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White Papers

    Alternative Remitters


     

    Informal Value Transfer Systems: A Financial Institution's Perspective

    Ryan Hodge, CAMS-Audit, 8/6/2015

    Financial institutions today face a wide array of risks in the world of Anti-Money Laundering (AML). Key to addressing and preventing future risk is properly evaluating an institution's Bank Secrecy Act program, whether as an external auditor, or a BSA Officer looking to conduct a self-assessment. While a high level overview can be valuable, certain issues merit a deeper look. This white paper explores how financial institutions are impacted by Informal Value Transfer Systems and how to properly examine and address the risks surrounding them.

    You Think you Know, But you Have No Idea

    Shanique Smith, CAMS-Audit, 8/5/2015

    The selection or range of products providing elevated anonymity is vastly increasing and will only continue to expand, as these products will be required to keep pace with providing continued convenience and variety while remaining innovative. However, because of the faceless aspects of these products, people are more inclined to be their true selves since they would not have to worry about committing a crime directly in front of someone or possibly being identified by law enforcement—and that is where additional risk comes into play.
    Money laundering exploits payment system vulnerabilities that provide criminals the opportunity to disguise both themselves and the nature of their transactions. Banking fraud groups and other criminals, as they always do, have found and begun to abuse weak links in the chains of security and oversight surrounding products with a great deal of anonymity.

    Cryptocurrency Compliance: An AML Perspective

    Sherri Scott, CAMS-Audit, 10/5/2017

    While consistent regulation is lacking, virtual currency exchanges (VCEs) are being denied fair banking services because they are being “de-risked" by financial institutions (FIs). The discrimination from fair banking services VCEs are facing is comparable to the medical marijuana industry. Unlike its high-risk counterpart, Fintech innovators operate in a field that is federally legal. We will embark on a journey through a brief history of cryptocurrency, the tides of regulation, and the storms to come.

    AML Program


     

    Auditing the AML/CTF Transaction Monitoring System

    Jon W Harvey, 07/14/2020

    This paper describes an approach to performing an audit of the Transaction Monitoring (TM) system. Advances in the tools and techniques used in the TM system can make the audit seem quite daunting, but it shouldn’t. The paper describes the concepts, controls and checks performed to obtain assurance that the system is appropriately configured, effective and efficient in monitoring for the risks faced by the organization.

    Lack of Sustainability - The Root Cause of Deficient AML Compliance

    Vikram Purohit, 6/2/2020

    The purpose of this white paper is to illustrate the importance of 'Sustainability of AML Program', lack of which opens vulnerability window for money laundering and leads to enforcement actions by regulators.

    AML/CTF Program Efficiency

    Yoko Hoshido, 5/29/2020

    The purpose of this white paper is to illustrate the common pitfalls many FIs face in their AML/CTF programs and pointing out the importance of establishing effective and sustainable AML/CTF programs while proactively seek new technological solutions.

    What Makes an AML Operating Model Effective?

    Janne Miettinen, 5/29/2020

    This white paper shares experiences and gives food for thought on improving AML operating models, thus delivering greater value from AML Programs.

    Tailoring the Staffing Assessment Using the Risk Assessment to Drive Staffing

    Brienne Bryson, CAMS, 1/7/2020

    The purpose of this white paper is demonstrate how to apply a risk based approach to an institution's staffing needs; taking into consideration experience, qualifications and quantity to ensure that the risk is adequately mitigated.

    BSA/AML Needs and Opportunities: Assessing Needs and Opportunities in BSA/AML at Financial Institutions

    Kris Ockenfels, 10/2/2019

    The purpose of this white paper is to assess the most pressing needs and opportunities in the Bank Secrecy Act / Anti-Money Laundering (BSA/AML) areas, and present options for how to effectively address those concerns.

    Balancing AML Compliance With Business Objectives as a SME

    Christina Wang LLM, CCRP, CAMS, 6/11/2019

    This white paper outlines a model for balancing AML compliance and other business objectives for small and medium-sized enterprises (SMEs). The solution proposed here is one that encourages a culture of compliance within the entity as well as collaboration with independent professionals. The key here is flexibility, finding an approach that suits your business. Outsourcing part of the compliance function while enhancing the internal processes that mirror and monitor the compliance framework you set out for the business, establishing and maintaining interactions and feedback loops between internal and external functions are of vital importance. The ultimate goal is to present an approach to channel the compliance function through internal expert and external advisers.

    Anti-Money Laundering & Third-Party Payment Processors

    Marcia Francis, CPA, CGA, CFE, CAMS-Audit, 6/11/2019

    Third-party payment processors (TPPPs) are critical participants in the payment ecosystem. TPPPs are legally responsible for the funds of each electronic transaction when those funds are not in the hands of either the buyer or merchant. This paper will focus on the facilitation of payments between buyers and sellers, and how they can work collaboratively to reduce money-laundering risk.

    A collaborative approach to combating elder financial exploitation

    Stephanie Painter, 5/10/2019

    The purpose of this white paper is to advocate for financial institutions to leverage participation in multi-disciplinary teams to effectively address risk posed by elder financial abuse.

    Implementing AML/CFT Requirements Consistent With Financial Inclusion Concept in the Middle East/Jordan

    Ahmad Taher Alessa, CAMS, 4/4/2019

    The purpose of this white paper is to illustrate that Financial inclusion is a system that provides low-cost banking services to low-income individuals in order to improve their economic circumstances. so we need to have anti-money laundering and terrorist financing controls that are effective and proportionate in the Middle East/Jordan.

    Utilizing the Suspicious Activity Report Audit as a Diagnostic for a Financial Institution’s AML Program

    Michael Schidlow, CAMS-Audit, 8/4/2015

    Modern, adaptable and successful SAR audits need to consider not only regulatory efficacy but also the weight of the institution's filing regime in terms of detecting and deterring the actual predicate offenses. This paper will serve to explore the correlation between a strong SAR audit process and the appropriate detection and reporting of a client's suspicious activities.

    AML Compliance Effectiveness of Designated Non-Financial Businesses and Professions: How to Create/Stimulate More Awareness of the Internal Audit (Third Line of Defense) Challenges for Designated Non-Financial Businesses and Professions in Small Jurisdictions

    Henry P. Rajan, CAMS, 7/13/2020

    The purpose of this white paper is to illustrate that most DNFBPs in small jurisdictions face huge challenges to mitigate risks in the AML field due to the absence of an effective AML Audit procedure.

    How to Audit an Effective AML Governance Committee Structure and AML Issue Escalation Protocol

    Jacob Johnston CAMS-Audit, 10/5/2017

    Before understanding how to audit an effective and transparent AML issue escalation process between the AML compliance group from the U.S. Head Office, regions and LOBs, it is important to have a clear understanding of what a strong outlined and transparent global AML governance committee structure of a large financial institution with multiple LOBs and multiple jurisdictions/regions (in addition to the U.S.) could look like. Audit needs to validate that adequate AML oversight is captured from not just the compliance group of the U.S. Head Office, but also from each of the banks' regions and LOBs, which also should have AML-designated individuals in a senior management role.

    Oversight of Cross-Border Funds Distribution: The Assurance and Benefits Provided by an Effective AML and CTF Audit

    Jacob Johnston CAMS-Audit, 10/5/2017

    Anti-money laundering (AML) tops the agenda for senior managers and boards of directors of Luxembourg investment funds. Regulatory pressure to comply with AML and counter-terrorist financing (CTF) has increased globally. In Europe, more banks and financial institutions have been facing the prospect of multi-million Euro penalties for breaches of AML/CTF regulations than ever before. Increasingly, regulators are requiring the completion of annual ad-hoc AML/CTF reports.

    The Audit Impact of the U.S. Department of Justice Prosecution of Bank Secrecy Act Violations

    Jason C. Honeycutt, CAMS-Audit, 7/29/2016

    As an institution required to have an “effective AML program," you must take a two-pronged approach to “effectiveness:” (1) test yourself internally and (2) test yourself by use of an independent auditor. This white paper is designed to assist you to determine what not to do and what to test for based on prior “ineffective” BSA/AML programs, according to public record of civil and criminal cases brought under federal law by the U.S. Department of Justice. This white paper also gives guidance on what the scope of audit of an AML program should include at a minimum, both as a financial institution and as the auditor of a financial institution's AML program.

    Challenges in Implementing Effective AML Compliance and Internal Audit Programs in a Global Enterprise

    Sid Valluri Ph.D., CAMS-Audit, 7/29/2016

    Global companies with multijurisdictional footprints, especially those with different lines of business, have some unique challenges in establishing, supervising and auditing an effective know your customer/anti-money laundering (KYC/AML) program. This problem is accentuated in financial services companies where a majority””or at least a significant portion of the products and services””have AML implications. Issues such as local regulatory differences, a focus on business operations, available KYC resources and geographic distance, can make the task of administering an effective program more difficult. That in turn complicates the task of the auditor who has to account for the many differences and ensure that the programs are effective, and despite their variations, faithfully follow their documented procedures.

    Who Is Reading Your SAR And Why? Writing With Purpose

    Terri Luttrell, CAMS-Audit, 7/29/2016

    In the real world of an AML professional, a SAR narrative must be written to a different audience, such as FinCEN and the institution's state (when applicable) and federal regulators. Regardless of what the intentions of a BSA officer are for fulfilling the requests of law enforcement when approving SAR narratives, the facts remain that they must meet all regulatory requirements with no exceptions. This is not only what puts a BSA officer's job on the line, but it also puts the institution at risk. Is it possible to soar through a regulatory exam while assisting law enforcement with the most important part of an AML professional's job””stopping the bad actors? That question will be pursued as the guidance presently offered on this topic is analyzed in order to determine if a conclusion can be determined that satisfies all of the audiences while meeting regulatory expectations.

    The Importance of AML Model Governance and Validation

    Andrew Li, CAMS-Audit, 7/1/2016

    With the technological advancement, the high complexity of the banking industry and the broader application of modeling, financial institutions (FIs) around the world are relying heavily on quantitative analysis models to make predictions within the risk tolerance. These include models on analysis from underwriting credits to the anti-money laundering (AML) program.

    The Problem of AML Model Validation

    Reema Al-Rabea, CAMS-Audit, 3/7/2016

    Anti-money laundering (AML) violations and enforcement actions have hit the headlines so often these past two decades that the attention of senior management and board members on AML/compliance risk management has been triggered. Still, businesses do struggle to satisfy regulatory requirements and face fines, penalties and enforcement actions.

    How Audit Departments can Develop an Effective AML Program

    Thomas Alessandro, CAMS-Audit8/6/2015

    When someone in the Banking community asks you what you do for a living, do you find yourself whispering, “I audit my firm's AML controls?” We have all seen the headlines.

    Bank Secrecy Act Auditing for Community Banks: A Risk-Based Approach

    Susan Cannon, CAMS-Audit, 8/6/2015

    This white paper will discuss some specific strategies for achieving compliance with the independent testing pillar for smaller banks, often referred to as “community banks,” commensurate with their BSA/AML risk profiles. Specifically, I will discuss customizing the independent testing approach and accompanying audit program so that it is appropriately risk-based. Additionally, strategies for selecting risk-based transaction testing samples will be discussed. It is important to note that appropriate scoping, planning, audit programs and sampling techniques are but a few of the overall considerations in successful BSA/AML auditing. Other resources should be consulted with respect to auditor independence, managing the audit, documenting work, formulating conclusions, issuing final reports and tracking and validating clearance of exceptions.

    Casinos are Financial Institutions?

    Kacy Drury, CAMS-Audit, 8/6/2015

    The majority of this paper will focus on what the casino industry needs to do to comply with the Bank Secrecy Act in all of its newfound glory as financial institutions. It has become an urgent matter given that there is no plan to make any regulatory changes and expectations have been set. I also intend to discuss how the financial institutions can learn from the casinos as each navigates their respective, evolving, regulatory hurdles.

    Beneficial Ownership – Understanding and Shaping AML’s Fifth Pillar

    Mark Prater, CAMS-Audit, CIPP/US, 3/3/2016

    Furthering a domestic initiative to strengthen the customer due diligence (CDD) requirements imposed on regulated financial institutions under the Bank Secrecy Act (BSA), on July 30, 2014, the Financial Crimes Enforcement Network (FinCEN) published a Notice of Proposed Rulemaking (NPR) whose primary purpose is to define new mandates for CDD. In scope for the NPR are financial institutions that are presently required under the BSA to have anti-money laundering (AML) programs and Customer Identification Programs (CIP). If adopted as proposed, these new rules would require the covered institutions, subject to certain exemptions, to identify and verify the beneficial owners of legal entity customers in support of their existing CDD programs and processes.

    A Risk-Based Framework for Assessing a Compliance Culture

    Francisco Daniel Zepeda Lázarus, PhD, MBA, CAMS, CFE, AML-CA, CAMS-AUDIT, 3/3/2016

    In various forums, compliance culture has been mentioned as an important component that sets the backdrop for the attainment of anti-money laundering (AML) objectives in a financial institution.

    Implementing an AML/CTF Audit Program for Non-Financial Institutions in Mainland China

    Wen Shi, CAMS-Audit, 10/5/2017

    This white paper outlines new ways to enhance the efficiency of AML/CTF audit. As both methods (regulation-based and risk-based AML/CTF audit) have disadvantages, in our research we have investigated a hybrid approach that takes good points from both the regulatory as well as the risk-based approach.

    Enhanced Auditing Techniques in Challenging Risk Assessment Situations & Practices to Ensure Proper Implementation of AML Program in Light of Financial Inclusion Regulations

    Marghrait M. Makhamreh, CAMS-Audit, 10/5/2017

    Financial inclusion is defined as having access to affordable and useful financial products and services to help and enable the poor and disadvantages people in developing economies to meet their needs, The World Bank Group in its report in 2012 estimates that only 50 percent of adults having a banking account at a formal financial institution, from there the courage had started to allow banks and non-banks to ensure their provisions of the financial services so they need to innovate and expand especially in the ulterior and isolated areas. The Financial access will facilitate the day-to-day living, and will help the families and businesses' plans for everything from long-term goals to unexpected emergencies.

    Detecting Hidden Risks: An Investigative Approach to AML Audit in Community Banks

    Dan Jackson, CAMS-Audit, 2/7/2017

    The intention of this paper is provide consideration and discussion on the impact of hidden risks within the Anti-Money Laundering (AML)/Bank Secrecy Act (BSA), including the Office of Foreign Assets Control (OFAC), programs of community banks. The collective efforts will hereafter be referred to as the AML program. This paper will explore potential areas in which components of the AML program may be overlooked and expose the institution to unwanted risk. In identifying these potential areas of risk, it is possible to identify processes and procedures to enhance controls over these areas to mitigate those risks that implicates drug cartels or terrorist rings””it also includes activity that might indicate fraud, insider trading, or manipulative trading schemes.”

    Following the Proceeds of Crime in Cash-Based Economy

    Gabriel W. Bellepea, 5/16/2018

    The motivation of this paper is to discuss how financial crime investigations, especially the component of the investigation that has to do with following the proceeds of crimes/money laundering in Liberia, remained a constraint to Law Enforcement Authorities/Agency (LEAs). This challenge is pronounced in a cash-based economy where almost all transactions are facilitated by cash. Law enforcement's investigation has primarily focused on the committed crime, referred to as predicate offense, while investigation relating to ”˜following proceeds of the crime'/money laundering is neglected. ”˜Following these proceeds of crime' in LEAs' investigations in order to confiscate/seize and deny criminals from benefiting from their ill-gotten money is an essential component of financial crime investigation by LEAs.

    Hacking the Web: Exploiting Open Source Intelligence & Cyber-Related Information to Disrupt Illicit Financial Networks

    Andrew P. Rudd, 5/16/2018

    We live in an age in which all aspects of our lives are facilitated by technology. The advent of mobile computing has enabled us to accomplish various tasks in a manner that would have seemed far-fetched less than a decade ago. As a corollary, these advancements have also increased risk in an unprecedented fashion. Threat actors can now move money through the financial system from a cell phone in one country, while holding accounts which are operated through a series of shell or front companies in another. This reality highlights the value of AML/CTF Analysts having access to the proper tools, training and knowledge to conduct in-depth online research. This is truly critical to countering the threat to the global financial system by transnational criminal and terrorist organizations.

    How Implementing Five Security Controls Can Reduce Your AML/CFT Attack Surface and Help Defend Your Bank’s Anti-Money Laundering Software Against Threats Related to the Posting of “Red Flag Warnings”

    Kent Stern, 5/16/2018

    The financial sector continues to be a prime target for highly sophisticated threats against automated and semi-automated systems. Recently, North Korea was linked to a SWIFT system attack where over $100 million was stolen from the Bangladesh Bank. In another infiltration, an estimated $1 billion was gained from over 100 banks worldwide by the Carbanak Group. In the U.S., a Trojan named Odinaff was used against the financial industry by individuals whose work resembled that of nation-state actors. As methods used by global terrorists and money launderers are continually being defined and redefined, efforts concerning software development that help facilitate the prevention and detection of the topologies used by such organization have come to the forefront of the industry. In the infamous Bangladesh Bank heist, there is no doubt that additional funds would have been funneled through the system if not for a typo, a benign sanctions hit and an exorbitant amount of luck. In its current state, how secure is your AML/CFT software and how are your vendors dealing with advanced persistent threats against their applications? What can you as an AML manager do to ensure your solution is safe? This paper will walk you through what is at risk when an AML/CFT solution is gamed and covers five security controls that can reduce your solution's attack surface and help defend against threats related to the posting of “red flag warnings.”

    Anti-Money Laundering Training… One Size Does Not Fit All

    Norma I Lopez, CAMS-Audit, 10/5/2017

    The purpose of this research paper is to analyze and discuss what an effective AML training program looks like and introduce, for the readers consideration, audit's approach and expectations for an AML training program. Please note it is this author's independent goal to illustrate audit's key contributions in a FI's design, delivery and management of BSA/AML training, which is the foundation of an effective system of controls to combat heightened AML risk.

    Distributed Ledger Technology: Streamlined CDD Examination Process through Blockchain Application- Why Auditors Should Embrace New Technology

    Nella Zelensky, 5/17/2018

    We all are very fortunate to be living through the era of Internet and enjoying all the technological advancements of the last few decades, - email, social media, mobile apps, e-commerce, smart TVs, and more. And just when someone might be wondering what's is next, - it's screamed from every post on LinkedIn and all TV programs: BLOCKCHAIN!

    Bitcoin Risks, Rewards and Regulation

    Chris Rowland5/17/2018

    Cryptocurrencies grew significantly in 2017 in terms of value and volume of transactions. Within the cryptocurrency market, Bitcoin dominates with over a 40 percent market share. The price of Bitcoin has increased over 1,300 percent in 2017 alone. The Bitcoin expansion also resulted in a significant increase in risk, fraud and regulatory issues.

    Typologies of Money Laundering & Terrorist Financing through Trade and Money Services Business (MSB) in United Arab Emirates.

    Altaf Shaikh, 11/13/2018

    Money laundering is an evolving activity, driven by the need for criminals to legitimize the proceeds of crime. In recent years, global and regional regulators have implemented stringent measures pertaining to Anti-Money Laundering & Terrorist Financing, which has made it difficult to launder money through the traditional channels. Due to the same, money launderers are using more sophisticated methods like TBML especially since it is very difficult to set red flags for detection of illicit funds. This can be supported by a report from International Narcotics Control Strategy Report (INCSR) of 2017 which states billions of dollars are laundered annually by way of Trade-Based Money Laundering (TBML).

    Narrowing the quality criteria for anti-money laundering commercial-off-the-shelf (COTS) software products under the Bank Secrecy Act

    Emil Ivanov, 5/17/2018

    The Anti-Money Laundering (AML) regulatory acts such as Bank Secrecy Act , Foreign Assets Control Regulations , Financial Record Keeping and Reporting of Currency and Foreign Transactions regulations , and the USA PATRIOT Act provide guidance to organizations for developing and maintaining systems of internal controls that are flexible to changes in the business and operating environments. Due to the constant proliferation of criminal and terrorist activities throughout the world, financial institutions should adapt their AML-related business processes and tools to address these risks.

    Audit


     

    Agile - Enhancing AML Audit and Moving it Forward

    Shashank Mohta, CAMS, 7/20/2020

    The purpose of this white paper is to explain that with ever-increasing regulatory pressure, dynamically evolving compliance programs, and shifting priorities, AML audit must keep pace with the increasing demands and external forces it faces in the changing landscape of business disruption. This white paper will define an alternative approach to conducting AML audit, which will be helpful in resolving the problems at hand that are faced by the audit committee. The white paper will also trigger rethinking the outlook of auditing procedures. The aim is to highlight the key aspects of this alternative methodology, such as gain in responsiveness, incremental delivery, quick feedback loop, faster turnaround time, and the most significant of all, a ”˜value-driven' approach.

    Eyes Wide Shut: Understanding Unconscious Bias in AML Audits

    Vanessa Pinto, 5/29/2020

    The purpose of this white paper is to demonstrate how unconscious biases continue to influence AML Programs and their transference to automated tools. It additionally outlines a potential model to identify and mitigate these biases during each stage of an AML Program Audit.

    How Japanese Auditors Will Rise to AML/CFT Challenges that Will Emerge in the Future

    Hidehiro Kobayashi, 5/29/2020

    The purpose of this white paper is to clarify how Japanese auditors should rise to AML/CFT challenges that will emerge in the future because of money laundering by Japanese Boryoukudan gangs and specialized fraud groups.

    Countermeasures on Fighting Against Money Laundering of New Typologies Crimes in Mainland China

    Sophia Huang, 5/29/2020

    The purpose of this white paper is to introduce the countermeasure on fighting against money laundering of new typologies crimes in Mainland China.

    Audit Your Customers Who Engaged in Macao Gaming Activities

    Wong Chi Iong, 5/29/2020

    The purpose of this white paper is to assist AML auditors to better understand the risk of Macao's gaming sector and their customers who engaged in Macao gaming activities. It would also highlight tricky points of verifying the source of funds, so AML auditors can further develop the scope in the audit program and enhance the risk control process when they audit the banking sector.

    Risk Indicators in the Current Chinese Charity Industry and Audit Recommendations to Mitigate the Relevant AML Risks

    Yanhong Wang, 5/29/2020

    The purpose of the paper is to discuss the risk indicators that have occurred or are potentially emerging in the current Chinese charity industry and offer recommendations from auditing and compliance perspectives to mitigate money laundering and compliance risks in the industry. The paper will emphasize the importance of the involvement of audit in charitable organizations. Audit plays a crucial role in the industry, not only in identifying suspicious activities, but also in improving internal control mechanism, social law mechanism and the overall credibility development of the industry.

    How to Audit the Unique BSA/AML Risks of the Border Bank

    Melissa Triplett, CAMS-Audit, 2/12/2020

    The purpose of this white paper is to highlight the distinct BSA/AML challenges that Financial Institutions located along the U.S./Mexico border continue to face and which special audit considerations need to be measured when auditing a border bank.

    How Open Banking Will Change the Nature and Character of AML/CTF Risk for New Banking Entrants, and the Challenges This Places on Auditors

    Adabella Yu8/5/2019

    The purpose of this white paper is to assist viewers to gain in-depth understanding and appreciation of the mechanism, technology, advantages and problems inherent in the open banking environment that in turn allow auditors to properly prepare for the possible or emerging issues.

    Blanket AML De-Risking: Risk Avoidance vs. Risk Management

    Aleksandra Mejertale, CAMS, 7/26/2019

    This White Paper aims to raise awareness about de-risking phenomenon, describing the key aspects of it and providing arguments about how banks should manage ML risk, as opposed to avoiding it by unnecessarily terminating customer relationships with the entire categories of customers. Furthermore, this white paper seeks to discuss how auditors, including regulators, need to address the de-risking issue: cooperating with banks, supporting and encouraging them to effectively implement a risk-based approach as required by the AML leading practice, neither supporting blanket AML de-risking approach, nor forcing banks to apply it.

    How to Effectively Transition into an AML Audit Role

    Monica Salinas, CAMS, 7/10/2019

    The purpose of the paper is to present the challenges and offer suggestions to individuals seeking a career change into AML Audit. The white paper will examine the transition from general auditing into AML Audit, and AML Operations into AML Audit, by presenting the challenges individuals from each area may face, and provide some tools and resources to become effective in the AML Audit role.

    Auditing Nonprofit Organizations (NPOs)

    Ra’ad Al Louzi, 4/18/2019

    This white paper highlights the risks associated with non-profit organizations and charities in the Middle East - Jordan in particular - and auditing and controlling them to reduce their risks, in light of events witnessed by neighboring countries (the Syrian crisis, the emergence of terrorist organizations).

    Understanding the New DFS Part 504 Regulations and the Associated AML Program Testing Challenges

    Chris Recor, CAMS-Audit2/7/2017

    This paper assesses each of the requirements under Section 302 of the Sarbanes-Oxley Act including examples of program risks, mitigating controls and testing measures that may be used to audit compliance with the Rule. Testing is the cornerstone of auditing the effectiveness of controls of the BSA/AML program. Controls are the system of internal controls (including policies, procedures, and systems) used to mitigate BSA/AML risks. To ensure that the BSA/AML controls are effective the following types of tests should be performed.

    Money Laundering Detection Regimes Credit Unions in Canada

    Christ Randle, CAMS-Audit, 7/29/2016

    In order to assess the state of the current money laundering detection regimes at credit unions, surveys were sent to managers responsible for the execution of these regimes at several credit unions across Canada. Through the survey responses received, this paper has documented that the credit union industry as a whole is facing a high risk of noncompliance against their obligations to detect and therefore report suspicious transactions. The response, being the provision of guidance relative to the development, execution and maintenance of an effective money laundering detection regime, will mitigate this risk and strengthen the overall AML regime in Canada.

    Assurance through Independent Audits

    Lawrence S. Grant-Lapre, CAMS-Audit, 3/7/2016

    As an anti-money laundering (AML) specialist who has been immersed in preparing policies, procedures and controls that all work together to ensure criminals are deterred from utilizing any financial services offered, I have highlighted the benefits and considerations that can be drawn from obligatory independent audits as required by regulators in various jurisdictions.

    Achieving a Successful Audit After a Merger or Acquisition: Know What is Expected for Seamless AML/BSA Compliance

    Rebecca Schauer Robertson, CAMS-Audit, CFE, 3/3/2016

    Being involved in numerous acquisitions and at least one merger over the past decade, I have learned what I consider “best practices” to ensure a continued culture of BSA/AML compliance by identifying critical processes that auditors and examiners expect to occur simultaneously as soon as the “ink meets the paper" when multiple companies come together to operate as one. My hope in writing this white paper is to share what I have learned with readers so each will be prepared with upfront knowledge in order to proactively incorporate steps throughout a merger or acquisition that will ultimately result in a seamless culture of BSA/AML compliance.

    Heightened Expectations and the Independent Testing Pillar: Managing Expectations While Providing Effective Assurance Over BSA Compliance in an Evolving Risk Governance Framework

    Kyle Rulau, CAMS-Audit, 3/3/2016

    The intent of this paper is to understand the impact of the Office of the Comptroller of the Currency's (OCC) “heightened expectations” on Bank Secrecy Act/anti-money laundering (BSA/AML) independent testing functions, and to identify steps to effectively manage regulatory expectations while providing effective assurance over BSA/AML compliance.

    Payday Lender – Great Banking Partners or Banking Liability?

    Brandi B. Reynolds, CAMS-Audit, 3/3/2016

    According to an article by nbcnews.com, “There are more payday lenders in the U.S. than McDonald's or Starbucks”¦.” As payday lenders grow in number, so do their critics. To many, the payday lending industry means over-priced and un-regulated loans; however, that is hardly the case. Often times, it is banking financial institutions (BFI) that have the biggest misconception of payday lenders, in thinking that they are predatory and take advantage of their customers. This mistaken belief can lead to banks considering payday lenders as a liability rather than a potential valued client.

    Learning from the Mistakes of Other: Matter Requiring Attention

    Kenneth Simmons, CAMS-Audit, 8/6/2015

    There are a myriad of compliance related regulations that financial institutions must comply with. In most cases, the accompanying regulations provide specific expectations for compliance. Disclose this here; provide a notice there; submit your report annually; and keep away from unfair and deceptive practices. Compliance regulations typically include one-size-fits most expectations. Over the years, we have experienced changes to various regulations, such as Truth-in-Lending and RESPA. These adjustments are relatively slow to progress. Financial institutions have the opportunity to grasp expected changes and understand how to comply, often before the regulatory changes occur and make the necessary adjustments to internal controls to comply with the changes.

    How to Choose an Effective and Sufficient Sample for an AML Program Audit

    Sam Adam Elnagdy, CAMS-Audit, 8/6/2015

    The stakes are higher than ever for anti-money laundering (AML). And in their duties of independent testing for AML programs, auditors need to use the right techniques and skills to determine the effectiveness of the program.

    Does one size fit all? The modernization of an AML Audit into a Financial Crime Audit

    Jay Smith, CAMS-Audit, 8/6/2015

    This white paper postulates that a robust independent Financial Crime (FC) Audit will enable the organization to detect and deter a broader set of financial crime risks, and why all organizations can easily adopt such FC audits because the steps and processes are already established for their mandatory AML audits. Although the focus of an independent FC audit is to “kill 2 birds with 1 stone”, it does not recommend consolidating the AML and Financial Crime audit into a consolidated financial crime program.

    Financial Crimes Compliance Auditing in a Consent Order Environment

    Jason Smith, CAMS-Audit, 8/5/2015

    Recent consent orders are being regarded as an increasing benchmark for Bank Secrecy Act /anti-money laundering (BSA/AML) regulatory interpretation. The question faced by most financial institutions today is how they can adapt their audit approach to account for this regulatory shift. This whitepaper will establish that the July 2012 Permanent Subcommittee on Investigations (PSI) Report for HSBC was the impetus for this notable change in the tone of consent orders. A comparison of recent consent orders versus those published prior to the HSBC PSI report will show that regulators use these actions to establish heightened Financial Crime Compliance (FCC) standards. The solution proposed by this paper is adapting audit practice to fit increased regulatory scrutiny.

    Automation of BSA & AML Activities

    Dave Dekkers, CAMS-Audit, 8/6/2015

    BSA/AML activities are seen as a necessary burden by many financial institutions due to the labor intensive nature of the work and the high costs. A key strategy regarding BSA/AML compliance activities should be to improve efficiency whilst fulfilling audit and regulatory requirements. This white paper will introduce aspects of automation of BSA/AML activities to improve accuracy, efficiency and effectiveness.

    Information Technology Audit Considerations When Designing Audit Coverage For AML Applications

    Peter D. Wild, CAMS-Audit, 8/6/2015

    This paper is intended to provide a high-level introduction to some of the important considerations that should be kept in mind when designing the Information Technology {IT} audit coverage for the suite of applications that support the Anti-Money Laundering {AML} and Sanctions Screening business processes in a Financial Institution {FI}. It is possible that the AML Auditor may not be familiar with IT Audit techniques and it is also possible that the IT Auditor may not be familiar with AML audit requirements. This paper aims to assist that partnership in the design and maintenance of effective AML audit coverage and offers some suggestions on how the power of software can be harnessed to improve audit depth and efficiency, this is referred to as Automated Auditing.

    What Auditors Should Know and Ask About BSA/AML Software Before a Successful Audit Can Be Conducted

    Nancy E. Lake, CAMS-Audit, 8/6/2015

    When it comes to auditing BSA/AML programs, one of the first questions the average auditor will ask is: “Do you have a manual or an automated process?” The usual assumption is that since an automated system is supposed to be more effective than a manual system, that it actually is more effective. An automated process is supposed to be much better than a manual process because an automated system has the ability to analyze large amounts of transactions and produce “red flags” or alerts to identify potentially suspicious activity that may not be detected in a manual process. However, auditors need to understand that this assumption can actually be totally false. If BSA/AML software is implemented incorrectly and/or ineffectively, then monitoring and reporting can be inaccurate.

    Ultimate Beneficial Owners (UBO) Between Identification and Verification

    Alaa Saleh Ghaith, CAMS-Audit, 4/20/2016

    Establishing effective policy and processes to identify an ultimate beneficial owner (UBO) is essential in combating money laundering and terrorist financing. All UBOs should be identified, declared, verified (where applicable) for all new and changes to existing accountholder accounts and financial services and products provided to occasional (walk-in) accountholders. These procedures must require proper due diligence and may identify unusual transactions, and possibly report the suspicious transactions. International AML standards and regulations (i.e., the Financial Action Task Force [FATF] Recommendations, the Financial Crimes Enforcement Network [FinCEN] and the Basel Committee principles), and local regulatory requirements impose legal and regulatory obligations on financial institutions (FIs) to identify UBOs, these obligations will be discussed in this white paper.

    Beneficial Ownership – An Insider’s View Versus an Auditor’s Perspective

    Nadine N. Al Shirawi, CAMS-Audit, 3/7/2016

    Ultimate beneficial ownership (UBO) is perceived as one of the primary challenges in anti-money laundering/counter-terrorist financing (AML/CTF) efforts. The related obstacles to detecting and verifying the ultimate beneficiary of financial transactions and business relations in AML/CTF-related investigations forms part of an existing hot debate in literature and the industry. In this paper, beneficial ownership will be explored from a procedural point of view as well as from an AML auditor's perspective. The issue will particularly be investigated from a local point of view, analyzing whether there are localized more significant challenges pertaining to doing business in the Middle Eastern/GCC region, such as a large number of politically exposed persons (PEPs), high-net-worth individuals, charities, and private trusts and often nontransparent nature of doing business. Being a nontaxable jurisdiction, publicly available information on natural persons and legal entities in the GCC region is quite limited.

    Improving Investigations through the CDD and EDD Process

    Tyler Nicoll, CAMS-Audit, 3/3/2016

    Regulatory expectations to satisfy Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) regulations continue to evolve in the U.S. and an essential component of an adequate BSA/AML program includes the responsibility for institutions to adequately know its customer base.

    Why Can’t We All Just Get Along? A call for the convergence of AML and ABC compliance functions at financial institutions

    Katya Hirose, CAMS-Audit, 8/6/2015

    The United States Department of Justice (DOJ) has been known to target corruption inquiries by industry. As a result, companies in the extractives industries, medical devices and pharmaceutical industries over recent years have developed fairly robust and sophisticated anti-bribery and corruption (ABC) compliance programs. According to various experts, including lawyers at Morrison Foerster, it appears that the DOJ has its sights set on the financial services industry.1 Why now, and why an industry typically more attune with anti-money laundering compliance? Financial institutions, hedge funds and private equity firms can have exposure to the Foreign Corrupt Practices Act (FCPA) risk in a number of ways. Those include dealing with Politically Exposed Persons (PEPs), high level employees of state-owned enterprises who are considered to be foreign officials under the FCPA, sovereign wealth funds, employees of publicly traded companies (issuers) acting abroad, foreign companies in which they invest by acquiring risk, as well as laundering suspicious proceeds through their accounts. Quite simply, the United States has an interest in assuring that its financial institutions are not abused to launder the proceeds of corruption. Integrating ABC compliance into existing AML compliance programs makes sense not only financially, but also practically, because where there is corruption, there are proceeds to be laundered.

    Examining Anti-Bribery and Corruption Measures in a Single Framework to Combat Money Laundering and Terrorist Financing

    Svetlana Agayeva, CAMS-Audit, 8/6/2015

    Corruption and money laundering are synergistic””not only do they tend to occur together, but also the presence of one tends to reinforce the other. The aim of this paper is to make a contribution to the existing audit framework by interrelating corruption and money laundering risks. This paper follows on recent regulatory developments to combat one type of financial crime that could be successfully employed in fighting the other. A more demanding regulatory landscape requires financial institutions to enhance existing controls and procedures of anti-money laundering (AML), anti-bribery and corruption programs. Understanding synergies between corruption and money laundering would enhance knowledge of each problem and would suggest a need for a continuous dialogue among audit teams covering financial crime compliance reviews. Ensuring holistic and consistent application of compliance with AML and ABC requirements is a challenging task facing internal audit function.

    Risk Assessment: Overlooked and Under Tested; The Importance of Implementing a Know Your Risk Assessment (KYRA) Within an AML Audit for Non-Bank Broker-Dealers

    Robert J. Bradley, CAMS-Audit, 8/6/2015

    This white paper Risk Assessment: Overlooked and Under Tested; The importance of implementing a Know Your Risk Assessment (KYRA) within an AML Audit for Non-Bank Broker-Dealers will seek to demonstrate the need for a required risk assessment review during the independent annual Anti-Money Laundering (AML) audit.

    Independent AML Testing of Introducing Broker-Dealers

    Gina Storelli, CAMS-Audit, 8/6/2015

    In October of 2001, the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (“USA PATRIOT” or “PATRIOT”) Act was enacted by Congress in response to the September 11, 2001 terrorist attacks. Among other things, the PATRIOT Act amended and strengthened the Bank Secrecy Act (“BSA”) and imposed new obligations on financial institutions intended to detect and deter money laundering and terrorist financing activities.

    What May Be Missing from Your Audit FBAR Testing Program

    Danielle M. Kuroski, CAMS-Audit, 10/5/2017

    The primary objective of this white paper is to increase awareness about the FBAR requirements; offer considerations for building a comprehensive internal audit FBAR program that satisfies regulatory expectations for deterring U.S. tax evasion, money laundering and terrorist financing activities through the use of offshore bank accounts and other assets; and provide guidance on how to effectively test the financial institution's FBAR compliance program.

    Auditing BSA/AML Incentive Structures

    Richard Ricot, 5/17/2018

    Post-mortem reviews of corporate scandals and enforcement actions indicate a clear linkage between incentive structures and compliance failures at financial institutions. However, there is limited published guidance available to financial institution AML auditors to assist in.

    The challenges of setting up an effective AML/CFT compliance policy for a financial group

    Yi-Chang Liu, CAMS-Audit, 11/13/2018

    A domestic financial holding company with foreign subsidiaries or branches is facing regulations from different jurisdiction and regulatory authorities, which brings the complexity of establishing, complying, supervising and auditing programs to it. Each entity needs to meet its compliance level; for example, the banking AML/CFT regulations are much stricter then regulations of trust, which would probably direct illicit customers to invest through fund house, such as PE funds, instead of buying a large insurance policy from bancassurance that implements higher level on know-your-customer (KYC) process.

    The Money Laundering/Terrorist Financing Risk Assessment – Is it fit for purpose?

    Aub Chapman, CAMS-Audit, 7/1/2016

    Deficiencies in money laundering/terrorist financing (ML/TF) risk assessments continue to feature as a major issue in enforcement actions by anti-money laundering/counter-terrorist financing (AML/CTF) regulatory authorities in many countries. This is despite the apparent level of maturity of the AML/CTF regime in many individual countries. These deficiencies are a major concern as the primary purpose of an ML/TF risk assessment is to be instructive in the development of an AML/CTF risk management framework. This framework should be relevant and proportionate to the ML/TF risk that a reporting entity may reasonable expect to face through its business activities. The regulatory expectation is that each reporting entity will have applied the appropriate resources and expertise in developing its ML/TF risk assessment, which categorizes its customer types, products and services, delivery channels and jurisdictions as presenting a high, medium or low potential risk for ML/TF.

    Auditing Elder Financial Exploitation: Minding Your Own Business or Making It a Part of Your Business

    Terri Sands, CAMS-Audit2/15/2017

    The purpose of this white paper is to furnish best business practices for independent testing on validating the effectiveness of the program, provide awareness of the growing problem of elder financial exploitation and the significance of a financial institutions' involvement and highlight regulatory expectations and guidance. Best business practices are based on experience, trial and error, known elder financial exploitation cases and today's regulatory expectations.

    Assessing Controls to Mitigate the Risk of Elder Financial Exploitation as a Vehicle for Money Laundering and Terrorist Financing

    Karen Motley, CAMS-Audit, 2/7/2017

    The risk of the potential for elder financial exploitation to become a vehicle for money laundering and terrorist financing has increased as evolving technologies create more opportunity for financial exploitation of the elderly through social engineering and cybersecurity threats. It is therefore necessary for financial institutions to strengthen controls to monitor and mitigate this risk in their BSA/AML compliance programs. In fulfilling the independent testing pillar of these programs, Internal Audit must also enhance testing approaches and procedures to ensure the institution has adequately assessed and responded to this emerging risk. This whitepaper seeks to set the context for these enhancements and to propose practical changes to internal audit work programs and test procedures.

    With Great Risk Comes Great Responsibility (and Reward)!

    Brooke Ferris, CAMS-Audit, 7/29/2016

    The purpose of this paper is to offer an alternative source of revenue for financial institutions that is not currently affected by interest rates or consumer protection legislation, by suggesting financial institutions offer banking services to marijuana dispensaries. In the current economy, banks' revenue has been significantly impacted by the interest rate environment and consumer protection legislation. In an effort to reduce costs, financial institutions have shifted their focus to risk avoidance by exiting high-risk customers or turning away new business deemed high risk. However, financial institutions are spending a substantial amount of their resources ensuring those customers are not banking with them. Research shows the states that have legalized recreational marijuana have seen a significant amount of tax revenue. The states are getting their share of the untapped source of revenue produced by marijuana dispensaries, so should the banks not collect their share?

    Detection and Reporting of Elder Financial Abuse

    John T. Wood, CAMS-Audit, 7/29/2016

    While there are many different types of compliance structures within the financial services industry, at many institutions the BSA group offers a unique opportunity for improving early detection of elder financial abuse. Implementation into a bank's existing program should not be a tremendous undertaking if a financial institution's compliance program already has a solid foundation in place based on the four pillars of a BSA/AML compliance program as described in the FFIEC BSA Exam Manual.

    Financial Institutions and Crowd Funding: Exposure to Money Laundering and Terrorist Financing and What can be done to Mitigate it

    K.M. VELDHUIZEN-KOEMAN, CAMS-Audit, 7/29/2016

    Crowdfunding often deals with small amounts over a longer period of time and runs the risk of not being picked up by the transaction monitoring tools that most financial institutions have in place. Where certain forms of crowdfunding are deemed to be low risk, financial institutions need to be more vigilant in preventing any wrongdoing. It is precisely on those areas that money launderers, individuals or organizations that are looking for channels to fund terrorist activities will concentrate. Social media poses an extra risk because anybody who uses it for crowdfunding operates under the regulatory radar.

    Financial Inclusion, Developing Economies and Effective Implementation of the Risk-Based Approach in AML/CTF: The Need for Legislative and Regulatory Leadership to Motivate Private Sector Commitment and the Role of Audit

    Hue Dang, CAMS-Audit, 7/1/2016

    Financial inclusion is an oft-discussed issue in the context of income inequality, especially for developing economies that are either poorly-defined or lacking in clear government policy objectives. The purpose of this white paper is to clarify the definition of financial inclusion and discuss the essential roles that both the government and private sector must undertake to meet the financial inclusion objective. From the government sector viewpoint, this paper will discuss the key elements of the risk-based approach in anti-money laundering/counter-terrorist financing (AML/CTF) compliance essential to encourage financial inclusion adoption and illustrate the crucial role of national policy, coupled with clear regulatory guidelines to motivate private sector commitment to this policy issue. At the same time, the paper also explores the business rationale for the banking sector to adopt financial inclusion, including the various new products/services pre-approved and simplified customer due diligence (CDD) requirements by the regulator. Most notably, the paper highlights the essential role of audit in insuring that the banking sector does indeed understand and adopt the parameters of financial inclusion as laid out by the government of the jurisdiction in which the bank operates.

    AML De-Risking: An effective method of plugging AML control failures?

    Bukola Adisa, CAMS-Audit, 8/5/2015

    AML control failures have gained a lot of press in recent times. There have certainly been widely documented instances of firms that have been subject to regulatory censures as a result of deficiencies identified within their AML control framework. As the penalties and fines have increased, financial institutions have looked for ways to plug these control deficiencies. These have ranged from simple solutions such as hiring extra resources to more complex solutions such as radical changes to operational models and setting up extensive remediation programs.

    Independent Audit/Compliance Review of a FATCA Program

    Jennifer Dors, CAMS-Audit, 8/5/2015

    In 2010 the US government passed a new legislation known as FATCA. FATCA stands for Foreign Account Tax Compliance Act and is intended to prevent US taxpayers from avoiding the payment of US income taxes by hiding money offshore. Starting in 2013 foreign (non US) financial institutions (FFI's) are required to enter into agreements with the US Internal Revenue Service (IRS) to report relevant information to the IRS regarding financial accounts held by identified US persons. Failing to comply with this regulation, the IRS will impose a 30% withholding tax on US source payments (and potentially certain non-US source payments at a later date) paid to the FFI or their clients. FFIs around the world must take the necessary steps to meet these obligations if they do not want to be subject to 30% withholding.

    Blanket De-Risking of Money Services Businesses

    Kristin Pullar, CAMS-Audit, 3/3/2016

    The purpose of this paper is to describe how the current regulatory environment is putting pressure on the banking industry to de-risk their client base, specifically money services businesses (MSB). The de-risking of MSBs often means termination of banking relationships and shutting down services to MSBs. The regulatory bodies of the Financial Crimes Enforcement Network (FinCEN) and the Financial Action Task Force (FATF) are against this blanket de-risking approach for an entire industry. However, I will demonstrate how the process still exists and how it impacts banking institutions and the global financial industry. More importantly I will describe the MSB regulatory environment to demonstrate how MSBs are responsible for implementing compliance programs in accordance with the Bank Secrecy Act (BSA) and the oversight by regulators of this process. The intent is to articulate how regulators need to encourage, through actions and practice, the banks use of FATF's risk-based approach and leveraging existing regulatory oversight of MSBs when evaluating the decision to provide banking services to MSBs.

    A Principles-based Approach for Auditing Board Reporting

    Jeffrey Houde, CAMS-Audit, 8/6/2015

    Regulatory requirements and guidance around independent testing of Board of Directors (BOD) data gathering and BOD reporting processes is sparse, but applicable processes support key Bank Secrecy Act (BSA)/anti-money laundering (AML) and Office of Foreign Assets Control (OFAC) governance activities. As such, it is incumbent on internal audit to understand applicable risks, process objectives and regulatory expectations and ensure their test programs drive sufficient testing of each. This is a challenging task that requires consideration of numerous factors. This white paper provides discussion of key factors and principles-based guidance to assist with test plan design and execution. By no means is the discussion or principles-based guidance conclusive. The white paper provides a snapshot of key factors and principles that I have found most helpful in my experience.

    The Expanded Expectations of Corporate Governance in BSA/AML and the Impact on the Audit Function

    Kathe M. Dunne, CAMS-Audit, 8/6/2015

    Most financial industry observers and participants agree that regulatory review of the Bank Secrecy/ anti-money laundering (BSA/AML) compliance function in depository financial institutions increased significantly immediately following the passage of the USA PATRIOT Act in 2001. It took several years for specific regulatory guidance to catch up to the law in the form of the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual. Until recently, depository financial institutions have done reasonably well auditing the (BSA/AML) program using this manual as a primary reference.

    Defining and Auditing AML Board Oversight for Subsidiary Entities

    Tamara A. Darnow, CAMS-Audit8/6/2015

    This white paper illustrates the impact on subsidiary boards and AML Officers of new heightened expectations and provides a methodology for internal auditors to assess subsidiary level board effectiveness, including board awareness, of AML related activities.

    Leveraging Big Data Techniques to Enhance Anti-Money Laundering Practices

    Margo Vakharia, CAMS-Audit, 10/5/2017

    The evolution of technology in recent decades has brought about unprecedented change for today's global workforce. The new reality is one of information overload, compounded by the constant onslaught of new technologies and a continuous stream of new regulations. This spiraling cycle means that we have a bigger workload than ever before with less time to complete it in. Couple this with the change management challenges involved, not to mention cost considerations, and every professional would agree that the issue of data management is one of the most significant in recent times.

    Independent Audit and Insurance AML Transaction Monitoring

    Vicki Landon, CAMS-Audit, 8/6/2015

    The Bank Secrecy Act (BSA) requires that insurance companies identify and report suspicious activities, which is the ultimate goal of transaction monitoring. Companies are free to choose how they monitor transactions via manual processes, exception reports, and/or transaction monitoring systems (TMSs) as appropriate for their size and risk profile, as long as the method(s) effectively identify suspicious activities and support timely reporting.

    Validating and Quantifying the Qualitative Elements of Customer AML Risk in the Insurance Space

    Louis A. Parris, CAMS-Audit, Dip(Compliance) FICA; Certified Professional, 10/5/2017

    Regulation in the insurance space has tended to lag behind the more aggressive regulation of banking and other financial institutions. As a result, risk modeling for the insurance industry has not been as comprehensively developed. Examination of existing rating models indicates that there are generic models, which insurance companies adapt to their own use. Moreover, the qualitative aspects have largely been used in preference to a more demanding application of the quantitative method. Even where regulators suggest models, these have tended to be driven primarily by qualitative inputs.

    Lessons learned from the impact of the mexican regulations imposing restrictions in mexican financial system for transactions in u.s. Currency and their impact in the aml cross-border risk impact in the u.s.-mexico border

    Andres Noren, CAMS-Audit, 8/18/2016

    This white paper is envisioned to familiarize the reader on the impacts of the anti-money laundering (AML) cross-border risks in the U.S.-Mexico border after Mexican regulations imposed restrictions in the Mexican financial system for transactions in U.S. currency and to provide a view on how the internal audit function should ensure there is an adequate coverage of this risk in the execution of their audit activities. Burrell The goal of this paper is twofold.

    Auditing the Non-Profit Organizations (NPOs) AML/CTF Framework in Jamaica

    Keron Oliver, CAMS-Audit, 7/29/2016

    With respect to non-profit organizations (NPOs) in particular, FATF has issued specific guidance through the publication of Recommendation 8 and a plethora of other guidance which further expound on matters relating to NPOs. The CFATF and a number of other FATF-style regional bodies (FSRBs) have developed and continue to develop policies and procedures as well as methodologies to adequately treat the issue of NPOs whilst satisfying the requirements of FATF. The issue of moment, however, for Jamaica and a number of other countries is how to develop the required legal and regulatory framework needed to fulfill the requirements of Recommendation 8, its attendant interpretive notes, methodology and immediate outcomes. This paper contemplates the question as to whether there is a deficiency in the current legal and regulatory framework for NPOs in the banking sector in Jamaica when compared to the Guidance given by FATF.

    Can the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Compliance Examination Manual (2014) be used as a benchmark to audit the AML controls in Islamic financial institutions in Malaysia?

    Aaron Lau In-Tsoi, CAMS - Audit, CFE, CA(M), FCA(Aust), 7/1/2016

    Rapid growth of the Islamic finance industry may necessitate an examination of whether some of the precepts and principles as contained in the Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Compliance Examination Manual (2014) could be applied to AML audit in IFIs in Malaysia.

    Auditing an Islamic Multinational Bank

    Wafaa El Dars, CAMS-Audit, 3/7/2016

    The challenges that a compliance auditor meets are many and for professional compliance auditors some of those are almost unknown. However, as the compliance auditor of a multinational bank faces different challenges, the auditor of a multinational Islamic bank faces even more challenges.

    Risk is in the Eye of the Beholder: The Difficulties Faced by Offshore Regulators

    Paul Coleman, CAMS-Audit3/3/2016

    This paper considers the position of the regulator in a small offshore country, tasked with fulfilling its obligation to assess levels of compliance with anti-money laundering/counter-terrorist financing (AML/CTF) legislation and international standards. In particular, the paper considers the examination challenges faced by the regulator for those financial institutions licensed in the country but with a number of operating and support functions situated across country borders.

    U.S. and Brazil AML Audit Comparative Analysis

    Alba Kiihl, 8/6/2015

    In foreign markets, corporations can be exposed to new customers and by creating foreign affiliates, companies become multinational in the process this is one of the most common courses of an expanding business: going abroad. However, expanding operations beyond the United States in whatever kind of structure (opening of a new branch, establishment of a foreign correspondent banking relationship, joint venture, etc.) requires a certain level of due diligence and understanding of the targeted market. When the matter relates to banking, these aspects become even more critical due to the highly regulated U.S. compliance sector. And as most banking professionals already recognize, Anti-Money Laundering is one of (if not the most) important item on a regulator's agenda. Therefore, before venturing into a new market, these are some important issues for a Board of Directors to consider. Note that although the main objective of this paper was to compare and contrast Anti-Money Laundering auditing in the United States and in Brazil, topics discussed should be highly positioned within a Director's due diligence checklist before expanding a banking business anywhere around the world.

    The Challenges in Conducting an AML/CFT Audit in Offshore Jurisdictions

    Author: Kem Warner, CAMS-Audit, 8/6/2015

    The purpose of this paper “The Challenges in Conducting an AML/CFT Audit in Offshore Jurisdiction” will seek to illustrate why an Anti Money Laundering/Counter Financing of Terrorism (AML/CFT) Audit is one of the key ingredients in an effective AML/CFT Program. The paper will allow readers to gain a comprehensive understanding of how and why an AML/CFT Audit should be conducted on a risk-based approach as opposed to a prescriptive approach. It will also emphasize some differences between an AML/CFT Audit and a Financial Audit, who should conduct it and how it should be conducted. The paper will allow the readers to understand some challenges faced by small companies operating in offshore jurisdictions. It will also offer suggestions to institutions, governments, regulators and law enforcement agencies and those who conduct an AML/CFT Audit for improving the procedures and scope. The paper will also address some possible perceptions by onshore jurisdictions on AML/CFT Compliance in offshore jurisdictions. The facts and opinions are drawn mostly from knowledge of the Caribbean jurisdictions.

    High Risk Countries in AML Monitoring

    Alicia Cortez, CAMS-Audit, 8/6/2015

    This report provides information on the monitoring process that financial institutions have to develop and implement for detecting and reporting suspicious activity with emphasis on high-risk countries. Policies and procedures focused towards combating money laundering provide the foundation for this fight. They have to address the particular vulnerabilities to which the financial institution is exposed. Policies and procedures have to be enforced to serve their purpose. An audit function, independent of the parties responsible for the monitoring, should be in place and conducted on a periodic basis.

    Use of Independent AML-CFT Audit as a Supervisory Tool -A Unique Opportunity for New Zealand’s AMLCFT Supervisors

    Martin Dilly, CAMS-Audit, 8/6/2015

    The Anti Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) came fully into force in New Zealand on 30 June 2013 bringing with it the requirement for entities caught by the Act (reporting entities) to be subject to an independent AML/CFT audit. A reporting entity must have an audit every two years (or at any other time at the request of its AML/CFT supervisor)2 which means that around 1,600 reporting entities must have an initial audit completed by 30 June 2015.

    Trust Offices in the Netherlands: The Introduction of the Compliance Audit

    David G. Specker, CAMS-Audit, 8/5/2015

    Dutch trust offices are supervised by the Central Bank. The applicable legislation and supervision is focused on anti-money laundering. Currently, there is no legal obligation for trust offices to perform an audit on the compliance with the applicable legislation. The introduction of a mandatory audit, expected January 2015, will change that.

    What Should Auditors Know About Correspondent Banking Activities and De-Risking?

    Nadine Abouzeid Harb, CAMS-Audit, 2/7/2017

    “De-Risking” is a recent trend in the global financial market where correspondent banks are restricting and terminating their relationships with other banks and financial institutions that are classified as high risk or are operating in high risk countries. 

    Compliance Audit: Evaluating and Balancing Country Risk and Regulatory Risk

    Lisa Bowyer, CAMS-Audit, 8/6/2015

    An initial and on-going risk assessment is the foundation of any compliance system regardless of its scope and the starting point for an audit of a compliance system should be to review and evaluate the risk assessment.

    The Links Between Money Laundering and Conflicts of Interest in the Investment Services Industry

    Karl-Johan Karlsson, CAMS-Audit, 3/3/2016

    A conflict of interest is generally defined as a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest.

    Best Practices of AML Audit of Trade Finance in Singapore

    Henry Lim, CAMS-Audit, 7/1/2016

    Trade-based money laundering/terrorist financing(TBML/TF”) is a complex money laundering methodology that operates across international and national borders, and is often combined with other money laundering methods such as the layering of financial transactions, use of shell companies, bulk cash and hawala underground remittance systems. Therefore, it is very difficult for banks to distinguish TBML/TF from legitimate activities of international trade by checking paperwork.

    Who are they? The Auditor’s Expectations – Knowing the Customers and Proving It

    Mark E. Wolfrey, CAMS-Audit, 8/6/2015

    How well does your financial institution need to know your customer? All too often, the frustrating answer to this staple of the financial industry is, “it depends upon the customer risk profile,” as risk assessment is subjective. Basic requirements were provided in Section 326 of the USA PATRIOT Act, which is referred to as Customer Identification Program (CIP) Joint Final Rule. CIP outlines minimum identifying information that customers will be required to provide prior to opening an account.

    Dodd Frank and Money Transmitters: 10 Key Aspects of Regulation E

    Iris Aimee Pinedo, CAMS-Audit, 8/6/2015

    On January 20, 2012, The Consumer Financial Protection Bureau (CFPB) released its long-anticipated rules governing certain electronic money transfers or “remittance transfers.” Subpart B to Regulation E of the Dodd Frank Wall Street Reform and Consumer Protection Act1 establishes a new regulatory framework governing cross-border electronic transfer payments originated by US consumers. The new “remittance transfer” rules took effect on October 28, 2013 imposing for the first time federally mandated disclosure, error resolution and cancellation rights on remittance transfer providers, which can include both financial and non-financial institutions. The CFPB believes that the new remittance transfer rules will create new protections and improve predictability for consumers who send “remittance transfers” from the United States to individuals and businesses in foreign countries.

    The Money Service Business in the USA: How to Comply with Federal and State Laws and Regulations and Maintain Good Relationships with Banks

    Mary-Jo LaHood, CAMS-Audit, 8/6/2015

    Money transmission businesses are taking the next step into the 21st century with more advanced technology. The remittance is navigating from the traditional way of transferring money at the agent's physical locations to cyber channels.

    Audit Remedies for PEP Risk

    Michael Sandretto, CAMS-Audit, 5/16/2018

    The significance of PEP illicit money and asset crimes cannot be stated strongly enough. The worldwide impact on the reduction of PEP criminal funds will tremendously help citizens in both home and destination countries. From the introduction, where we learned of the Russian anti-corruption campaigner Raman Borisovich and the Ukrainian investigative reporter Natalia Sedletska, it is clear that the citizens of crooked leaders are demanding change. The public outcry is shared by the enforcement agencies who are working tirelessly to stop PEP misconduct. In just the past few years the U.S. has moved from no restraints on anonymous shell companies purchasing deluxe properties to now having six metropolitan areas prohibited from this activity (part of FinCEN's Geographic Targeting Orders) It is refreshing to see change happening. Every exposure of PEP crimes in the media brings us that much more relief.

    The Risks of Banking HNWI’s: An Effective Anti-Money Laundering Program for Wealth Management

    Sahar Banu, CAMS-Audit, 3/7/2016

    This white paper explains the risks banks face when engaging with high-net-worth individuals (HNWIs) and how to implement an effective anti-money laundering (AML) program for wealth management and the program's specific components.

    Exploring an Industry-Wide Standard to Customer Risk Assessment - Proposing a Best Practice Model for Banks

    Farokh Keki Adarian CAMS-Audit, MBA (Banking); CFCS, ICA Prof.Pg Dip (FCC); Int.Dip (GRC); FICA Certified Professional, 10/5/2017

    This white paper intention is to provide the challenges faced in proposing an industry-wide risk assessment model. While consistent with the basic tenets of the RBA, this paper explores the concept of “harmonization,” in order to present a conceptual and harmonized customer risk assessment model for banks. As opposed to process “standardization,” which in its strict sense seeks to achieve uniformity of process activities (i.e., aims at only one uniform, global standard), process “harmonization” seeks to align similar process activities based on a single, focused business objective, while recognizing that some mandatory differences (process variants) may be essential and will remain. The harmonization of laws in the EU member states, is one such empirical example.

    Augmenting the AML Audit Toolkit to Strengthen Cyber and AML Controls

    Prasanna Haran, CAMS-Audit, 10/5/2017

    This white paper encourages internal auditors (and compliance personnel) at financial institutions to take a holistic approach to audits related to anti-money laundering (AML), by incorporating the risks emanating from cybercrime. It also recommends strategies by which the AML audit toolkit could be augmented to achieve this objective.

    AML Model Validation in Compliance with OCC 11-12: Supervisory Guidance on Model Risk Management

    Susan Devine, CPA, CAMS-Audit, 7/29/2016

    Supervisory Guidance on Model Risk Management (OCC SR 11-7 establishes requirements for model validations. Model validations verify that models are performing as intended to meet the defined business objectives. The guidance states that model validations should be performed at least annually to help reduce the model risk. This white paper describes validation approaches and methodologies used to comply with the guidance with an emphasis on model validation.

    Risk-Based Approach Understanding and Implementation: Challenges Between Risk Appetite and Compliance

    Karima Touil, CAMS-Audit, 4/20/2016

    In today's emerging risks and challenges, financial institutions, especially in the Middle East, are exposed to money laundering, terrorist financing and sanctions risks leading to the necessity of adopting preventive measures that can be enabled in the financial institution to mitigate risks.

    Strategic Gap Assessments: A Primer for Risk Managers

    Brian W. Vitale, CAMS-Audit, 8/6/2015

    Risk Managers are tasked with a myriad of responsibilities; responsibilities rooted in regulatory requirements promulgated by their specific state or federal regulatory agency. Further, Risk Managers routinely immerse themselves in the tactical operations side of the business. Tactics sustain enterprise objectives for the common purpose of goal attainment. From a strictly BSA/AML risk perspective, goal attainment, driven by a number of internal and external factors, results in strategic positioning of the organization for risk mitigation purposes in essence, it is the identified risk appetite of the organization.

    Business Customers and Money Laundering Risk: A New Perspective

    Laurie S. Kelly, CAMS-Audit, 8/6/2015

    As crime and money laundering methods evolve, so must our perceptions of the characteristics of business customers that present a higher risk for money laundering. Increasingly, legitimate businesses in industries traditionally perceived as low risk are acting as intermediaries in the “layering” phase of money laundering for transnational organized crime and other illegal activity.

    Auditing and Updating an AML Risk Assessment

    Donna Davidek, CAMS-Audit, 8/6/2015

    The risk assessment process is not new to the Banking industry. Risk assessments have been conducted in many areas within banking organizations for years, so it seemed appropriate when the BSA area came into regulatory focus. Since at least 2005, every depository financial institution has been required to perform and document a written BSA/AML Risk Assessment. The purpose of a comprehensive risk assessment is to assess the enterprise wide BSA/AML risk profile of the organization, including the Bank and all subsidiaries. By determining the enterprise wide BSA/AML risk profile, the organization can evaluate the adequacy of existing processes and where required, modify and update the risk management processes in an effort to more effectively identify and mitigate risk. A risk assessment can serve as a valuable tool for any Banking institution that wants to manage its BSA/AML risk effectively. The key is to understand the Bank's risk exposure and develop the necessary policies, procedures, systems, and controls to mitigate the risk. The emphasis by regulators for financial institutions to conduct detailed risk assessments has increased substantially over the years.

    How to Build an Audit Risk Assessment Tool to Combat Money Laundering and Terrorist Financing

    Jonathan Estreich, CAMS-Audit, 8/6/2015

    The primary objective of this white paper is to offer specific considerations and suggestions for how a financial institution's internal audit department (“Audit”) can design a firm” wide AML risk assessment (“AMLRA”) tool that: 1. improves the auditor's ability to identify relevant AML risks; 2. sets the foundation for thoughtful and supported risk determinations; and 3. produces results that can assist in the development of an audit plan that satisfies current regulatory expectations for deterring money laundering and terrorist financing.

    Banking on the Border: Managing high gross risk bank relationships by testing the comprehensiveness of the AML risk assessment

    Jaime Verástegui, CAMS-Audit, 8/6/2015

    This paper is intended to provide a set of risk-based recommendations when assessing the comprehensiveness of the AML risk assessment within the retail banking industry that has in its portfolio a volatile combination of high risk customers, high risk geography and high risk products.

    OFAC and the Role of the Three Lines of Defense

    Tara Johnston, CAMS-Audit, 8/6/2015

    Unlike Bank Secrecy Act legislation, OFAC-related regulations have applicability outside U.S. borders. All U.S. persons, to include permanent residents, individuals located in the U.S and U.S. banks, their domestic branches, agencies, international banking facilities, foreign branches and overseas offices and subsidiaries are required to comply with OFAC regulations when transacting in U.S. dollars. This includes U.S. branches for foreign financial institutions, as well as U.S. persons working at foreign corporations outside of the U.S. at the time the transactions are processed. (Slear 2006) At a high-level, OFAC requires the blocking of accounts and property of specified countries, entities and individuals. It also prohibits or requires the rejecting of unlicensed trade and financial transactions with sanctioned countries, entities and individuals. (Federal Financial Institutions Examination Council 2010)

    Control Considerations For Auditing the OFAC Affidavit Program

    Cheryl Sincock, CAMS-Audit, 8/5/2015

    OFAC generally prohibits financial institutions from processing transactions involving sanctioned countries unless exempted by a specific regulatory provision. One provision is for the processing of certain transfers to or from sanctioned countries that represent non-commercial personal remittances.

    Combating the Layering and Integration of Money Laundering by Debit Card

    Qian Sun, CAMS-Audit , 10/5/2017

    Debit cards are a basic and popular financial instrument all over the world, and they have inevitably been used throughout all three stages of money laundering. In recent years, along with new technologies adopted in the financial system, debit card payments have become a very convenient and efficient option, particularly in Asia-Pacific countries and regions where debit cards are widely used in not only cash withdrawal but also purchase transactions.

    Suspicious Activity Monitoring; An Innovative and Auditable Approach to Threshold Tuning

    Scot Luther, CAMS-Audit, 2/7/2017

    This whitepaper provides a high-level overview of a suspicious activity monitoring system and the necessity of threshold tuning as a critical component to the typology validation. Most importantly, the whitepaper will introduce a conceptual implementation of a software solution that provides financial institutions and suspicious activity monitoring system managers automated, data-driven predictive indicators and alerts that a threshold should be reviewed and possibly tuned. The solution would be integrated to the suspicious activity monitoring system in place. It would also be running in real-time to provide alerts that could justify the obsolescence of an annual periodic threshold tuning exercise. The predictive indicators would also include data snapshot captures that financially rationalize threshold tuning exercises from a business perspective, all while providing an auditor concrete justification for a threshold tuning exercise.

    Guidelines for Effectively Auditing for Tax Evasion Controls

    Shibu Abraham, CAMS-Audit, 7/1/2016

    Globally, over the past two decades, there has been increasing sensitivity around tax evasion and facilitation thereof by financial institutions (FIs). This eventually led to the categorization of tax evasion as a money laundering predicate offense by the Financial Action Task Force (FATF) in 2012.

    Trade-Based Money Laundering – Capturing the New Frontier through Analytics

    Manisha Khanna, CAMS-Audit, 8/18/2016

    Trade-based money laundering (TBML) is an extremely different method of laundering criminal proceeds, wherein criminal organizations utilize the trade of goods instead of an actual monetary transaction.

    Auditing for Effective Training

    Maleka Ali, CAMS-Audit, 8/6/2015

    Anti-money laundering (AML) statutes were first introduced in the United States in the 1970s in the form of the Bank Secrecy Act. This established basic record keeping and reporting requirements and has since expanded in complexity to also require banks to establish procedures to ensure compliance with the Bank Secrecy Act (BSA). The regulations dictated that financial institutions must establish and maintain a BSA/AML compliance program that includes the following four pillars: (1) A system of internal controls to ensure ongoing compliance (2) Independent testing of BSA compliance (3) A specifically designated person or persons responsible for managing BSA compliance (4) Training for appropriate personnel.

    AIMing for Excellence: Optimizing the BSA/AML Training Program as an Effective and Efficient Control, and Audit’s Contribution to this Pursuit

    Kathleen O. Smith, CAMS-Audit, 8/6/2015

    Compliance professionals within financial institutions strive constantly to achieve best in class, and generally view training as a critical tool in achieving this pursuit. Training can truly be an organization's first, last and best control. Despite the best intentions, budget and resource considerations may present formidable challenges in this endeavor.

    AML Training: Preparing Auditors to Adequately Assess AML Programs

    Jack Sonnenschein, CAMS-Audit, 8/6/2015

    The Bank Secrecy Act (BSA) includes training as a requirement and one of four core pillars of an effective anti-money laundering (AML) program along with effective internal controls, independent testing and specific accountability for oversight of BSA/AML.

    Automation


     

    New KYC/AML Tools: Staying Savvy and Embracing Technology

    Cheung D.M. Jason, 6/3/2020

    The purpose of this paper is to raise awareness in the audit community on new technologies increasingly being employed by KYC/AML functions at banks, and the Hong Kong Monetary Authority's respective outlook as Asia's leading financial center regulator. This paper also illustrates a practical approach when conducting an AML audit on such new technologies.

    AML Rule Tuning: Applying Statistical and Risk-Based Approach to Achieve Higher Alert Efficiency

    Umberto Lucchetti, CAMS-FCI, 7/23/2015

    In order to maintain AML detection scenarios current with best market practices, rule tuning exercises have become an ever-increasing important task to perform at a financial institution. The methodologies to tune AML detection scenarios are also becoming more complex with heightened expectations from regulators. The tuning needs must be constant, that is, continuously applied over time to identify potential new risks or new typologies not covered by the current process in place. Likewise the application of a risk-based approach to the transaction monitoring process should also be taken into consideration by banks since it helps to focus the efforts and resources of staff on what poses a higher money laundering risk for the institution. This tuning will directly benefit the financial intelligence unit (FIU) and consequently the financial crime investigators who will have more productive alerts to review, having more time to investigate the potential suspicious alerts, therefore, improving the transaction monitoring process as a whole.

    Implementing an Effective Anti-Money Laundering System

    Kevin Harris, CAMS-FCI, 8/2/2016

    Increased pressure from regulators have Bank Secrecy Act/anti-money laundering (BSA/AML) officers turning to software vendors for solutions which can add efficiency and accuracy to their program. Financial institutions must choose a software vendor solution that is right for their institution's size and risk appetite. While larger financial institutions may have the ability to custom build software, many smaller institutions rely on software vendor solutions to provide them with an all-inclusive solution. This white paper should serve as a tool for BSA/AML officers who are looking to implement an automated AML software and provide real world guidance as it relates to the planning, resource, and validation stages of implementing the software. This white paper will provide insight into some of the many technical pitfalls in which BSA/AML officers commonly find during the implementation process. It will outline various tools available within most AML software, considerations to be had while implementing a new AML software, IT and staffing resources, and discuss the importance of a system validation.

    Beneficial Ownership


     

    Use of Complex Structures, Trusts, and PIVs in Money Laundering Schemes

    Olivia Tawadros, CAMS-FCI, 12/31/2019

    This paper offers a comprehensive view on the use of complex structures in money laundering schemes and measures recommended by the FATF and other international bodies to mitigate the associated risks.

    Beneficial Ownership of Legal Persons and Legal Arrangements: Recommendations for an Audit Programme to Assess Compliance with the Requirements

    Andy Walker, 4/8/2019

    An analysis of progress in global efforts towards transparency on beneficial ownership, and good practice recommendations for audit programs assessing compliance with the beneficial ownership requirements.

    Auditing to the Inherent Risks of Real Estate Gatekeepers

    Mitchell Lincoln, CAMS-Audit, 5/16/2018

    Real estate has long been a relative secret that criminals utilized to hide their assets. It has been overlooked for years as the government and financial institutions found it difficult to detect due to the complex nature of the transactions and the level of anonymity that is permitted in real estate transactions.

    Challenges of finding the ultimate beneficial owners in AML and ATF

    Juan Carlos Ariza, CAMS-FCIt, 8/6/2015

    Identifying the ultimate beneficial owners (“UBOs”) in accounts under the control of individual may not be necessarily difficult, although there are always exceptions. However, in the case of business accounts it's another story. With legal structures and corporate vehicles, there is still a grey area regarding the meaning of ownership and control, specifically in terms of what percentage of ownership is considered “control”, or who can have control over the account. Furthermore, the different roles within different vehicles and structures complicate things even more. Moreover, corporate vehicles incorporated in offshore financial centers and legal structures subject to the laws of these jurisdictions makes this task even more challenging.

    Customer Due Diligence Challenges in the Middle East

    Varadarajan Viswanathan, CAMS-Audit, 10/5/2017

    Financial institutions based in the Middle East have been increasingly on the regulatory radar. Increased enforcement action and stricter enforcement of regulations coupled with the pace of regulatory change has made institutions more risk averse. Furthermore, the increasing cost of compliance and scarcity of trained resources has resulted in de-risking and has become the order of the day. The risk of de-risking is that it will drive the unregulated sector underground or compel them to use alternate or informal means of payment. It is also likely to affect global growth and financial inclusion.

    Bribery


     

    Broker-Dealer


     

    Over-the Counter “Pink Sheet” Securities and the Threat they Pose as a Money Laundering Vehicle to Broker-Dealers

    Henry Pleau, CAMS-FCI, 7/23/2015

    The purpose of this paper is to provide FCI's and broker-dealers a cogent solution towards identifying and preventing money laundering through the use of Pink Sheet securities at their firm; thereby promoting a securities market based on financial integrity, transparency and fairness.

    Relationship-Based Monitoring

    Douglas Stevenson, 5/16/2018

    It is no secret that our global financial institutions are being used to launder money. The scale of how much money is being laundered is sobering: In 2009 The United Nations Office on Drugs and Crime (UNODC) conducted a study to determine the magnitude of illicit funds generated by drug trafficking and organized crimes and to investigate to what extent these funds are laundered. The report estimated that criminal proceeds amounted to 3.6 percent of global GDP, with 2.7 percent (or $1.6 trillion) being laundered. (Forbes Insight "Don't Blame the Transaction Monitoring Systems", 2017, p. 3) That was 8 years ago. The numbers are likely more depressing today in 2017.

    BSA/AML Audit Testing


     

    The Importance of the Auditor's Role in Third-Party AML Systems

    Rebecca Ip, CPA, CA, CFF, CAMS, 8/3/2020

    This white paper discusses the key audit considerations throughout the AML system life cycle and how AML auditors are invaluable in ensuring the effectiveness of controls put in place by an entity's first and second lines of defense in addressing the risks stemming from outsourced AML third-party systems.

    Auditing the Second Line of Defense: The Compliance Monitoring and Testing Function

    Genesis Martis, CAMS-FCI, 2/11/2020

    The purpose of this white paper is to provide the auditor an audit approach to test the effectiveness and efficiency of the compliance monitoring and testing function.

    Validating AML/Sanctions Models: A Case Study

    Chandrakant Maheshwari, 1/30/2020

    This white paper provides the validator with approaches he can use to gain an in-depth understanding of banks' customer demographics, product profiles, and customer behavior with respect to the products they use. We discuss using data analytics, what steps the validator can take to ensure that the existing rules and assumptions of the model are adequately capturing the risks described in the bank's risk assessment document.

    Overview of a 360-degree Group Advisory Audit: The Last and Best Control to Ensure Enterprise-wide AML/CFT Compliance

    Jose Thottungal, CPA, CSSP, CAMS, MA, CAMS-Audit, 6/11/2019

    However, effective and structured are the AML/CFT compliance environment in a big bank is at a point in time, the continued sustainability of the compliance is still not achievable. The purpose of this white paper is to establish that 360-degree Group Advisory Audit is the last and the best Control to ensure the continued sustainability of Enterprise-wide AML/CFT compliance in a big bank environment.

    Effective Audit Testing on Transaction Monitoring Program (TMP) Equipped With Artificial Intelligence and Robotics (AIR)

    Roy Teoh, 5/20/2019

    The purpose of this white paper is to examine the need for an augmented audit testing approach for Transaction Monitoring Program equipped with Artificial Intelligence and Robotics.

    How to Audit Know Your Customer (KYC) and Customer Due Diligence (CDD)

    Sohail Akbar, 4/4/2019

    The purpose of this white paper is to illustrate the importance of KYC/CDD and the role of auditors in ensuring that the required testing is performed, issues uncovered during audit are remediated prior to the regulator's examination or the financial institution (FI) falling victim to the perpetrators of money laundering and terrorism financing. Proper KYC/CDD ensure and unveils the true identity of customer specially UBO's in simple as well as in complex structures of entities such as off shore, FZCO and companies set in secrecy heaven where the rights to monitor, control and dispose funds on behalf of true owners, are given to legal persons such as lawyers, and trustees etc. Auditing FIs KYC/CDD process using modern techniques determines that the desired results have been achieved from KYC/CDD as it subsequently impacts sanctions screening and transaction monitoring, if a FI KYC/CDD program is not stringent the entire AML/CFT program can collapse and the FI will always remain vulnerable to regulatory and ML/TF risk. This paper also defines the controlled environments other than audit, how to identify and resolve issues and how to conduct risk assessment of audited entities of an organization in relation to CDD.

    Data Analytics Audit Considerations When Designing BSA/AML Audit Testing

    Lindsay M. Dastrup, CAMS-Audit, 8/4/2015

    The purpose of this paper is to demonstrate the benefits of data analytics in providing more robust audit coverage of a Bank Secrecy Act/anti-money laundering (BSA/AML) audit in order to provide a higher level of assurance of BSA/AML regulatory compliance.

    The Leveraging of Social Media by Corporate Credit Unions to Enhance the Detection and Reporting of Suspicious Activity

    Naomi B. Glass, 5/16/2018

    Corporate credit unions are presented with unique challenges with respect to the identification and reporting of suspicious activity to law enforcement. That is because they are in the business of processing transactions on behalf of individuals and businesses whose accounts they do not hold. Due to the lack transparency associated with the financial transactions that they process on behalf of third parties, corporate credit unions must identify alternate sources of intelligence to aid in their investigation of suspicious activity. That is where social media comes into play.

    “Are You Throwing Out the Good with the Bad?” Successfully Banking MSBs in the age of De-Risking

    David Ryan, 5/17/2018

    What does it mean exactly that banking Money Services Businesses (“MSBs”) should be risk-based? The phenomenon of “de-risking” has come to mean the wholesale closure of MSB accounts without taking into account the subtleties of the risk presented within the MSB industry. If FinCEN has stated that banking MSBs should be based upon risk,1 as have all the other banking regulators,2 then why have banks continued to categorically close all of their MSB accounts? The FFIEC's definition of high-risk accounts that includes all MSBs in no way prohibits additional discrimination within the high-risk category. The techniques presented here will help a bank perform high-risk discrimination that will allow it to tailor its account portfolio to fit within its chosen risk assessment. The resulting portfolio will in turn provide the bank fee income that is well above and beyond the costs associated with the underwriting and monitoring of the portfolio.

    Compliance Program


     

    STR Buildup

    Imad Habre, CAMS-Audit, 6/18/2019

    This paper will identify and define criminal activities, how to detect them, what policies, processes, and procedures should be in place, and what AML systems should be implemented. In addition, it will cover how financial institutions should assess and take the decision of filing a suspicious transaction report (SAR), which will benefit financial institutions with existing suspicious reporting systems as well as institutions new to or having deficiencies in their reporting procedure.

    A Fourth Line of Defense: The Role of External Auditor and Regulator

    Yih Ling Wu, CAMS6/11/2019

    The purpose of this white paper is to provide the financial regulators, AML/CFT compliance officers, and internal auditors with some thoughts on the four lines of defense model, acting as the control model that builds up a joint defense against anti-money laundering and counter-financing of terrorism compliance risk.

    White Paper on KYC — Enhanced Due-Diligence

    Jagannathan Vasudevan, CAMS Audit, 5/16/2018

    The cornerstone of a strong Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program includes comprehensive customer due diligence (CDD) policies, procedures and processes for all customers combined with the adoption and implementation of internal controls. The requirement that a financial institution (FI) know its customers, and the risks presented by its customers, is basic and fundamental to the development and implementation of an effective BSA/AML compliance program.

    Corruption


     

    Recent Corruption Scandals in South America and Their AML Impact on the Region

    John Jairo Sepúlveda, MBA, CAMS, 6/25/2019

    The purpose of this white paper is to illustrate the connection that corruption and money laundering have in South America by using recent, major scandals as an example.

    Mitigating the Effect of Organized Crime on the U.S. Tax System

    Scott Karem, 5/17/2018

    This paper has been written and prepared for financial crime investigators and representatives of financial institutions tasked with monitoring and mitigating money laundering activities. The objective of the paper is to educate the reader on the nature of tax fraud, explore the criminal act itself, and portray those who perpetrate it against the United States government. Ongoing efforts by the government to curtail money laundering and other criminal acts through tax activity are also examined.

    Counter-Terrorist Financing


     

    Lebanese Banks: Keeping Watch in a Tough Neighborhood

    Youmna Fares, 12/30/2019

    This white paper sheds light on some particularities of the Lebanese banking sector particularly exposed to the threat of terrorism financing. It discusses the fight against terrorism financing through the example of the Lebanese regulatory framework and the experience of Lebanese banks, and draws lessons from the Lebanese Canadian Bank and Middle East and Africa Bank cases.

    Disrupting Terrorist Financing on Social Networks and Video Game Platforms - A Guide for Non-Traditional Financial Institutions and the Banks That Hold Their Accounts

    Scott F. Butler, 5/16/2018

    Transaction monitoring-based and geography-based counter-terrorist finance regimes are not adequate to protect 21st century financial companies from extremist exploitation. A new methodology is required by which non-traditional financial institutions can monitor for "small scale" terrorist finance transactions and guard against radicalization via their platforms. Specifically, this analysis applies to social networks with a money transmission component (like Facebook or Snap) and video game companies that allow their users to interact and transact within virtual environments (Riot Games, Blizzard). Those entities are referred to as “social-financial companies.”

    15 Years of Anti-Terrorist Financing: Why One Size Does Not Fit All

    Jochen Best, CAMS-Audit, 8/5/2015

    Almost 15 years after the terrorist attacks on September 11, 2001, and the implementation of countless United Nations Resolutions, international standards from government and private organizations as well as national legislation anti-money laundering/anti-terrorist financing (AML/ATF) compliance professionals around the globe still struggle with successfully mitigating the risks posed to their financial institution or financial services providers. Screening watch and sanctions lists and freeze assets as a consequence was and probably never will be the silver bullet in the fight against sophisticated terrorist groups like the Iranian Qods Force or the Islamic State of Iraq and Syria (ISIS), since they are still very much in business despite the Financial Action Task Force's (FATF) assessment in its 2008 report that state-sponsored terrorism is in the decline. In its most recent report, the FATF even confirmed the author's view that the most common countermeasures are not suitable to undermine ISIS' funding.

    ISIS at the Gates

    Rashid El Takash, CAMS-FCI, 7/23/2015

    The purpose of this white paper is to provide the international audience and mainly financial crimes investigators a brief hands-on about ISIS from the eye of a financial investigator operating in Lebanon - a Middle Eastern country that witnesses day-to-day threats by ISIS on all levels and mainly the financial sector.

    A Guidance to Understand Hawala and to Establish the Nexus with Terrorist Financing

    Genesis Martis, 5/17/2018

    The global financial system is vulnerable to money laundering and terrorist financing risks. After the unfortunate events of 9/11, jurisdictions are constantly developing new rules and regulations to mitigate these risks, especially the risks of terrorism. Without the necessary funding, terrorists cannot commit their crimes, making the delivery stage of terrorist financing the most crucial stage. Seeing the growing stringent regulatory framework, bad actors constantly seek new ways to move the funds for terrorism funding purposes, which is either obtained legitimately or illegitimately. Informal Value Transfer Systems (IVTS) have become a preferred way to move around funds, for not only money launderers, terrorism financers but also for immigrants who must support their families back home.

    Exploring Potential Uses of Geographic Information Systems and Predictive Analysis in AML/CTF Investigations

    Michael Wakeman, CAMS-FCI, 3/3/2016

    In 2014 the Islamic State of Iraq and Syria (ISIS) emerged as a new and disturbing player in the field of terrorism. This organization, which seemingly sprang from nowhere, was actually born out of the marginalization of Sunni Muslims under Iraq's Maliki regime and the failed inspirations of the terrorist organization Al-Qaeda in the Land of the Two Rivers (AQI). Unlike other terrorist organizations, ISIS has strived since its foundation to be independent of outside wealth.

    Bitcoin: Risky business or Not? Containing a potential threat by mitigating the risks related to Money Laundering and /or Terrorism Financing through Bitcoin.

    Natasha G. Blomont, 5/17/2018

    Bitcoin and other cryptocurrencies are gaining more and more popularity lately. Be it positive or negative news, this emerging trend has been viewed and spoken of in hesitation and fear. This is a very natural reaction to a new or relatively new concept and there are different ways humans react to change and innovation. One might panic, be confused, be overjoyed, be in denial, refuse to change or feel helpless. We currently live in the digital age and our technology is evolving on a relatively rapid pace. We humans need to keep up the pace. We need to employ an out of -the box mentality to be able to survive the possible risks that come hand in hand with our ever expanding technological developments.

    What is the Opioid Epidemic and What Can Financial Institutions Do to Help Stop it?

    Benay Nachin, 5/17/2018

    There is an epidemic in this Country that is transcending age, race, gender, and economic status. It is clearly one of the most unrelenting concerns of our times. It is the opioid epidemic. Statistics show that close to 50,0001 people in the United States died in 2016 from an opioid overdose, including heroin. For perspective, that one-year casualty figure is comparable to the number of people who died in the Viet Nam conflict that spanned a ten-year period. Federal and state law makers, as well as local, state, and federal law enforcement, have awoken to this all-too-clear and present danger and are now working to understand it and formulate new laws in order to combat its devastation. Since the 1970 implementation of the Bank Secrecy Act, financial institutions have had reporting requirements that were designed to identify drug traffickers by following their money. However, given today's current crisis, the question must be asked: are these measures enough to assist in the battle against opioid distribution and addiction in this country? And, do financial institutions not have a role, even a critical one, in battling this plague that has destroyed so many individual lives, families, and entire communities?

    Emerging Trends


     

    From Effective Enterprise-Wide Risk Assessment to Efficient Risk-Based Approach – Fintech Perspective

    Tomas Kakanauskas, CAMS, 8/4/2020

    The aim of this white paper is to provide insights into risk assessments and their audits in Fintech industry, focusing on payment service providers, virtual asset service providers and peer-to-peer lenders.

    The Dilemma and Challenges of AML/CFT Implementation for Private Fund Industry in China

    Li Nan, 6/9/2020

    The purpose of this paper is to encourage fund institutions to enhance the ML/TF implementation based on the distinct features of the fund industry in China, to take a more holistic approach to audits, and to create a more efficient and robust monitoring process across funds. This paper highlights the key issues the auditor should penetrate to improve efficiency of the AML audit and lists the typical challenges emerging in prevailing fund practice. A more emphasized, targeted, and efficient risk-based approach should be taken, to include the depth of AML control by legal representative, risk tolerance on various fund products, risk management in a placement agent model, and extensive UBO review. It offers specific considerations for fund institutions for designing an AML audit as well.

    What Should Auditors Know About the Application of the Risk-Based Approach in the CDD Reliance in International Law Firms in the United Kingdom?

    Xin Xin, 5/29/2020

    This white paper aims to illustrate the application of the risk-based approach in the CDD reliance in the international law firms in United Kingdom, since AML auditing has become prominent in the legal sector.

    De-Risking: It's Key Drivers, Impact on the Caribbean and the Way Forward

    Niranjanie Ramprashad, 1/30/2020

    The purpose of this White Paper is to analyze the causes, consequences and extend to which the de-risking phenomena has affected the Caribbean banking sector. In addition, the paper also focuses on the policy responses and actions taken by Caribbean Governments and other regional bodies and potential solutions aimed at stemming the tide of de-risking.

    Fintech: Preventing Payment Platforms From Becoming Conduits for Illicit Activity

    Blanca Rojas, CAMS, 1/13/2020

    The purpose of this paper is to highlight considerations needed when releasing a new payments product in order to meet regulatory obligations and ensure business success in a rapidly changing Fintech environment.

    Improved understanding of emerging technologies will facilitate more effective audit and supervision of the financial crime risks posed by Fintechs: A UK and US perspective

    Danielle Herndon, 8/20/2019

    The purpose of this white paper is to explore the emerging challenges when it comes to regulating and auditing Fintechs.

    A Guide to Understanding Money Laundering Through Art and Associated Risks

    Katharina Stoll, 7/26/2019

    The purpose of this white paper is to provide a general guidance on money laundering through art by introducing the international art market, its regulatory background, business practices and trends as well as threats and risks related to vulnerabilities that can be exploited for money laundering purposes.

    ALL HAT, NO CATTLE: What the AML Professional Needs to Know About Cattle Fraud

    Brigette K. Miller, CAMS, 6/25/2019

    Cattle fraud is an increasingly large source of illicit funds, much of which is subsequently laundered through financial institutions. This report explores some recent and significant frauds, as well as how financial institutions can guard against fraudsters attempting to conduct money laundering through the financial system.

    Digital Identification Methods and Testing for AML Programs

    Eugenio (Gene) Di Mira, 6/13/2019

    To study the impact of the modernization of client identification in combating money laundering and terrorist financing, this paper will begin with a definition of identification, outline current methods to identify persons using physical and/or electronic records and deliver approaches to testing these processes.

    Synthetic Identities: An Emerging Risk for AML Programs

    Lanie L. Wood, CAMS, CFE, 6/12/2019

    The purpose of this white paper is to communicate emerging risks, significant impacts and guidance for AML Programs due to Synthetic Identity Fraud (SIF).

    Digital Identity and Blockchain: Opportunities and Challenges for Financial Institutions

    Vijayakumar Thirugnanasambandan CAMS-Audit, PMP, 6/11/2019

    The purpose of this white paper is to illustrate that "Blockchain Technology enabled Digital Identity solutions" can open doors to new business opportunities for Financial institutions, and to highlight the implications to Audit profession based on such implementations.

    Lack of Sustainability - The Root Cause of Deficient AML Compliance

    The Convergence of Cyber, Fraud, and AML, 6/11/2019

    Cybercrime is the most ubiquitous threat our financial ecosystem, and in turn the AML industry, is challenged with today. Unsurprisingly, cybercrime is the least understood and the most unprepared for threat the AML industry has ever faced. This foundational paper will inform the AML professional of the basics of the 'cyber world' so that they will obtain a working knowledge of the subject. Furthermore, this paper will detail how the convergence of Cyber, Fraud, and AML occurs and proposes a solution as to how financial institutions can react and respond to the daunting threat of cybercrime.

    All That Glitters Is Not Gold, or Is It

    Stefanie K. Kronenberg, 5/16/2019

    Due to the global strengthening of AML/CFT measures, laws, rules and regulations in the formal financial sector, law enforcement is seeing a shift in criminal behavior. This white paper shall shed some light on the shady gold trade industry as an alternate conduit for money laundering, terrorist financing and corruption.

    Relative – THIEF – Confidant Powers-of-Attorney

    Kenneth B. Simmons, CRCM, CAMS-Audit, ACT Specialist, 10/5/2017

    This white paper discusses powers-of-attorney (POAs), what POA case studies tell us about financial exploitation, and what financial institutions can do to control risk.

    Elder Financial Exploitation – Three Prominent Issues and Recommendations

    Maria Dodson, CAMS, 4/25/2017

    Elder financial exploitation is a despicable crime, which will occur more frequently as the elderly population grows. Financial institutions are on the frontlines to help those most vulnerable to this issue and could mean the difference between an elderly person losing his or her entire life savings. This requires a more proactive approach on the part of banks in dealing with this egregious crime problem. Financial institutions that simply meet state and federal reporting requirements could do more to detect and prevent elderly customers from being victims of exploitation.

    AML Audit and Correspondent Bank Transaction Monitoring for Diamonds

    John McCormick, CAMS-Audit, 8/5/2015

    Transactional monitoring systems are limited in their effectiveness to identify illegal transaction activity. A weak link in the financial system exposes all banks and financial institutions to this illegal activity. Most recent are charges by Belgian authorities to HSBC for their lack of compliance for the better part of 10 years (1999 to 2011) to have allowed individuals and businesses to dodge taxes, hide cash and transport untraceable money that would include diamonds.

    Big Problems in Small Transactions

    Deborah Hitzeroth, CAMS-FCI, 7/23/2015

    The purpose of this paper is to discuss the challenges of detecting microfinancing of terrorist activities and recommend ways to separate normal activity from transactions with potentially deadly consequences. This paper is based on both research and personal interviews with anti-money laundering/counter-terrorist financing (AML/CTF) experts.

    Combating the Proliferation of Mobile and Internet Payment Systems as Money Laundering Vehicles

    Sean McCrossan, CAMS-FCI, 7/23/2015

    Innovation in products and services related to mobile payments and digital currency has skyrocketed in recent years with no signs of stopping. Consumer adoption appears to be a matter of comfort; baby boomers are now comfortable with accessing financial statements and paying bills online, while their children fund tech startups and purchase digital currency from global exchanges, all from their tablets and smartphones. There is no shortage of mobile applications being developed for sending money or making payments and among the swiftest adopters of these new services are the bad actors seeking obscure avenues to launder illicit funds or finance acts of terror. How can financial institutions (FIs) and financial crimes investigators best position themselves to detect and deter misuse of these new mediums? This paper will discuss the proliferation of Mobile and Internet Payment Systems (MIPS) and the complications they present to banks and financial crimes investigators, as well as recommendations for combating their use as vehicles for money laundering and terrorist financing.

    Combating Black Money by Demonetization

    Poornima Gupta, CAMS-FCI, 10/5/2017

    This paper will explain the short-term and long-term impacts and the series of actions that will be required to dismantle India's scourge of black money and counterfeit currency funding terrorism, along with money laundering through real estate and the funding of political parties, and the transition thereafter of the country toward a digitized economy with more transparency.

    Developing Mid-Level Professionals While Keeping Up with Emerging Technologies

    Kyle A. Farina, 5/16/2018

    Even the most sophisticated Anti-Money Laundering (AML) programs have flaws. A Bank Secrecy Act (BSA) officer is only as good as their team. Training opportunities exist for entry level as well as advanced or specialized segments of the industry. However, the industry lacks opportunities for mid-level professionals. With all the advances in technology, it can be difficult to keep up. Fortunately, with an open mind, you can conquer these challenges. From various ways to engage your team with new opportunities to an overview of new technologies with ways to implement them into your program, this paper will cover these topics.

    AML/CFT Transaction Monitoring: Alert-Based Monitoring vs Case-Based Monitoring

    Terence Ho, CAMS-FCI, 10/5/2017

    Over the years, U.S. regulatory agencies such as the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC) and the New York State Department of Financial Services (NYDFS) have been actively issuing consent orders against financial institutions that have failed in their responsibility to identify, detect, and report suspicious transactions.

    An Analysis of the Legalization of Marijuana to Financial Institutions

    Lindsay M. Dastrup, CAMS-Audit, CRCM, CIA, CFSA, 10/5/2017

    This paper provides recommendations for those financial institutions that would like to participate in the marijuana industry and those financial institutions that do not want to participate in the marijuana industry.

    Crowdfunding: The New Face of Financial Crimes?

    Sherry Sessoms, CAMS-FCI, 2/7/2017

    What is crowdfunding? The term itself is very confounding without a doubt and remains a riddle to most and due to its many variations is hard to clearly define. However, for the purpose of this paper, crowdfunding is defined as the demonstration and procedure of raising expansive amounts of cash, funding or financing from numerous people who are interacting via the internet in online consumer communities. It is becoming one of the main avenues for individuals, small businesses and visionaries around the world to raise capital online for various ideas and projects. It has become an alternative to the typical and traditional financing means we've known in the past. Customarily, an entrepreneur, per say, would invest months filtering through their own systems, reviewing potential backers, and investing their own energy and cash to get before them. In the past they would have needed to compile their strategy or business plan, complete their marketing research, create their prototypes and then pitch their idea to a limited pool of wealthy people or organizations including banks and various investment firms, truly constraining their options for funding. Today, crowdfunding is regularly conducted by means of internet based registries (websites), also known as “crowdfunding platforms” and is perfectly legal

    Forgotten Fraud: A Post-Crisis Review of Mortgage Fraud and Where the Industry is Today

    Linda Settle, CAMS-FCI, 2/7/2017

    Although the worst of the recent mortgage crisis appears to have passed, the residual effects are still being felt in many areas of the country and the industry itself. Many articles and books were published about the crisis ”“ the causes, the victims and those responsible. Movies have been produced that condensed the drama of those events into a couple of hours that took years to live through. But the fallout and damage lingers longest with those whose homes and dreams were lost. These traumatic events will haunt them for years to come. Because of the crisis, government regulators have stepped in with a long list of new regulations and requirements in an effort to hold the industry more accountable and prevent the abuses that contributed to the crisis. This is not intended to assign blame ”“ there is plenty of that to go around for all industry participants. This is not even to identify and address all of the contributing factors that led to the crisis. But every account will assign some level of fault or blame on the underlying fraud that was rampant and at the center of so many of the transactions.

    Canabanking: Cultivating a Culture of Compliance through Strategic Alliances

    Sherri Scott, CAMS-FCI, 2/7/2017

    The fastest growing industry in the country is also the largest underbanked population; the two ingredients combined are a recipe for disaster. According to The Huffington Post, legal marijuana is the fastest-growing industry in the United States (Ferner, 2015). Due to our existing state of affairs, De-Risking has evolved into financial exclusion. Roughly 60 percent of marijuana related and ancillary businesses remain unbanked (Olson, 2015). Consider the view point of your nemesis; if I were a drug lord running an illegal marijuana operation and wanted to hedge my risk, I'd position myself to profit from the legalized business.

    The Right to Be Forgotten: Context and Anti-Money Laundering (AML)/Counter-Terrorist Financing (CTF) Investigative Tips to Consider as Internet Search Results are Delisted

    Miguel Alcántar, CAMS-FCI, 8/2/2016

    Online reputation management in Europe hit a significant milestone on May 13, 2014, when the Court of Justice of the EU ruled that individual EU residents have a “right to be forgotten” online. In other words, individual EU residents have the right, under certain circumstances, to ask internet search engines like Google, Bing and Yahoo!to remove or delist links to personal information about themselves.

    The Dilemma for Financial Institutions with Providing Services to Marijuana Businesses

    Margaret Williams, CAMS-FCI, 3/3/2016

    The conflict between federal and state laws in the U.S. regarding the legality and use of marijuana has created a major dilemma for financial institutions. It has caused a serious debate about whether or not to provide services for marijuana businesses. Most are outright declining to do so. But how did this problem even start? Marijuana was not always categorized as an illegal substance.

    Weeding Through: The Challenges of Banking the Marijuana Industry

    Lauren Kohr, CAMS-FCI, 8/6/2015

    With 22 states and the District of Colombia allowing the use of marijuana for medicinal purposes and two of those states, Colorado and Washington, legalizing marijuana for recreation drug use, financial institutions (FIs) are faced with addressing the challenges of the legalization of marijuana at the state level while it remains illegal at the federal level. Outside of the more evident legal and political challenges that have been discussed in several recent articles published throughout the industry and which will not be the main focus of this paper, FI's must weed through those challenges to ultimately address what challenges impact their FI.

    Taking a Proactive Approach to Monitoring and Investigating Emerging Threats in Money Laundering

    Zachary C. Miller, CAMS-FCI, 8/6/2015

    The purpose of this white paper is to provide financial crimes investigators in financial institutions insight into some emerging trends and help them understand the importance of being proactive in monitoring and investigating new types of potentially suspicious activities even before any or minimal official regulatory rules or guidance is available. This paper will focus specifically on virtual currency and interstate funnel accounts as two areas of current concern provoking discussion. The goal is for investigators to understand how to gain new insights into emerging threats and the activities related to those threats as trends in the world of financial crimes change and develop monitoring thresholds, focusing on red flags. Making these adjustments will also create preparedness when regulations eventually lay out the requirements for monitoring these areas.

    Open Banking, Digital Age, and the Role of the Audit to Safeguard the Financial Ecosystem

    Irina Samoylova Kunces 6/29/2020

    This white paper intends to highlight the essential role of the risk managers and audit in a digital age, along with the expectations, challenges, and opportunities of these functions, and the role they play to safeguard the financial ecosystem. 

    Financial Institution


     

    SAR Privilege: Unveiling the Complexities and Use for Financial Institutions

    Brittney L. Dean, CAMS, 4/8/2020

    This white paper explores the complexity in: litigants challenging the SAR privilege where regulation is not definitive; the paybacks of SAR confidentiality; and the demand for financial institutions to be intentional in creating internal controls that enable their legal counsel and FinCEN to uphold SAR privilege during trial discovery.

    Centralization of Digital KYC in MENA Region: An inevitable Transformation for Combating Financial Crimes in a Digital Era

    Bahaa Hamwi, CAMS, 12/31/2019

    The purpose of this white paper is to shed light on the current due diligence process and how important it is to evolve it, especially in developing a centralized digital KYC that will help investigators and help financial institutions secures customer data protection, reduces operating costs, enhances customer experience and improves customer monitoring, authentication and verification. The transformation to centralized digital KYC is the ultimate key for driving sturdy financial investigations and for maintaining a solid financial sector.

    Environmental Crimes


     

    Are Financial Institutions Directly or Indirectly Involved in Financing Environmental Crimes

    Aaron Lau, CAMS-Audit, 5/29/2019

    The objective of this whitepaper is to determine if financial institutions are directly or indirectly involved in the financing of environmental crimes. Environmental crimes are serious offenses that we cannot turn a blind eye. The whitepaper goes through the current financial impact of these crimes, and the vulnerabilities and threats to humans and to the environment. Cases are explored and discussed to determine the validity of the purpose of this whitepaper. Some recommendations are provided to key stakeholders on what action they should take next.

    Governance


     

    Auditing a UK/European Bank’s Sanctions Compliance Programme

    Samar Pratt, CAMS, CAMS-Audit, 9/10/2019

    The purpose of this paper is to help auditors in UK/European financial institutions understand how to conduct end-to-end audits of a bank's sanctions compliance programme, and how to assess their own institutions' compliance with sanctions regimes. The ever-changing sanctions landscape, as evidenced by the re-imposition of U.S. secondary sanctions in relation to Iran, makes this more important than ever.

    How a Well-defined Target Operating Model Can Enhance AML Risk Management in General, and Internal Audit in Particular

    Marcus Keisers, CIA, CAMS, 8/26/2019

    This white paper discusses the considerations in developing a Target Operating Model (TOM) across the organization and how this can be translated into a dedicated TOM for internal auditors in order to comprehensibly and effectively manage AML risk.

    Auditing AML Governance Through the Regulatory Lens

    Marcus Keisers, CIA, CAMS, 6/18/2019

    This white paper serves as a guide for financial institutions to create, and auditors to assess, processes and controls developed to manage previously unknown and emerging risks.

    The Concealed Internal Threat: The Need to Manage Affiliates and Affiliate Networks for Anti-Money Laundering Risks

    Dr. William Scott Grob, CAMS, 5/20/2019

    The purpose of this white paper is to illustrate the rising importance of affiliate management within the correspondent risk management framework as enforcement and regulatory actions continue to point to lapses in financial crime risk controls. Affiliate entity management is a concealed internal threat within the foundation of correspondent banking.

    The Line in the Sand: Senior Management Responsibility and Independence of the MLRO

    Shaune Williamson, 4/8/2019

    The purpose of this paper is to explore what it means for an AML Compliance Officer (MLRO) to act independently. In particular, where is the point of balance between the responsibility of senior management to ensure the effectiveness of a Firm's AML/CFT Program, and the need for management to allow independence to the MLRO in performing the MLRO's function?

    USA PATRIOT Act, Section 314(a) and 314(b) Information Sharing: Beneficial and Detrimental Effects of the Act

    Monika Wilejto-Rieken, 5/17/2018

    The enactment of the USA PATRIOT Act, Section 314(a) and 314(b) was a reaction of the US Congress and the President following the tragic event at the World Trade Center that hit the country on September 11, 2001. The two sections have a similar objective of detection and prevention of terrorism and money laundering in aid of funding terrorism. The goal is achieved through enhanced investigative tools and information sharing about any suspicious transactions and accounts. The full act even encompassed immigration laws, better surveillance process, and stringent measures to curb money laundering.

    Ethics and Compliance Based Leadership Models: Essential to Compliance and Performance

    Arthur C. Taylor, Jr., CAMS-FCI, 3/3/2016

    This white paper is intended to introduce an argument for greater emphasis on companies creating and establishing a culture built from ethics, values and compliance as an organizational control. Material examples and indicators, that the benefit of a value/ethics based compliance program far exceeds a rules-based compliance program and can also lead to improved employee and organizational performance, will be shared in this paper.

    How Boards of Directors and Senior Management Can Leverage on Internal Audits to Demonstrate Proper Oversight of AML/CFT Processes in the European Union

    Patrick Velay,  1/4/2020

    Following high profile AML/CFT failures within European financial institutions, authorities and financial supervisors in the European Union (”EU”) have moved their attention to the internal governance of AML/CFT. This new regulatory perspective puts the Board of Directors front and centre of the attention of authorities and supervisors. Adopting a European perspective and highlighting underappreciated challenges, Patrick Velay shares practical advices to members of Board of Directors.

    Human Resources


     

    The Current Trends and Challenges of Hiring, Developing and Retaining Talent in AML Audit and Compliance

    Jonathan Kay, CAMS-Audit, 8/4/2015

    The information contained in this paper should provide assistance in dealing with the ever-changing regulatory environment and the impact it has on an institutions' talent needs. While this white paper will not cover each unique circumstance that institutions face, it will provide a rounded start-to-finish look at the process and questions that should be asked in order to position each institution's AML compliance audit staff for success.

    Human Trafficking


     

    Combatting Online Child Sexual Abuse Material as New Information Technologies Advance

    Chad M. Squires, CAMS, 1/7/2020

    The purpose of this white paper is to illustrate the growing challenges that new information technologies are creating in the fight against online child sexual abuse material, explain the current measures being taken by financial institutions, law enforcement, government, and nongovernment agencies to defend against the illegal activity, and provide methods and ideas that can be implemented to better combat against these terrible crimes.

    Financial Investigations: Combating Human Trafficking

    Karen M. Messer, 6/12/2019

    The purpose of this white paper is to identify the challenges in detecting, investigating, and prosecuting human trafficking offenders and organizations, and to discuss how proactive, parallel financial investigations can enhance the effectiveness of human trafficking investigations.

    Financial Institution Responses to Organ Trafficking – A Roadmap

    Rosemary Matthews, CAMS-FCI, 5/29/2019

    The purpose of this white paper is to describe how organ trafficking occurs and to suggest solutions for financial institutions to implement in order to assist law enforcement in their efforts to shut the practice down.

    Separating Fact from Fiction: Do Major Sporting Events Attract Increases in Incidents of Commercial Sex Trafficking?

    Owen K. Waterman, 5/16/2018

    The Super Bowl is the most profitable sporting event in the world with a 2016 revenue of at least $620 million. From Super Bowl ads to fan merchandise, the National Football League's siren call to the masses is that there is money to be made and spent in a Super Bowl host city. Aside from the many fans attending the game, there are other spectators that will be looking to cash in on the wave of dollars flowing into the host city with promises of carnal delights if you can afford them.

    Human Trafficking Monies in the Community Banks

    Nancy Lake, CAMS-Audit, CAMS-FCI, 7/23/2015

    The purpose of this paper is to give bankers an understanding of exactly what HT is; the scope of HT especially here in the U.S., how American children are also being trafficked, and the ways banks can identify and report suspicious activity tied to HT. With this knowledge, the financial sector can be a vital part of stopping this despicable crime.

    Humanity's Travesty: The Trafficking and Smuggling of Humans as a Commodity

    Debbie L. Rogers CAMS-FCI, 8/1/2016

    Every 30 seconds another person becomes a victim of human trafficking. While collaborative effort exists throughout the world, slavery lives on in the global economy. The trafficking of humans, as a commodity, is the fastest growing and the third most lucrative criminal industry in the world today as listed by the U.N., following drug trafficking and counterfeit goods. Based on 2014 data, the Walk Free 2014 Global Index estimates there are 35.8 million victims enslaved and the number is growing. Also, based on 2014 data, the International Monetary Fund Finance and Development Report of June 2015 estimates the illicit proceeds of forced labor globally, to be $150 billion U.S. annually.

    Information Technology


     

    Strengthening Financial Crime Compliance Through Artificial Intelligence and Machine Learning: Use Cases and Challenges

    Sam W. K. Leong, 6/17/2019

    The purpose of this white paper is to introduce some Artificial Intelligence (AI) & Machine Learning (ML) use cases in fighting financial crime risk and related regulatory concerns.

    Optimization of Technology to Meet Regulatory Expectations

    Philip Tu, CAMS-FCI, 3/3/2016

    Many banks that are in their current predicament with fines and monitorships, are results of the failure to execute and follow through with a well-documented AML program, or on the contrary, failure to identify gaps/breaks with their current programs/controls and policies and procedures. Instead of identifying which controls are not operating effectively and need improvements, they over engineer a problem that is in need of simplification. The purpose of risk assessments or implementation of an adequate transaction monitoring system is to simply detect material risks that need to be mitigated and to unravel root causes of these key risks. The purpose of this white paper is for banks to actively seek assistance and allocate the adequate resources to either staffing or technology (i.e., systems) to perform on an optimal scale to meet regulatory expectations, if they are already not doing so.

    Investigations


     

    Combating Financial Crimes in the Technology Era: How Data Analytic Tools Assist Financial Crime Investigation in the Insurance Industry

    Manhim Yu, 5/29/2020

    The purpose of the White Paper is to discuss how technological tools corroborates financial crime investigations, and the advantages of enhancing investigation effectiveness and quality through technology enablement.

    Transaction Monitoring in Correspondent Banking: An exploration of the unique landscape of correspondent banking and how it compares to private and corporate banking

    Amy FU Man Seung, 5/29/2020

    The purpose of this paper is to share and shed some light on the adoption of TM methodological approach/framework, management cycle, essential components of TM program and each process's specific techniques in correspondent banking. Not only it could assist financial institutions tailoring to their specific bank situation to ensure effective AML/CFT regulatory compliance, but it can also provide some insights to assist compliance professionals in banking, especially TM compliance investigators and practitioners.

    Applying Risk-Based Approach on the Independent Review of Transaction Monitoring

    Mark Lejin Wang, 5/29/2020

    The purpose of this white paper is to explain the challenges of Chinese FIs related to ML & TF risk management and regulatory expectation, providing a practice reference for auditor to adopt the RBA while conducting AML audits to the transaction monitoring (TM) program.

    What the United States Banking System Can Learn From Fintechs: Informal Information Sharing

    Kate Pentecoste, CAMS-FCI, 1/6/2020

    The purpose of this white paper is to illustrate how informal information sharing, utilized by some Fintechs, may be an efficient and effective way to gather information over traditional 314(b) requests as used by financial institutions.

    Public-Private Information-Sharing Partnerships: Effective Tool to Strengthen Fighting Financial Crime

    Jānis Brazovskis, CAMS, 8/6/2019

    This White Paper aims to present the examples of already operational public-private information sharing arrangements (partnerships) as an effective tool to investigate and prevent a serious financial crime. White Paper also discusses practical considerations needed for development of workable partnerships across the globe, as well as the importance of good governance of partnerships for the accomplishment of the better results in fighting of financial crime.

    The Subtle Distinction Between “Evading” and “Avoiding” Is Key to Determining Whether the Obligation to File a Suspicious Activity Report Exists

    Brendan R. Kelly, CAMS, 5/29/2019

    As the volume of structuring-related SARs continues to increase and demand additional resources, the need to limit unmeritorious filings becomes even more critical. With a focus on a particular subset of customer behavior, this paper examines the relevant issues at play, the challenges that AML Investigators may face, and highlights an often-overlooked distinction that can determine whether the behavior is innocuous or warrants a SAR.

    314(b) Collaboration: A Call to Join the Battle Against Criminal and Terrorist Networks

    Sandra L.Snow, CAMS-FCI, 5/29/2019

    314(b) collaboration is a powerful tool to aid anti-money laundering investigations. Large banks have embraced the process, but smaller institutions have lagged behind. This paper is designed to provide encouragement and direction to the smaller institution, enabling broader participation in the battle against criminals and terrorists.

    Suggestions for Producing Typologies Over Chinese Walls With Restrictive Information-Sharing Rules

    Yi-Chang Liu, CAMS-Audit, CAMS-FCI, 5/16/2019

    In a financial holding company, in terms of a financial group, each entity has its own Chinese Wall, which is a barrier to information sharing. However, as we already know, typologies can assist in addressing ML/FT threats in order to understand existing and emerging activities. The more information shared, the more accurate and detailed typologies can be produced. Thus, the purpose of this white paper is to discuss and suggest for producing typologies over Chinese Walls with restrictive information-sharing rules.

    An Effective AML Risk Management Framework for Private Funds in Mainland China

    Chou, Szu chia (CAMS, CFE), 5/16/2019

    The main topic of this paper is how to establish an effective anti-money laundering risk management system for private funds companies. We discuss how to use investigative techniques to identify suspicious transaction patterns in the anti-money laundering investigation procedures of customers and products. We also discuss how building cooperation with intermediaries, and setting information sharing and notification models, can make anti-money laundering investigation procedures more complete.

    Defensive SAR Filing: An Unnecessarily Heavy Burden on the AML Field

    Zhang Teng, 4/1/2019

    Filing a SAR to avoid regulatory criticism is commonly called “defensive filing.” The efficiency and effectiveness of SARs are currently way below the expectation of AML society, as much of the effort is wasted on filing and investigating SARs merely for compliance concerns. The purpose of this paper is to perform a comprehensive analysis of defensive filing and promote effective countermeasures.

    Information Sharing—Strengthening our AML/CTF Program

    Richard T. Wells, CAMS-FCI, 3/3/2016

    The focus of this paper is to leverage the USA PATRIOT Act Section 314(a) and (b), and to improve the reader's anti-money laundering/counter-terrorist financing (AML/CTF) program with a focus on the importance of not just building but maintaining relationships with law enforcement (LE) and regulators. The goal is to display the importance of information sharing between financial institutions (FIs), as well as between LE, regulators and FIs, specifically pertaining to financial intelligence in connection with money laundering and/or terrorist financing investigations. This will be accomplished by defining the USA PATRIOT Act Section 314(a) and (b) and by emphasizing what the current state is. A redacted case example that spanned two years and uncovered a large network of trade-based money laundering (TBML) and Black Market Peso Exchange (BMPE) will be showcased. The data and information gathering (research) of this white paper will be from the laws and regulations, as well as the professional organizations/groups that have written on this topic.

    Keeping an Eye on Suspicious Activity

    Ramona Murton, CAMS-FCI, 3/3/2016

    An increased emphasis by regulators across the globe to enforce high standards, not only in the world of financial institutions (FIs), but also in a wide range of industries, has impacted anti-money laundering (AML) and counter-terrorist financing (CTF) compliance programs. The Financial Action Task Force (FATF), the Egmont Group and the Wolfsberg Group work to continuously improve applicable regulations. This topic is one of top priority as demonstrated by national regulatory audits and the subsequent increase in both the amount and frequency of fines. The media has captured the growing presence of industry noncompliance, as exhibited by the billions of dollars in fines imposed yearly. As these international regulatory expectations continue to mature, FIs are tasked with determining an appropriate investment in transaction monitoring. In essence, this balancing act distills to determining a right-sized approach to human analytics supplemented by automated transaction monitoring. Regardless of how FIs choose to proportion automated monitoring, the human component must remain prominent.

    Garbage In, Garbage Out…
    …a reasonably reasonable assessment of the reasonably unreasonable “Reasonable Grounds to Suspect” threshold and its unreasonably definitive ill-defined definition.

    Chris Randle, CAMS-Audit, CAMS-FCI, 2/7/2017

    “Reasonable grounds to suspect” is the Canadian regulatory threshold that triggers a reporting entity's obligation to report suspicious transactions, and their liability for failing to do so. It is an inherently subjective threshold, applicable to all reporting entities, under all of their various operating models, and in all circumstances; by its very nature, scope, and purpose it is an expansive threshold which remains open to a variety of interpretations from a variety of perspectives.

    Anti-Money Laundering Challenges Faced When Onboarding High-Net Worth and Ultra High-Net-Worth Chinese Clients

    Wing-Chi Leung, CAMS-FCI, 2/7/2017

    This white paper examines the anti-money laundering and know-your-client challenges faced by financial institutions when onboarding wealthy Chinese clients.

    Politically Exposed Persons (PEPs) – In Jamaica

    Keron Oliver Burrell, CAMS-FCI, 3/3/2016

    The global financial system is at risk of being used to clean dirty money, to finance terrorism and weapons of mass destruction (WMD). Countries have sought to implement various policies and process to mitigate the risk of being used as vehicles for money laundering (ML), terrorist financing (TF) and the proliferation of weapons of mass destruction (PWMD). The Financial Action Task Force (FATF) has been at the forefront of the global fight against ML/TF. The FATF has issued 40recommendations (FATF 40), these recommendations have been issued three times with each iteration representing enhanced guidance over the previous one. The current iteration absorbs the 9 Special Recommendations, which were issued subsequent to the events of 9/11.

    Proactive Rather Than Reactive KYC Reviews May Enhance Data Precision, Upon Which Accurate Risk-Based Decisions Depend

    Tessa Oudkerk, CAMS-FCI, 2/7/2017

    The risk of the potential for elder financial exploitation to become a vehicle for money laundering The recommendations of the Financial Action Task Force (FATF) are “universally recognized as the international standard for anti-money laundering and countering the financing of terrorism (AML/CFT)”. In the face of continuous innovative financial crime techniques and threats, FATF is constantly reviewing and revising its recommendations to “ensure that they remain up to date and relevant” and to safeguard the integrity of financial systems.

    Macau Junket Operators Pose Financial Crime Risks to Banks – How to Identify, Assess and Address Those Risks

    Kenneth Pemberton, CAMS-FCI, AFI, 10/5/2017

    This white paper explains the origin and development of the operation of junkets in Macau and reviews some of the adverse media concerning their activities. In addition, it identifies how casinos are used to launder money from crime and reviews the risks posed to banks that provide service to junket operators and individuals or entities closely associated with them.

    Risky Business: Should Mid-Size Financial Institutions Bank High-Risk Customers?

    Katie Foley, CAMS-FCI, 2/7/2017

    In today's ever changing regulatory environment financial institutions are constantly evaluating risk and looking for effective and cost efficient ways to mitigate risk. The trend has become so prevalent that the concept of de-risking has resulted; where some financial institutions have executed mass exit strategies of certain business relationships to decrease their overall risk and better comply with changing regulations.

    Benefits of an Effective CDD Program and How Risk Scoring Customer Accounts Can Protect the Reputation of Your Institution

    Douglas J. Bruggeman, CAMS-FCIt, 8/18/2016

    The following white paper, Benefits of an Effective CDD Program and How Risk Scoring Customer Accounts Can Protect the Reputation of Your Institution, is intended to show the importance of a formal customer due diligence (CDD) program and how it must be designed to conform to current securities industry regulations pertaining to policies, procedures and processes. In addition to discussing a formal CDD program, this white paper will also discuss risk scoring a customer, including general risk scoring policies, procedures and processes.

    Between a Rock and a Regulator: Building an Effective AML Program in the Microcap Sphere

    Holly Peck, CAMS-FCI, 8/18/2016

    A securities firm’s AML obligations extend beyond prohibiting money laundering and terrorist financing. The SEC and FINRA require firms to monitor, detect and report any activity that could be considered fraudulent. This includes activity that may not be overtly related to money laundering or terrorist financing, but that still may be fraudulent activity under the securities Acts. These requirements place member firms in a difficult position as they strive to satisfy the Financial Crimes Enforcement Network, the governmental body charged in the fight against money laundering along with the SEC and FINRA. Speaking recently, Kevin Goodman, of the Office of Compliance Inspections and Examinations at the SEC, reinforced the requirements placed on broker-dealers: “AML includes far more than just preventing traditional money laundering. Broker-dealers must report large cash transactions and retain records on wire transfers regardless of whether any potential criminal activity is suspected. Broker-dealers must also monitor for and report suspicious activity, including activity that has no business or apparent lawful purpose. This goes beyond activity that implicates drug cartels or terrorist rings—it also includes activity that might indicate fraud, insider trading, or manipulative trading schemes.”

    Hedge Funds: A Primer on Money Laundering Vulnerabilities

    Elizabeth A. Bethoney, CAMS-FCI, 8/1/2016

    The regulatory climate for U.S.-based investment advisers is poised to undergo significant change in the coming years. The Financial Crimes Enforcement Network (FinCEN) in August 2015 proposed to define investment advisers as “financial institutions” and require them to establish anti-money laundering (AML) programs. In addition, regulators have begun to turn their attention to securities firms with respect to AML efforts.

    Trade-Based Money Laundering in Free-Trade Zones Across the World/in the Caribbean

    Maria Croes, CAMS-FCI, 10/5/2017

    This white paper illustrates that trade-based money laundering (TBML) is a persistent problem in the free trade zones (FTZs) in the Caribbean. Cases such as La Costa Cartel, Cashkip and the recent seizure by German Customs of 1,580 pounds of cocaine originating from the Caribbean, substantiates that TBML is potentially happening at a large scale.

    Tipping the Scale in the Fight Against TBML

    Jeffrey J. Pedecine, CAMS-FCI, 8/18/2016

    While money launderers have long exploited the financial system and its various products to mask the origins of ill-gotten funds, the increased scrutiny around Trade Based Money Laundering (TBML) has only really escalated and come under fire in the past decade.

    The New Economy in Financial Crimes: Understanding the effects of Under-Invoicing, Double Invoicing and False Invoicing in Trade-Based Money Laundering and Terrorist Financing (TBML & TF)

    J. Scott Mauro, CAMS-FCI, 8/6/2015

    This white paper details the effects under-invoicing, double-invoicing and false invoicing in trade-based money laundering and discussed the application of four (4) profiling techniques used to recognize trade-based money laundering that focus on country, customs district, and product and transaction price characteristics. Being aware of, and also being able to recognize these techniques, will be a useful in application for many financial institutions financial crimes personnel when monitoring corporate accounts within the institution.

    KYC


     

    You Can Bet on It

    Calum Macdonald, 5/29/2020

    The purpose of this white paper is to understand and explore the money laundering & terrorist financing risks faced by the sports betting industry; to consider what's working and what's not and help move forward the discussion on where do we go next.

    Intricacies of Unveiling the Cannabis Industry: Knowing Your Customer, Awareness of Risks, and the Implications for Your Audit

    Rebecca C. Odom, 1/7/2020

    The purpose of this white paper is to provide guidance for financial institutions de-risking or onboarding cannabis-related entities/individuals associated with the industry and the auditors regulating the financial institutions providing services to the industry as well as establish an adequate know your customer (KYC) program.

    Demystifying Enhanced Due Diligence in International Banking and Private Banking

    Gregory Dellas, CAMS, FICA, 7/11/2019

    Dealing with high-risk clients, especially in international financial centers, is admittedly quite challenging. It requires effective enhanced due diligence (EDD) in order to ensure a solid understanding of the customer and the customer's circumstances. This process becomes particularly important when offering international banking and private banking services where the risks are both high and more complex.

    Risk-Based Audit Approach to MSB Programs for Sellers of Prepaid Cards

    Elisa Evans, CAMS-Audit, 4/26/2018

    This paper provides guidance for a risk-based approach to conducting an audit for large organizations that are considered both a retailer and a Money Services Business (MSB). The MSB referenced in this paper has over 4,000 retail stores throughout the U.S., an e-commerce website and a major publicly traded retailer. The MSB sells a variety of prepaid cards. The MSB sells its own branded reloadable gift card in addition to a variety of other gift cards, reloadable prepaid gift cards and prepaid debit cards; it also offers additional financial services such as check cashing, money orders, wire transfers and bill payments.

    The Importance of Incorporating Data Privacy into Anti-Money Laundering and Anti-Corruption Compliance Programs

    Jessica R. Hughes, Esq., CAMS-FCI, 10/5/2017

    This white paper primarily focuses on the conflict between U.S. AML and anti-corruption statutes and their due diligence and know your customer (KYC) requirements and the relevant restrictions imposed by the EU's General Data Protection Regulation.

    Decreasing Risk of Remote Onboarding Through Broader Adoption of EDD

    Nate Suppaiah 6/22/2020

    This paper was written to highlight inefficiencies in the onboarding process as it relates to institutions which bring on clients remotely, predominantly fintechs and offshore banks. Through small adjustments such institutions can reduce risk while increasing operational efficiency.

    MSB


     

    Banking the Payments Revolution: Testing Risk Assessments for NBFIs

    Robin Garrison, CAMS, 2/5/2020

    The payments industry is in the midst of a revolution as fast, secure and seamless movement of money is ubiquitous in the average consumer's life. While the companies themselves may be new, they still rely on the traditional banking network. Banking payments requires a rethinking of the risk-based approach and a new application of old principles.

    Correspondent Banking Relationships: Terminations of Exchange Houses Accounts

    Rozana Shukri, 8/23/2019

    The purpose of this paper is to address the issues that make exchange houses riskier than banks, the drives of CBR terminations, the impact of CBR terminations on the financial market and the alternatives that may-be adopted for CBR terminations.

    PEPs


     

    The PEPs’ Threat to an Already Eroded Financial System in the Central American Region: Nicaragua Financial System Vs. PEPs

    Carlos Saravia, 1/8/2020

    The purpose of this white paper is to illustrate that political expose persons in the central American region, specifically in Nicaragua constitute a permanent risk were bribery, money laundering, and corruption are an ongoing problem, and significant dollars continue to escape notice due to nefarious schemes perpetrated by corrupt individuals'.

    How to Audit Controls to Manage Financial Crime Compliance (FCC) Risks Associated with Politically Exposed Persons

    Alexandra Rosi, CAMS-Audit, 8/5/2015

    While risks associated with politically exposed persons (PEPs) are important to mitigate across all financial institutions, this paper will focus on auditing the financial crime compliance (FCC) risks associated with foreign PEPs in large U.S. financial institutions. Whether your financial institution has already defined a process and implemented controls for PEP customers or your financial institution is one that is looking to strengthen their anti-money laundering (AML) program by establishing processes for identifying and managing the risk of PEPs, it is vital to your AML program to ensure the appropriate controls are in place to deter, detect and report suspicious activity inherently associated with these customers. Internal audit plays an important role as the third line of defense in testing and evaluating the Bank Secrecy Act/anti-money laundering (BSA/AML) controls currently in place as well as identify gaps in controls not in place. This paper aims to provide solutions to internal auditors who audit controls to manage the financial crime and counter terrorism risks associated with PEPs.

    Private Banking


     

    Embracing the AML/CTF Challenge: Pulling Back the Curtain on Chinese HNWIs with an Effective AML Program

    Yam Yat Ming Provis, 5/15/2019

    The rise of High Net Wealth Individuals (“HNWIs”) in China has fostered great opportunity for financial institutions, especially the private banks. This whitepaper will attempt to pull back the mysterious curtain on the Chinese HNWIs and suggest what an auditor should focus on when assessing a sound AML program to mitigate a bank's relevant AML/CTF risks.

    Risk Assessment


     

    NPO Audit: How Auditing Function In an NPO Can Improve AML/CTF Compliance to Improve Financial Access

    Syon Niyogi, 5/29/2020

    The purpose of this paper is to illustrate that Auditors in NPOs can assist in saving lives by increasing compliance. Auditors can help in creating a tone from the top in NPOs to combat ML/TF. Auditors need to develop audit programs based on the type of NPO and type of program to be effective.

    The Need for Contracts Management in Reducing the Risk of Fraud in Public Expenditures

    Dave Banarsee, CAMS-FCI, 1/7/2020

    Governments are faced with an array of legal challenges, fraud and loss of public trust as a result of poor contract management practices. This white paper demonstrates how effective contract management practices can lay the foundation for detecting and reducing the risk of fraud in public expenditures.

    Managing Reputational Risk
    Mapping risk appetite against risk exposure

    Jennifer Hanley-Giersch, CAMS-Audit, 8/8/2019

    Reputational risk management has become an important strategic topic both from the perspective of the supervisors trying to ensure the stability of the financial system but also internally within financial institutions, which are under pressure to improve their anti-financial crime (AFC) frameworks. This white paper sets out methods and approaches to manage reputational risk, based on theoretical discussion and best-practice approaches, and offers general guidance for a reputational risk assessment workflow.

    Auditing Money Laundering and Terrorist Financing Risks of MENA Institutions: The Trials and Tribulations

    Angeli Pereira, 4/15/2019

    The purpose of this white paper is twofold, one to give AML/CFT practitioners the insights into ML/TF risk assessments and second for AML/CFT auditors to understand the nuances and challenges of auditing ML/TF risk assessments from a global and MENA perspective.

    The Underbelly of AML De-Risking: Executing Case-by-Case Account Closure Decisions

    Iris Smith, CAMS-Audit, 8/5/2015

    Regardless of a financial institution's size, complexity and regulatory authority, each institution faces account closure decisions when the money laundering (ML) or terrorist financing (TF) risk of keeping a customer relationship outweighs the cost/benefit of the relationship, more recently referred to as ”˜de-risking.' Differences between financial institutions regarding the actual execution of account closures appear when you compare risk appetite between those institutions. What might be considered medium risk for one institution may be considered high risk for another.

    Challenges of Applying Objective, Quantitative Measures for Formal Risk Appetite Statements in the Financial Crime Compliance Space

    Joseph Weber, CAMS-Audit, 8/4/2015

    The personnel and teams of the internal audit function at large financial institutions responsible for evaluating the effectiveness of controls pertinent to anti-money laundering (AML), sanctions programs and corruption should assess that management has defined and the board has approved a clear statement of risk appetite. Risk assessments for financial crime within individual lines of business and across the entire enterprise should be regular exercises. However, the logical articulation of the acceptable amount of risk for which one cannot avoid or control, (i.e., the appetite for residual risk), is equally valuable.

    How to Effectively Audit Financial Crime Risks in Trade Finance in a Complex Regulatory Environment

    Ralph Guillou, CAMS-Audit, 8/4/2015

    Trade finance is considered a high-risk product often used by bad actors and criminal organizations to launder funds, conduct terrorist financing and evade Office of Foreign Assets Control (OFAC) sanctions regulations or other restrictions. Banks that provide trade finance services are under significant regulatory pressure to develop consistent standards across the complete suite of trade finance products to mitigate financial crime risks.

    Banking Non-Profit Organizations (NPOs)—How Financial Institutions can Avoid Wholesale De-Risking NPOs by Mitigating Money Laundering and Terrorist Financing Risks Posed by the Sector

    Chris Galloway, CAMS-FCI, 7/23/2015

    The main focus of this paper is to present a risk framework that FIs can adopt in order to provide services to legitimate NPOs and to outline the following AML/CTF areas and how they relate to NPOs.

    Auditing the AML Business Risk Assessments of Legal Professional Firms

    Delia Morna 4/1/2020

    The purpose of this paper is to provide AML auditors with a solid grounding and basis of understanding of what an AML business risk assessment should incorporate in general and the regulatory expectations as they relate to legal professional firms operating in the Qatar Financial Centre (QFC). Further, this paper aims to help AML auditors with key considerations when auditing AML business risk assessments of legal professional firms.

    Sanctions


     

    Evolving Sanctions Circumvention Techniques and the Role of Audit

    Charles Chan Yiu Lai, 5/29/2020

    This whitepaper is not aiming to encourage sanctions circumventions, instead, to highlight evolving sanctions circumventions techniques by targeting weaknesses and room for improvement in sanctions compliance programs. This white paper also highlights the role of audit in sanctions compliance in handling new sanctions circumvention's methods.

    Software


     

    Trade-Based Money Laundering


     

    Opportunities for Advanced Analytics and Artificial Intelligence in Combating the Trade-Based Money Laundering and Financing of Terrorism

    Savaş Külcü, CAMS, 9/1/2019

    Trade-based money laundering and financing of terrorism (TBML/TF) is the largest and most pervasive methodology, and the least understood, recognized, and enforced. The complexity and challenges of TBML/TF cause financial institutions (FIs) to be exposed to great vulnerabilities. Because of the role of banks as the responsible party for combating the financial crime defined in their compliance programs and their role in risk management, intermediation, and finance of trade, the effectiveness of combating TBML/TF is crucial from regulatory perspective, but also for economic and national security purposes. Thus, this white paper is aimed at presenting the opportunity to use advanced analytics and artificial intelligence in FIs against TBML/TF.

    Training


     

    Virtual Currency


     

    Challenging to Standardization: Comprehensive and Specific Approaches to Assess Risks of Crypto-Assets

    Yusuke Araki, 9/6/2020

    The purpose of this white paper is to provide some clues and methods to answer the challenges on the risk assessment for crypto-assets. As an AML auditor of crypto-assets, this document de-scribes how to conduct risk assessments of crypto-assets based on a risk-based approach in a more specific way when you are checking whether the risk assessment of crypto-assets related to AML/CFT is correctly conducted, or when you are considering how to conduct risk assessment of your own crypto-assets as a compliance officer.

    AML Audit Framework for Crypto-Asset Service Providers (CASPs)

    Ahmad Jaber 9/6/2020

    This paper discusses a relatively new area: the fast-growing global use of crypto-assets, its accompanying challenges, and the importance of developing an adequate AML system to control the associated risks.

    This paper is divided into seven main sections. After introducing the different types of crypto-assets and the key terminology within the crypto world, along with their fundamental characteristics, this paper delves into examining the reasons behind allowing and disallowing the use of crypto-assets by different jurisdictions as well as identifying the regulatory challenges and gaps in the field. In addition, this paper explores the role of ML/TF in the world of crypto-assets.

    In the last two sections, this paper tackles the prerequisites for a good AML system and control for crypto-assets service providers (hereinafter, Firm) in addition to the way in which the risk assessment visit (RAV) should be applied to the fullest extent possible.