Alacra is visiting ACAMS 2013 in Florida this week, joining our friends and partners in the key KYC compliance space to help firms of all types stay within the bounds of the law.
On the first full day of the conference, we heard from some of the luminaries of the financial crime and compliance space, including OFAC Director Adam Szubin and a panel comprised of the top compliance executives, including David Clark from Barclays Wealth & Investment Management, William Langford of Citigroup, Timothy Leary of the Federal Reserve Bank Board of Governors, Richard A. Small of American Express, and the OCC’s John Wagner.
The morning began with remarks by OFAC’s Mr. Szubin. To paraphrase Mr. Szubin, sanctions rules are the last effort before military action. Sanctions are designed to change behavior through material or financial pressure. Given the gravity of sanctions in diplomacy, it stands to reason that sanctions lists are taken very seriously by many states, and even more so with the new reality of compliance enforcement against individuals.
During Mr. Szubin’s speech, he reminded the many compliance professionals that countries under pressure, like Iran and North Korea, are using new tactics to use their foreign assets in contradiction to US and UN sanctions. Non financial firms are now used as middle men and as trade conduits, some willingly, others unaware. So it is no longer enough to vet typical financial counterparties. Director Szubin emphasized that enforcement actions can and will be taken against firms who do not take appropriate steps to verify counterparties of all types. Even mid-sized rural banks could be misused and it is up to the bank to ensure their clients are above board.
Which leads us to a thought that was not emphasized in the morning sessions: firms of all types can and should use KYC tools to better ensure they are not exposed to legal as well as reputational risk. Dodgy suppliers can quickly ruin a clean environmental or labor record in a matter of minutes given today’s fast moving information. Avoid the costs of reputational repair—and fines—by implementing a consistent approach to your KYC workflow.
After Mr. Szubin, we heard from a feisty panel on risk based approaches and what to expect from examiners. While there was no consensus on what risk based approaches really meant, everyone agreed that the process was critical to ensuring consistency and regulatory compliance.
During the Caribbean session on Global Tax Compliance, Cherise Cox-Nottage of UBS Bahamas noted that banks are caught in the middle—between their government obligations and their obligations to client service. Balancing these needs well and legally will be the hallmark of future banking.
Looking forward to today’s sessions. See you around the floor!