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Evolving Sanctions Landscape and its impact on AML Compliance

Evolving Sanctions Landscape and its impact on AML Compliance. Executive Briefing – Lloyds of London – 29 th February 2012. Dan Mendelsson; Solution Specialist. Jeremy Doyle; Content Integration Specialist. 2011 - Arab Spring. 2012 - Syria. 2012 - IRAN.

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Evolving Sanctions Landscape and its impact on AML Compliance

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  1. Evolving Sanctions Landscape and its impact on AML Compliance Executive Briefing – Lloyds of London – 29th February 2012 Dan Mendelsson; Solution Specialist Jeremy Doyle; Content Integration Specialist

  2. 2011 - Arab Spring

  3. 2012 - Syria

  4. 2012 - IRAN

  5. Attractive growth opportunity has transformed to a damage limitation exercise 15% of the $1.5 trillion deposited from the region in foreign bank accounts is generated from corruption* Calls to recover public assets stolen by corrupt politicians The Arab Spring – Ramifications *Source: MyPrivateBanking - Switzerland

  6. Today’s evolving Sanctions landscape Arab Spring: new sanctions regimes introduced or extended overnight New US Executive Order targeting Syria quickly followed by new EU and Swiss sanctions Aggressive US enforcement of CISADA sanctions regulations against Iran Sanctions requirements growing in scope, complexity and size, extending to a range of state controlled companies: • - Banks and insurers • Petroleum companies • Shipping companies • - Industrial conglomerates

  7. State-Owned Entity information for AML/CTF screening 3,500+ state-owned companies from Libya, Iran and 7 other jurisdictions ~ 40% of these companies are not yet on sanctions lists Includes profiles of companies fully or partially-owned by sovereign wealth funds • New “Enhanced Country Risk” category that identifies companies associated with governments from sanctioned jurisdictions

  8. Sanctions compliance and vessel information • Imo • Ships lists specifically on OFAC list; details now included in details of EU sanctions targets • Identification of sanctions risk is a specific compliance challenge • Flag, Name and other identifying features may change • Complex/paper-based Trade Finance documentation • Concern that Iran is circumventing sanctions régimes by re-naming and reflagging vessels • International Maritime Organization (IMO) number is a unique characteristic of a vessel • IMO remains constant; valuable as the compliance key to identification of sanctions risk

  9. Increasing cost of sanctions compliance • Regulatory developments are adding to the existing pressures faced by compliance departments • Compliance Consequences • More risks to be identified & managed • Significant and sustained operational impact • Increased visibility and accountability to senior executives • Threat of substantial penalties and reputation damage • So how are institutions managing? Achieving Global Sanctions Compliance: Challenges and Solutions

  10. AML challenges facing organisations

  11. Key findings – AML workloads increasing

  12. False positives are still an area of concern

  13. Too few are confident in data accuracy

  14. HMT screening & Chinese language names In-Jaw Lai 賴英照 = Ying-Jaw Lai Yingzhao Lai Difficult to screen OFAC lists against names data in Chinese script • Many ways to transcribe Chinese characters into Roman scripts • Taiwan had 4 different official standards in 10 years • Unofficial standards are common

  15. Introducing Dow Jones Risk & Compliance Objective: To be a leading provider of risk identification information and research services that protect our customers from regulatory, commercial or reputation risk Anti-Money Laundering Anti-Corruption Anti-Fraud Payments Identify Investigate Monitor Data News & Analysis Research

  16. Closing thoughts • The adoption of Sanctions as a means of political and economic influence is on the increase. • Such increases are putting additional pressure on regulated organisations with increased work load and desire for more resources at a time of austerity. • Using the correct type of sanction content for specific business needs is an effective way of improving operational efficiency with out jeopardising compliance integrity. • Businesses with exposure to China or those looking to expand into this region are now seeking support with the challenges associated with Chinese Commercial Code and sanction screening of transactions.

  17. Connect with us • Jeremy Doyle • Content Integration Specialist • jeremy.doyle@dowjones.com 0203 217 5135 • Dan Mendelsson • Solution Specialist • Daniel.mendelsson@dowjones.com 0203 217 5281

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