1. What is Financial Crime?
Introduction
• The charming customer case
• Learning objectives
Types of financial crime
• What is financial crime?
• Money laundering
• Money laundering (case example: Bart Singleton)
• Terrorist financing
• Sanctions evasion
• Sanctions evasion (case example: Demetrios Serghides)
• Fraud
• Fraud (case example: John gets rich)
• Bribery and corruption
• Bribery and corruption (case example: Isabel Dos Santos)
• Tax avoidance versus tax evasion
• Tax avoidance versus tax evasion (case example: Walter Anderson tax evasion)
• Tax avoidance versus tax evasion (case example: Singapore Sling tax avoidance)
• Cybercrime
• Cybercrime (case example: Colonial Pipeline attack)
Review
• Review questions
2. Financial Crime Risk
Introduction
• The case of Mrs. Pavlova’s mother
• Learning objectives
What is risk?
• Types of risk: operational, legal, concentration, and reputational
• International regulations and guidance
• Categories of risk: customer, jurisdiction, product, and channel Customer risk
• Customer risk
• Beneficial ownership
• Ultimate beneficial ownership
• Politically exposed person risk
• Shell company risk
• Cash-intensive business risk
Jurisdiction risk
• Jurisdiction risk
• Jurisdiction risk (case example: Gupta Brothers)
Product risk
• Product risk
• Trade finance risk
• Cryptoasset risk
Channel risk
• Channel risk
Private banking and wealth management associated AFC risk
• Private banking risk
• High-net-worth individuals risk
• High-value assets risk
• Trusts risk
• Special purpose vehicle risk
• Asset management and diversification of wealth risk
• Offshore financial centers risk
• Family offices risk
Review
• Review questions 3. Controlling Risk
Introduction
• The suddenly sanctioned customer
• Learning objectives
Risk-based approach
• Risk-based approach to business
• Controlling risk
• Residual risk equation
Compliance framework
• Three lines of defense
• Risk-based escalation
• Independence of the second line
• Role of MLRO
• Audit as the third line of defense
• Controls across the customer lifecycle
Know your customer
• KYC is intended to manage risk
• KYC (case example: Lux Leaks)
Transaction monitoring
• Transaction monitoring is intended to manage risk
• Transaction monitoring process
• Transaction monitoring (case example: Jeffrey Epstein)
Sanctions compliance
• Who imposes sanctions?
• Internet search: sanctions screening
• Transaction monitoring versus screening
• Sanctions (case example: sanctioned beneficial owner)
Review
• Review questions 4. Research and Reporting
Introduction
• Good philanthropist gone bad?
• What would you do?
• Feedback
• Learning objectives
Research
• Levels of due diligence
• Customer due diligence (CDD) for a natural person
• CDD for a legal person
Information sources
• Criteria for selecting standard customer research sources
• If more information is needed
• Tipping off
Organize
• How much research is reasonably enough?
• Following organization-specific policies and procedures
• Filtering what customer information is relevant and important
• Data security and privacy
• Documenting your research
How an organization might act
• Duty to report
• Suspicious activity escalation process
• Maintaining an account after unusual activity
• Refusing or terminating a customer
Review
• Review questions
5. Conclusion