1 SWIFT Latin American Regional Conference - 11-12 July 2013 Jim Wills SWIFT USA Silvana Mesquita Mark Samara BTG Pactual Brazil OFAC Colombia The Evolution of Central Counterparty in Latin America and the Need for More Oversight (Spanish) @swiftcommunity #LARC2013 Regulatory Plenary
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1 SWIFT Latin American Regional Conference - 11-12 July 2013
Jim
Wills
SWIFT
USA
Silvana
Mesquita
Mark
Samara
BTG Pactual
Brazil
OFAC
Colombia
The Evolution of Central Counterparty in Latin America and
the Need for More Oversight (Spanish)
@swiftcommunity
#LARC2013
Regulatory Plenary
OFAC Sanctions: Who, What, Where…
…and Iran and TBML too!
“Instead of being a secondary measure, as in the past, economic sanctions have become a centerpiece of national security policy.” - Washington Post 03/23/2011
Who is OFAC?
OFAC administers and enforces economic and trade sanctions against targeted:
Foreign governments
Individuals
Entities
Vessels
Practices
OFAC is Not a Bank Regulator
OFAC cannot mandate compliance
We can (and do) impose penalties for violations
We work with regulators to ensure compliance
by U.S. financial institutions
Jurisdiction – To Whom Does OFAC Apply?
• Individuals located anywhere in the world, doing business in the United States or through U.S. persons
• Corporations located anywhere in the world, doing business in the United States or through U.S. persons
• Transactions:
– Transactions by foreign persons to extent they involve the United States;
– Transactions in property of blocked person within the United States;
– In limited circumstances, transactions involving
controlled U.S.-origin goods or technology.
OFAC Terminology: Blocking v. Rejecting
BLOCKING
“Freezing” assets under U.S. jurisdiction
Across-the-board prohibitions against transfers or transactions regarding the blocked property
Title of blocked property remains with sanctioned target
REJECTING
Underlying transaction that is prohibited, but contains no “blockable” interest
U.S. person must simply refuse to process the transaction
(Weapons of mass destruction, support for terrorism, and Iran’s energy and trade).
o As a result of U.S. sanctions and outreach:
• Most foreign financial institutions have dramatically reduced their business w/ Iran.
• Those foreign financial institutions that run afoul of U.S. sanctions risk having their access to the U.S. banking system restricted or being cut off
– Pursuant to CISADA, in July 2012 Treasury identified two foreign banks:
Kunlun Bank in China // Elaf Islamic Bank in Iraq.
• Reports indicate that Iranian oil-revenues have dropped by 50%
Burma –Sanctions targeted Burmese regime’s repression of democracy.
o As Burma made progress in political reform Treasury has eased sanctions
• Sanctions no longer prohibit U.S. persons from engaging in new investment in Burma
• Sanctions no longer prohibit U.S. banks from exporting financial services to Burma
Iran Sanctions: Is there even more now??
First East Export Bank PLC
Labuan, Malasia
Vobster Shipping Company Ltd.
Malta
Cobham Shipping Company Limited
Isle of Man
Banco Internacional de Desarrollo C.A.
Caracas, Venezuela
Eleventh Ocean Administration GMBH
Hamburg, Germany
Galliot Maritime Inc.
Panama
International Safe Oil
Malasia
Hercules International Ship
Atenas, Grecia
Cylinder System LTD
Croacia
MCS Enginerring
Alemania
Kont Investment Bank
Tajikistan
Golden Resources Trading Company LLC
Dubai, UAE
One Class Properties (PTY) LTD.
Sudafrica
Overview
1. IFCA
2. E.O. 13645
AML Compliance & Onboarding Controls
July, 2013
22
Money Laundering Phases Money laundering refers to the process of concealing the source of legally, illegally, and grey area obtained monies.
Layering (means separating the illegally
obtained money from its source
through a series of financial transactions
that makes it difficult to trace the origin)
Integration (means converting
the illicit funds
into a seemingly legitimate form)
Placement (physically placing
illegally obtained money
into the financial system)
23
How to Mitigate AML Risks
Deals
With 3rd parties?
What is THIS source of funds?
Compatible with income and wealth?
Compatible with business activity?
Suspicious transactions must be reported
Corporate Governance
Knowledge constant update
AML involvement in new products and structures
Training Sessions and Communication Memos
KYC
Who is the customer?
What is the source of funds?
Are there Negative News?
PEPs?
Sanctioned?
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High Risk Customers
PEPs (Politically Exposed Persons),
SIAPs (Sensitive Industry Affected Persons),
SCAPs (Sensitive Country Affected Persons),
Media (Persons involved in scandals and proceedings).