evolving sanctions landscape and its impact on aml compliance

©2010 Dow Jones & Company

Evolving Sanctions Landscape and its impact on AML Compliance

Executive Briefing – Lloyds of London – 29th February 2012

Dan Mendelsson;Solution Specialist

Jeremy Doyle;Content Integration Specialist


2011 - Arab Spring

3


2012 - Syria

4


2012 - IRAN

5


*Source: MyPrivateBanking - Switzerland

The Arab Spring – Ramifications• Attractive growth opportunity has

transformed to a damage limitation exercise

• 15% of the $1.5 trillion deposited from the region in foreign bank accounts is generated from corruption*

• Calls to recover public assets stolen by corrupt politicians

©2010 Dow Jones & Company©2011 Dow Jones & Company

Increasing volume and scope of sanctions data OFAC, EU, UN sanctions updates, Jan-10 to Dec-11

12

• 114% YOY increase in sanctions (2010 versus 2011):• 2010 – 2,512 updates• 2011 – 5,738 updates

• New measures targeting Iran and Syria continue to add scale and complexity to sanctions screening


Today’s evolving Sanctions landscape

Arab Spring: new sanctions regimes introduced or extended overnight

New US Executive Order targeting Syria quickly followed by new EU and Swiss sanctions

Aggressive US enforcement of CISADA sanctions regulations against Iran

Sanctions requirements growing in scope, complexity and size, extending to a range of state controlled companies:

- Banks and insurers- Petroleum companies

- Shipping companies

- Industrial conglomerates


State-Owned Entity information for AML/CTF screening

– 3,500+ state-owned companies from Libya, Iran and 7 other jurisdictions – ~ 40% of these companies are not yet on sanctions lists– Includes profiles of companies fully or partially-owned by sovereign wealth

funds

• New “Enhanced Country Risk” category that identifies companies associated with governments from sanctioned jurisdictions


Sanctions compliance and vessel information

• Imo

– Ships lists specifically on OFAC list; details now included in details of EU sanctions targets

• Identification of sanctions risk is a specific compliance challenge– Flag, Name and other identifying features may change– Complex/paper-based Trade Finance documentation

• Concern that Iran is circumventing sanctions régimes by re-naming and reflagging vessels

• International Maritime Organization (IMO) number is a unique characteristic of a vessel– IMO remains constant; valuable as the compliance key to identification of sanctions risk


Increasing cost of sanctions compliance

• Regulatory developments are adding to the existing pressures faced by compliance departments

• Compliance Consequences

- More risks to be identified & managed

- Significant and sustained operational impact

- Increased visibility and accountability to senior executives

- Threat of substantial penalties and reputation damage

• So how are institutions managing?

Achieving Global Sanctions Compliance: Challenges and Solutions


Cost of Watchlist Operations at Large Financial In-situtions

MaintenanceManagementTechnologyAnalysis


AML challenges facing organisations

12%

18%

19%

30%

30%

35%

41%

49%

50%

45%

11%

15%

16%

27%

33%

36%

38%

38%

38%

46%

Lack of senior management engagement

Avoiding sanctions

Understanding regs in home country

Understanding regs outside of home country

Too many false positive results

Technology concerns

Understaffed AML department

Increased enforcement of current regs

Additional Regulations

Properly trained staff

2011 2012


Key findings – AML workloads increasing

76%

70%

61%

43%

29% 29%

37%

24%19%

5%8%

3%

Increased senior management focus on AML

New or expanded government regulations

Company growth Expanded into new markets

Merged with another

organization

Had suspicious activity

Reason for increase Most important reason


False positives are still an area of concern


Too few are confident in data accuracy


Difficult to screen OFAC lists against names data in Chinese script– Many ways to transcribe Chinese characters into Roman scripts

– Taiwan had 4 different official standards in 10 years– Unofficial standards are common

HMT screening & Chinese language names

賴英照 In-Jaw Lai=

Yingzhao LaiYing-Jaw Lai


Introducing Dow Jones Risk & Compliance

19

Objective: To be a leading provider of risk identification information and research services that protect our customers from regulatory, commercial or reputation risk

Anti-Money Laundering Anti-Corruption Anti-Fraud Payments

Identify Investigate Monitor

Data News & Analysis Research


Closing thoughts• The adoption of Sanctions as a means of political and economic influence is on the increase.

• Such increases are putting additional pressure on regulated organisations with increased work load and desire for more resources at a time of austerity.

• Using the correct type of sanction content for specific business needs is an effective way of improving operational efficiency with out jeopardising compliance integrity.

• Businesses with exposure to China or those looking to expand into this region are now seeking support with the challenges associated with Chinese Commercial Code and sanction screening of transactions.


Connect with us

• Jeremy Doyle• Content Integration Specialist• [email protected]

0203 217 5135

• Dan Mendelsson• Solution Specialist• [email protected]

0203 217 5281

mailto:[email protected]

mailto:[email protected]

evolving sanctions landscape and its impact on aml compliance

Documents

dow jones risk

dow jones company6

dow jones company5

dow jones companyin

dow jones companytodays

dow jones company42012

new sanctions regimes

new risks sanctions