001 • EU third money laundering directive 2005/60/EC • European Commission implementation directive 2006/70/EC • Committee of European Banking Supervisors (CEBS) • Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) • Committee of European Securities Regulators (CESR) • Basel Core Principles for Effective Banking Supervision 2006 • Basel Core Principles Methodology 2006 • Basel Consolidated KYC Risk Management 2004 • Basel Shell banks and booking offices 2003 • IOSCO principles and guidelines • IAIS principles and guidelines • UN international conventions, resolutions, sanction regime • Council of Europe international conventions, i.a. 2005 Warsaw conventions • Various Council framework decisions i.a. 2002/475/JHA on combating terrorism

  4. Overview – the interrelations and influences between a number of relevant organisations, committees, standards on i.a. AML/CFT/CT EU Second directive 2001 (now repealed) Council framework Decision 2002/475/JHA On terrorism AMLTF (CEBS CESR CEIOPS) Basel Comittee Core principles 2006 KYC papers 2001,2004 EU third directive 2005 FATF 40 + 9 rec 2003, 2001 Guidelines Methodology European Commission CPMLTF IOSCO Principles Guidelines EC Implementation directive 2006 IAIS Principles Guidelines EC Regulation 1781/2006 and related

  5. The EU third directive 2005/60/EC (I) • State of play – implemented by almost all member states by now • AML as well as CFT covered by the directive • Extension of the range of institutions and entities/professionals covered • ”All institutions” supervision approach taken • Predicate offences for money laundering extended • Terrorist offences defined in the Council Framework Decision om combating terrorism (2002/475/JHA) are also included in the definition of terrorist financing in the third money laundering directive • A Risk-Based Approach for Customer Due Diligence (CDD) measures • Enhanced CDD measures where the AML/CFT risk is higher • Simplified due diligence where the AML/CFT risk is low • Third party reliance on certain conditions

  6. The EU Third directive (II) - selected core issues A) • Development of a Risk-Based Approach for CDD measures – methods for doing it and how in-depth shall we go?

  7. Example riskmodels risk-based approach for customer Due dilegence (CDD) related to AML & CFT Company specific input Reports/studies from international bodies, FIU:s, FATF typologies etc Customer segments risk Enhanced CDD Products & Services incl Transactions risk General CDD Distribution channels & Interfaces risk Simplified CDD Customer Geography & country risk 1) Areas for risk assessment Inherent risks 2) Combined risk factors + obtaining customer specific info = CDD level & measures

  8. Overview - the principle of CDD and the risk based approach Info on the purpose and nature of the business relationship Ongoing monitoring of the business relationship based on risk Enhanced monitoring om higher risk customers and transactions Customer identification Up date of customer information Register controls and other measures for identification of beneficial owner PEP-control (various sources) Monitoring systems, programmed controls, manual scrutiny (risk based) Info collected from the customer UN/EU Sanctionlists

  9. The third directive (II) – selected core issues B) • Political Exposed Persons (PEPs) – who are they and how do we find them in our files? • Wide definition – PEPs living abroad and their immediate family members, close associates and PEP with controlling interests in legal entities alone or together with associates • PEPs are per se higher risk – enhanced CDD • No official PEP-list but a number of private sector companies providing information

  10. The third directive (II) – selected core issues C) • Supervisory arrangements – approach for a comprehensive supervisory regime? • A number of additional categories of entities and professionals are now covered by supervision • The level of supervision will vary according to the type of institution and risk of being used for money laundering & financing of terrorism

  11. Example: Proposed institutional structure of coordination within the Swedish FSA FSA Co-operation with: Industry bodies FIU National Economic Crime Bureau Liaison function Largest county Administrative boards Real Estate Board Audit & Accountant Board Bar Association Lottery Inspection Board

  12. CT and CFT – recent EU developements • Proposal for a Council Framework Decision amending Framework Decision 2002/475/JHA on combating terrorism – adding offences linked to terrorist activities namely when committed intentionally: • public incitement to commit a terrorist offence • recruitment for terrorism • training for terrorism • The Data Retention Directive 2006/24/EC and related - update • Regulation (EC) No 1781/2006 on information on the payer accompanying transfers of funds –CEBS report on ”common understanding” and also FATF recognition of domestic areas treatment

  13. Case study –alleged terrorist financingProsecutor for security cases versus Al Aqsa Spannmål, Sweden

  14. Indictment on terrorist financing alternatively violation of regulation EC 2580/2001 and 2003/646 Representatives of al-Aqsa Spannmål Stiftelse, Sweden collected/received around 4 million SEK (around 500.000 USD) for alleged terrorist financing to Hamas, Izz-al-Din al-Qassem and various Hamas committees Hamas Account at Bank X Middle East bank Also physical transportation of money

  15. Questions?

  16. Thank you for your attention!Thomas Grahn AML Consultingthomas.grahn@amlconsulting.se

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