Global AML Survey

By KPMG
Input for preparation of Personal Action Plan

Kiev, Ukraine: AML/CFT & International Sanctions

Seminar

Kiev 24-27 May l 2016 Adriana Consultancy Consortium

KPMG Global AML Survey 2014

Challenge of far-reaching AML standards:

New regulations in Asia, FATCA, 4th EU AML Directive
AML compliance is no longer “just” compliance: it is a
complex and overarching function across legal, risk,
operations and tax issues.

At local and regional (national) level?

At global level ?

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

 Respondent Profile

Job Title Geographical Area

37% Head of AML Compliance 27% Western Europe

23% Head of Other Departments 26% Asia Pacific

16% Managers 18% Middle East and Africa

13% Officers 11% Russian and Eastern Europe

6% Directors 8% North America

5% Others 10% Others

100% 100%

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Key Headlines:

• What priority for senior management?

• Cost of compliance
• Global Approach
• PEPs
• KYC
• Sanctions compliance
• Transactions Monitoring
• Regulatory Approach

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Senior Management ?

AML moving up the agenda for senior

management with a very high percentage
of respondents that say that AML is indeed
a priority for senior management.

When conducting risk assessments AML is

considered a high risk area.

AML is highest risk in developing countries

92 % in Africa and Middle East

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Cost of Compliance ?

Costs rising at an average rate of 53 percent for

banking institutions

This exceeds previous predictions made in 2011

by 40 % !!!!

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Global Approach

YES, there is a global approach in global

banking groups BUT

Only 32 % of respondents with a global policy

are indeed able to maintain global consistency
across subsidiaries and branches

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

PEPs

PEPs remain area of focus

Senior management more engaged

This is important as senior management needs

to be involved in the sign-off process.

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

KYC

KYC is continued area of concern

Increased regulatory scrutiny of KYC

procedures

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Sanctions Compliance

A big Challenge:

75% now use MT20ZCOV SWIFT

But

Only 52% said that if required information

was missing, the MT20ZCOV would be
rejected

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Transaction Monitoring

TM systems are the greatest expense in

AML spending

However:

Satisfaction is low as regards the TM

efficiency and effectiveness

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Regulatory Approach

Ranked as TOP concern for AML

compliance

84% of respondents stating that the pace

and impact of regulatory changes is a
significant challenge to the FI.

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Cost of Compliance ?

Costs continue to increase

• Senior management needs accurate cost

forecasting
• Remains key area of weakness
• 78% of survey respondents report increases in total

AML activity investment

• next 3 years a further need to invest in compliance

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Budget investment
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Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

 Other Challenges

 Foreign Account Tax Compliance Act (FATCA)

 USA’s Approach to Tax Evasion by its Nationals
 Requires Foreign Financial Institutions to Enter into an
Agreement with the IRS and Disclose Information
 Penalties for Non-Compliance
 KPMG Survey – 47% Stated that Compliance Departments
would be Sponsoring FATCA

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Recommendations for Boards

1. Nominate a member of the Board with special responsibility

for maintaining effective AML controls

2. Ensure a broad assurance program is in place which tests

systems, processes and procedures

3. Prepare effectively for regulator visits and ensure that the

Board has all necessary information to demonstrate
• Accuracy
• Oversight
• Control
Kiev 24-27 May 2016 -- Adriana Consultancy Consortium
Risk Management and Internal Controls

 Appoint a Chief Risk Officer (CRO)

 Ensure the Compliance Function
 Ensure the Internal Audit Function

 All
with Authority, Stature, Independence,
Resources and Access to the Board

 Internal Communication

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Role of Compliance Officers

 Ensure that the bank complies with existing legal

and regulatory requirements
 Report directly to management
 Ensure senior management engagement
 Instill compliance at all levels within the

organization
 Create an atmosphere of ethics and trust
 Recognize threats and vulnerabilities
 Train staff at all levels

Kiev 24-27 May 2016 -- Adriana Consultancy Consortium

Homework
Personal Action Plan

Or

Benefit Analysis Form

- What are your priorities ?

- where does your bank stand ?
- what will you take back to the office ?
Kiev 24-27 May 2016 -- Adriana Consultancy Consortium
THANK YOU
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Thank you

Adriana Holtslag-Alvarez
Consultant to the EBRD;
Project Leader Seminar

adrianaholtslag@gmail.com
Kiev 24-27 May 2016 -- Adriana Consultancy Consortium