IMPLEMENTATION STRUCTURE & EXPECTED OUTCOMES FOR RECOMMENDATION 16, 17, 18, 19 & 20 Oladele Adeoye

OUTLINE Introduction Recommendation 16 Recommendation 17 Conclusion

INTRODUCTION Structure Reporting Suspicious Transactions 16 17,18&19 Additional Measure for specific customers activities Reliance, controls and financial groups Reporting Suspicious Transactions 16 17,18&19 20

Wire Transfer (Regulation 23) RECOMMENDATION 16 Wire Transfer (Regulation 23)

RECOMMENDATION OBJECTIVES Prevent Terrorist & Criminals from moving funds Detecting movement of illicit funds Ensuring that basic information about originators & beneficiaries of funds are immediately available to LEAs, FIU Complying with freezing action and prohibition of dealings with designated persons and entities.

RESPONSIBILITIES OF PARTIES TO WIRE TRANSFER The Parties Ordering financial institution Intermediary Financial Institution Beneficiary Financial Institution Capture both originator & beneficiary information Keep records of parties to wire transfer Put in place enhanced real time or post event monitory in place on transaction lacking details Transaction below reputable threshold should be captured The records of all transfer should be kept for 5yrs Identify and verify beneficiaries Keep records Have a RB mechanism for execute, reject or suspend deal without proper information Have a RB mechanism for execute, reject or suspend deal without proper information Do not deal without information

RECOMMENDATION SCOPE SCOPE Qualifying cross border wire transfer Domestic wire transfer Qualifying cross border wire transfer

DOMESTIC WIRE TRANSFER Capture originator information Account number Transaction reference number Information should be made available on request or within a maximum period of (3) working days to: Beneficiary financial institutions Statutory bodies LEAs

QUALIFYING CROSS BORDER WIRE TRANSFER Capture name of the originator Capture account number if used to process transaction Capture identification details Capture name of beneficiary Capture account number of beneficiary if used

LIMITATION TO WIRE TRANSFER Purchases transaction involving debit/credit/prepaid card accompanied by card numbers Financial institution to financial institutions

REGULATORY FRAMEWORK (REG. 23) Get originator info File STR to NFIU where info is not available Restrict/terminate relationship with originator financial institution that fail to meet standard

Reliance on third party Regulation 28 RECOMMENDATION 17 Reliance on third party Regulation 28

RELIANCE BASIS Identification & verification of customer using reliable, independent source document Identification and verification of beneficial owners. Understanding purpose and intending nature of business relationship

RELIANCE CRITERIA Obtain information relating to customer immediately from the third party Take steps to be satisfied that copies of identification data and other relevant documentation relating to CDD are readily available Be satisfied that the third party is regulated, supervised or monitored for CDD and record keeping Be satisfied that the third party has measures for CDD and record keeping Give consideration to the risk level of the country of operation of the third party

LIMITATION Responsibility for CDD measures remain ultimately with the financial institution relying on the third party Third party means financial institution and designated non-financial institutions that have prior business relationship with customer It does not include outsourcing or agency relationships

Internal Controls and Foreign Branches and Subsidiaries RECOMMENDATION 18 Internal Controls and Foreign Branches and Subsidiaries

GROUP AML/CFT PROGRAM Group financial AML/CFT program include: Internal policies, procedures and controls Appropriate compliance management arrangement Adequate screening procedure for employment of staff (KYE) On-going employee training Independent audit function to test the system

APPLICABILITY Group Financial Institution Branches Majority Owned subsidiaries Foreign Operations

BRANCHES & MAJORITY-OWNED SUBSIDIARIES AML/CFT programs should be made applicable to all branches and subsidiaries Implementation of the AML/CFT programs should be effective The program should include policies & procedure for sharing CDD and risk management information. Safeguards on the confidentiality of information should be put in place

FOREIGN OPERATIONS Home country FIs should export their AML/CFT to Host country FIs where host country is less strict. Implementation should be subject to host country’s extent of permission Where proper implementation is not possible in host countries, additional measures should be taken and home supervisors should be informed of ML/TF risks

RECOMMENDATION 19 Higher Risk Countries

FRAMEWORK FIs to apply EDD to business relationships in higher risk countries. This is applicable to relationship involving: Natural person Legal persons Financial institutions. Countries to also apply countermeasures to Higher risk countries The application of the measures will be at the instance of FATF

HIGHER RISK COUNTRIES Identified by credible sources (i.e. mutual evaluation reports) as having inadequate AML/CFT systems Countries subject to sanctions, embargoes or similar measures issued by, for example, United Nations Countries identified by credible sources having significant levels of corruptions or other criminal activity. Countries identified by credible sources as supporting or have designated terrorist organisation operating within its territories

EDD MEASURES Obtain additional information on the customer using public database and internet Update customer and beneficial owner identification regularly Obtain additional information on intended nature of business relationship Obtain information on the source of funds and source of wealth of the customer Obtain information on the reason for intended or performed transaction Obtain Senior Management Approval to commence or continue relationship Conduct enhanced monitoring of the business relationship by increasing timing of controls and setting of patterns of transaction requiring further examination Requesting first payment to be made through an account in customers name with a bank subject to similar CDD measures

COUNTERMEASURES BY COUNTRIES Financial institutions to apply specific EDD measures Introducing specific reporting mechanisms Refusing to have branch/subsidiaries in such jurisdiction and taking cognisance of ML/TF risk level in dealing with FIs in such jurisdiction Linking business relationship with the identified country/persons Not relying on third party for CDD procedures Review, amend or terminate correspondence relationship Increased monitoring of activities on branches and subsidiaries Increased external audit of branches/subsidiaries operating in identified country.

RECOMMENDATION 20 Reporting of Suspicious Transactions (Section 15 MLPA 2011, (As Amended) Regulation 31 of CBN, AML/CFT Regulation 2013

FRAMEWORK Suspicious transactions relate to all predicate offense for money laundering: section 15 of MLPA 2011 (As Amended) Terrorist Financing relate to Financing of terrorist Act Terrorist organisations Individual terrorist (whether or not linked to terrorist act(s) Activities are to be reported regardless of the amount involved It must be a direct mandatory reporting

GROUND FOR SUSPICIOUS Unjustifiable or unreasonable frequency Unusual or unjustified complexity No economic justification or lawful objectives Involves terrorist financing/inconsistency with known patterns

Be ready to demonstrate Compliance! CONCLUSION Be ready to demonstrate Compliance! Compliance Model Documentary Statistic Information on risk, context and activities case studies (to analyse statistics) Relevant Accurate Comparable Case study (i.e. success story) Timely Coherent Internal Document (AML/CFT policies & procedure) Clear Accessible

THANK YOU