APCC London Regional Forum

• Monday, 16th June 2014

• 13.00 – 13.30 Registration, tea and coffee

• 13.30 – 13.40 Welcome and introduction - Kevin Parkinson, Director of the APCC

• 13.40 – 14.20 View for the Regulator - Rob Grupetta - a member of the FCA's Financial Crime Dept will provide an update on the latest views and issues that are impacting on the Regulator. This is your opportunity to learn about what challenges the Regulator and the wider financial services industry are facing daily in the fight against financial crime.

• 14.20– 15.00 Gordon Findlay FCA - A BRAW and regulatory review update – • - Upcoming regions • - Provide some updates, further ion our thematic work and perhaps some other topical/supervisory updates• - Reflect on the last year of FCA/APCC cooperation• - A preview of next Positive Compliance Workshops

• 15.00 - 15.20 Coffee break

• 15.20 - 15.50 - What to look for when undertaking an audit - Is there merit in following the tried and tested audit methodology? Stuart Carson LLP will provide an insight into the approach adopted for a recent audit in light of recent shifts in the financial crime arena, particularly Cyber Crime, and the questions that Senior Management and NEDs should be asking MLROs to ensure that the business is protected.

• 15.50 - 16.30 Irwin Mitchell, Financial Crime Lawyers - Hear the latest developments from one of the City's leading financial crime law firms. With a national Investigations and Prosecutions team, they will provide a specialist overview of cases of companies and individuals who are either at risk of or are under investigation by the FCA's Enforcement or Supervision Divisions for alleged breaches of the FCA's Financial Crime rules and regulations in .

• 16.30 – 17.00 APCC update and open forum - Your chance to discuss the issues that are concerning you, share industry best practice and learn how the APCC Financial Crime working group can help you.

Agenda

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APCC June Southern Regional Forum

Financial crime – view from the regulator

Rob GruppettaManager, Financial Crime Specialist Supervision

Financial Crime & Intelligence Department

16 June 2014

4

A view from the regulator

• Role of the FCA

• Expectations on regulated firms

• Systematic Anti-Money Laundering Programme

• Trade finance thematic work

• Current areas of focus

• Questions

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Role of the regulator - framework

• FCA legal duty

• Financial crime: money laundering, terrorist financing, bribery & corruption, data security, sanctions & fraud

• FCA Handbook – SYSC

• Money Laundering Regulations 2007

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The FCA - new style of regulation

• Forward looking

• Judgement based decisions

• Early intervention

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Expectations on regulated firms

• Adequacy of controls and resources

• Applying the spirit of the risk-based approach

• Board and senior management engagement

• Individual accountability

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AML supervision and compliance• Systematic AML Programme

─ Deep dives on AML, counter terrorist financing, and financial sanctions

─ 14 major retail and investment banks

• Thematic work

─ Trade finance

─ Asset management

• Poor AML compliance is a matter of concern

─ Poor controls and questionable judgements over high risk customers and PEPs

─ Assurance too focused on process, not risk

• Enforcement

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Areas of focus – current thematic work

• ABC systems and controls in smaller commercial insurance brokers

• AML and sanctions systems and controls in smaller banks

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Areas of focus – trends and emerging risks

• E-money issuers

• Cybercrime

• MSBs

• Digital currencies

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Areas of focus – future work

• Consumer credit

• Financial crime supervisory approach

• FATF Mutual Evaluation of UK

• Whistleblowing

12

Questions?

Gordon FindlayFCA Update

Areas to cover

• BRAW/Regulatory reviews• RDR

-Cycle 2 results-Cycle 3 thematic work

• Positive Compliance• 12 months of APCC/FCA

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BRAW/Regulatory reviews

Current region – Wales & Severn• Reg reviews – July• Follow up work - JanuaryNext region – Eastern region• Postcodes: CB,CO,CM,IP,NR,SS,SG• BRAW sessions – September• Reg reviews – October/November• Follow up work – May 2015Online reviews• West Midlands region online reviews part of this region• Remaining regions face to face/online to run concurrently

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RDR

• Thematic findings for cycle 2 work now published

• Cycle 3 to begin July 2014 – findings around Q1 2015

• Template published to assist firms

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Positive Compliance

• Topics: RDR & CIPS• Why RDR & CIPs?• Starting August 2014• Covering all UK• Open to both regulated and compliance

firms

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Last 12 months of FCA/APCC

• Day in life of compliance consultant• Authorisations meetings/event• Clive Adamson speech at annual conference• Annual conference ‘launch’ for RDR cycle 2 independence

findings – Rory Percival• Discussions with FCA on various topics from non advised

to reg reviews (GI)• Recognition of ‘working group’ approach• Chairman's lunch in Manchester July 2014

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Planning Financial Crime Compliance

• Compliance with Regulations/FCA/JMLSG/FATF/etc.

• Appointment and role of the right MLRO

• Client Due Diligence – Question the standard & issues

• Level of Training – Induction & Ongoing

• Record Keeping – All Decisions or some

• Financial Crime Warning Signs – recognised

• Reporting Systems – Internal /External

• Compliance Plan

• Monitoring system and reporting

• Communicating Policies and Guidance (Intranet)

Financial Crime Reviews Include

• Management Support AML/CTF Compliance Policy – Review evidence

• Risk Assessment – H/M Reviews Documented; Approved – Test

• Training Programme – Targeted and Delivery Methods – Content

• CDD - Whole area; explained; communicated; followed

• Enhanced and simplified CDD – As above

• PEP Policy and Sanctions programmes - As above

• Recognising Suspicious Transactions – Test

• Reporting

• Records and Documenting Decisions – All of above

• Monitoring – Plan/Reports/Remediation

Your Recommendations – Case Study

We know

• High on FCA agenda

• Issues regular guidance on expectations Financial Crime A Guide for Firms

• Regularly take enforcement action – successfully

• Repeatedly fine individuals and firms plus remediation

We Risk

• Enforcement action or legal consequences

• Reputation

• Management time and cost of remediation

• Disruption to business and affect on morale

So how do we achieve a good state of compliance without losing business?

• New Financial Crime Policy – Highlights• Board approval and accept responsibility• Communicate throughout Client X with board support• Introduce Targeted Training for key staff• Train employees in Branches• New process for Partners/Introducers• Questions for board to ask

• Reduce Risks• Enforcement action or legal consequences• Reputation• Management time and cost of remediation• Disruption to business and affect on morale

What is new?

New Financial Crime Policy

• Compliant with FCA; Money Laundering Regulations and POCA/TA

• Determines course of actions to ensure KYC/CDD at outset – in London and branches

• Recruited, trained and managed in AML/CTF risks – Financial Crime Team

• Train employees in all Branches

• FCT and MLRO demonstrate ownership – Train, Monitor, Guidance, Update, Report.

Your Role – (the Board)

• Continue to develop culture

• Question MLRO; MI and Reports

• Review and approve Policies

• Require FCT Monitoring Reports and Compliance Audits to review

• Annual MLRO Report

• What has changed?• Financial Crime Policy• Updated High Risk Countries and Excluded List• Politically Exposed Persons (PEPs) Policy• Sanctions Screening• Better use of World-Check; Experian and Media

• To be delivered • FCT Training and Professional Development • Financial Crime Compliance Plan• Financial Crime Monitoring Plan• Integrating Compliance within Branches• Appoint MLRO with oversight - senior, vision and find a way approach • Ensure systems and controls develop to support compliance with AML/CTF Policy• Embed within business• Train in requirements imposed on employees – Targeted training and relevant to

their work • Develop and reinforce a culture of compliance

Complete Review

• Update on APCC• Open Forum• Close

Open Forum