fraud crime as predicate act to money laundering ... acfe asia pacific fraud conference thursday,...
TRANSCRIPT
2015 ACFE ASIA PACIFIC FRAUD CONFERENCETHURSDAY, NOVEMBER 5, 2015
GUNAWAN HUSIN
Fraud Crime as Predicate Act to Money Laundering & Financing of Terrorism
Offences“Going behind recent headlines and what really went wrong”.
©2015 Association of Certified Fraud Examiners, Inc. 1
Outline
• About Predicate Crimes• Issues and Trends – Sanctions Violations• Counter Measures – Governance
UNODC “Circulations” (2012)
Source: www.unodc.org
Predicate Crimes• Corruption;• Bribery;• Narcotics;• Psychotropic
substances;• Smuggling of workers;• Smuggling of
immigrants;• Banking Fraud /
Crime;• Capital market Fraud
/ Crime;
• Insurance Fraud / Crime;
• Customs Fraud;• Human Trafficking;• Illegal trade in arms;• Terrorism• Kidnapping;• Theft;• Embezzlement;• Deception;• Currency
counterfeiting;
• Gambling;• Prostitution;
• Tax Evasion;• Forestry;• Environmental;• Maritime; and / or• Other offences with
jail sentence of > 4 years
Adopted from Indonesian Legislation No. 8, 2010, on Criminalisation of ML and FT.
Legislations, Regulations and Good Practices
0 10 20 30 40 50 60 70 80
BOFA
Lloyds
RBS
BNP Paribas
Deutsche
Morgan Stanley
Goldman Sachs
Rabobank
Soc Generale
Bank of Tokyo
8039
2014
1110
99
55
44
2111111
US BILLIONS
Source: Thomson Reuters.
The Cost of Market Misconduct.. ( Up to 2015)
Circumventing Sanctions
• A “Cut and Paste” or “Box Ticking” Exercise• Withholding adverse or negative information • Allocating low risk ratings to avoid case escalation• “Stripping” transaction or payment details to circumvent sanctions• “Wilful Blindness”, “Deliberate and Intentional”
VS
Financial Incentives - Massive compensation when sales targets are metLavish Lifestyle Culture of GreedWeak Management Supervision and Controls. Rewards often tied closely with excessive risk taking
Why the Disconnect - What drives excessive Risk Taking Activities ?
Crippling Criminal/Terrorist Funds WILL Disrupt the lifeblood and Block Criminal/Terrorist Activities and as such, lowers the risk of crime / terrorist attacks.
With no money, less harm can be done.
We all play critical roles to fight Financial Crime
We Can:• prevent criminals/terrorists from using our infrastructure, as they
plan to raise, store and move their funds • establish robust means to understand, identify, escalate and
report suspicions to the appropriate authorities.
We are not Investigators? What can We DO ?
The estimated amount of money laundered globally in one year is 2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars.
Source: UNODChttps://www.unodc.org/unodc/en/money-laundering/globalization.html
Risk Governance And Culture
• Policy, Procedures, Guidelines and Good Practices
• Risk governance model – drive meaningful reporting, escalation, measurement and management of risks
• Enhance risk control and regulatory management – proactive keeping abreast of legal & regulatory development
• Develop systems and people – training, networking and recognition
• Create environment with strong risk culture– Transparent, acknowledge, responsiveness against risks.
Value Creation
• Self• Customers• Shareholders• Legal and Regulatory• Financial Sector• Entire community
Concluding Remarks
• Senior Management still see risk management as a compliance activity rather than helping them achieve their objectives
• The ability to manage risk must be an essential management skill rather than a separate function and process
• Management of risk beyond a compliance exercise, thus contributing to an organisational success
• Management of risk includes seizing opportunities as well as avoiding hazards – A new BAU
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