Sanctions Risk Management Symposium September 18-19, 2017 | The Princeton Club | New York, NY in cooperation with September 18, 4:45 – 5:30 PM Designing a Sanctions/Export Controls Risk Assessment That Government Agencies (in Any Country) Will Applaud 1
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Sanctions Risk ManagementSymposium
September 18-19, 2017 | The Princeton Club | New York, NY
incooperation with
September18,4:45– 5:30PM
DesigningaSanctions/ExportControlsRiskAssessmentThatGovernmentAgencies(inAnyCountry)WillApplaud
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
Moderator
Panelists
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
3
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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• IncorrectRiskRatingMethodology• AssessingRelevantRiskAreas• FailingtoAssessTopicsofInteresttoRegulators• OFAC• AML,Export,Anticorruption•MisrepresentingDataorResults• DataQuality• ExpertJudgment• LackofSenior-LevelOwnership•MustShowInvolvement• FailingtoActontheResults• ImplementationofActionPlans
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
MostCommonRiskAssessmentMisstepswithRegulators
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Sanctions Risk ManagementSymposium
September 18-19, 2017 | The Princeton Club | New York, NY
incooperation with
Questions?
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BasePenaltyMatrixfromOFAC
EnforcementGuidelines
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
FinancialCrimesEnforcementNetwork(FinCEN)
§ PartofU.S.Treasury§ Establishedin1990§ Safeguardsthefinancialsystemfromillicituseandcombats
moneylaunderingandpromotesnationalsecuritythroughthecollection,analysis,anddisseminationoffinancialintelligenceandstrategicuseoffinancialauthorities.
www.fincen.gov
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BISEnforcementGuidelines
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§ GuidanceonChargingandPenaltyDeterminationsinSettlementofAdministrativeEnforcementCases
§ RevisedJune22,2016§ Promotesgreatertransparencyandpredictabilitytotheadministrative
enforcementprocess.§ AlignsproceduresofDOC’OfficeofExportEnforcementwiththoseofOFAC,
bothofwhichadministerbulkofprogramsunderInternationalEmergencyEconomicPowersAct.
§ https://www.bis.doc.gov/index.php/documents/pdfs/1567-administrative-enforcement-guidelines/file
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
OFACEnforcementActions2003– Sept.2017
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413
238
129
106
64
24 19 18 16
10
0
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Cuba Iran Sudan Yugoslavia Libya Kingpin/SDNT Iraq Burma WMD Terrorism
WhatSanctionsProgramWasViolated
CUBA IRAN SUDAN YUGOSL
413
238
129106
64
LIBYA KINGPIN
24 19
IRAQ BURMA
18
WMD
16 10
TERRORISM
WhatSanctionsProgramWasViolated?
Sourcedata:OFAC
AnalysisandCompilationbySanctionsAlert.com
InherentRisk
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
Source:Wolfsberg FAQsonRiskAssessmentsforML,SanctionsandBribery&Corruption
Representstheexposuretomoneylaundering,sanctions orbriberyandcorruptionriskintheabsenceofanycontrolenvironmentbeingapplied.
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ResidualRisk
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
Source:Wolfsberg FAQsonRiskAssessmentsforML,SanctionsandBribery&Corruption
Theriskthatremainsaftercontrolsareappliedtotheinherentrisk.Itisdeterminedby
balancingthelevelofinherentriskwiththeoverallstrengthoftheriskmanagement
activities/controls.TheresidualriskratingisusedtoassesswhethertheMLriskswithinthe
FIarebeingadequatelymanaged.12
RiskAssessment
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
Source:Wolfsberg FAQsonRiskAssessmentsforML,SanctionsandBribery&Corruption
Anexerciseusedtoidentifykeyrisksfacedbythefirmandtotestthecontrolsthatafirmhasinplacetomitigatetheserisks.Riskscanbebothexternalandinternaltothefirm.Theriskassessmentaimstomeasurethetotal
exposureafirmhastotherisksitfacesandtoplanactionstoreducetheserisks.
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Wolfsberg:ConventionalML/TF/Sanctions/ABCRiskAssessmentMethodology
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
Source:Wolfsberg FAQsonRiskAssessmentsforML,SanctionsandBribery&Corruption
14
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
Source:WolfsbergFAQsonRiskAssessmentsforML,SanctionsandBribery&Corruption
15
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
Source:FFIECBSA/AMLExaminationManual
APPENDIX M: QUANTITY OF RISK MATRIX—OFAC PROCEDURES
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
ExportCompliance
Source:DepartmentofCommerce,BIS:2017ExportComplianceGuidelines:TheElementsofanEffectiveComplianceProgramhttps://www.bis.doc.gov/index.php/forms-documents/pdfs/1641-ecp/file
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
ExportComplianceRisksand
WaystoMitigate
Source:DepartmentofCommerce,BIS:2017ExportComplianceGuidelines:TheElementsofanEffectiveComplianceProgramhttps://www.bis.doc.gov/index.php/forms-documents/pdfs/1641-ecp/file
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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§Notproperlydocumented§Didnotincorporatealllinesofbusinessorentities§Didnotconsiderallmajorriskcategories§Policiesdidnotspecifyfrequencyofriskassessmentupdates§Nodocumentedmethodologyforassigningriskrankings§Policies,proceduresnotcommensuratewithbank/company’sriskprofile§Notalignedtopoliciesandprocedures
SampleDeficienciesinSanctionsRiskAssessment
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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§ Scanningagainstinapplicablewatchlistsofferedbyvendor§ Scanningagainstmoreliststhannecessary§Notscanningagainstrelevantlists§ Inadequatemappingofdatafieldstowatchlists§Dataintegrityissues§ Inadequatealgorithms/fuzzylogic
SampleDeficienciesinConfigurationSanctionsListScreening
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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NewYorkDepartmentofFinancialServices(DFS)Part504Rule§ RuleeffectiveJanuary1,2017§ FirstcertificationdueonApril18,2018§Whoissubject?
§ Banksandnon-bankinstitutionslicensedorcharteredunderNYlaw
§ Banks§ Branchesandagenciesofforeignbanks§ Trustcompanies§ Privatebankers§ Savingsbanks§ Savingsandloanassociations
RequirementsofFilteringProgramReasonablydesigned forpurposeofinterdicting
transactionsthatareprohibitedbyOFAC.Basedonon-going,enterprisewideRiskAssessmentBasedontechnology,processesortoolsreasonablydesigned toidentifyprohibitedtransactions through
nameandaccountmatchingorotherwiseEnd-to-endpre- andpost-implementationtestingof
variousfactorsincludingmappingriskstoOFACsanctionslists,matchinglogicdetectionscenariosand
otherfactors,asrelevantDocumentation oftheprogramanditstoolsand
processes
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
22
Source:AudiencePollfromSanctionsAlert.comAugust2017WebinaronNYDFSPart504
Rule(238attendees)
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
23
Source:AudiencePollfromSanctionsAlert.comAugust2017WebinaronNYDFSPart504
Rule(238attendees)
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