AML for Depositary Functions

Professional Obligations with regard to Money Laundering and Terrorist Financing - Investment Funds, Private Equity, Real Estate, Depository functions.
This programme is designed to deliver a greater understanding of the necessary AML and Due Diligence measures required to minimise the threat to those involved in Due diligence process in Real Estate, Private Equity, Securities and Depositary Banking Functions as regards to the needs to satisfy Regulatory requirements of Luxembourg.

All firms face key risks in relation to money laundering: They are being used to facilitate financial crime, including money laundering in the wider context of domestic and international requirements to review systems and controls in their sphere of operations and secondly risks in transactional activity and the risk of criminal money laundering offences. We will provide a breakdown and understanding of the relevant Luxembourg and international guidance to compliance and AML staff to enable them to avoid a risk of money laundering and terrorist financing.

This key training programme provides an interactive experience for employees and managers working as Relationship Managers, Accounts Officers, Depositary control Officers, and Compliance Officers to identify the key requirements and obligations they must undertake to avoid the Risk of money laundering and terrorist financing, as well as the requirements to remain vigilant to the evolving complexities and risks.
We will target within the training a greater understanding of the RBA (Risk Based Approach) and its implementation as proportionate and commensurate of the risk to the business.

This means a clear understanding to the impact of a risk-based approach in the on-boarding process as well as in the life cycle or business relationships following key principles set for under Luxembourg AML laws as well as regulations and CSSF key circulars.

The case studies and theory within the programme will focus on key concerns as regards to:

• The Requirements for CDD/EDD
  • The Risk-Based Approach and CDD/EDD obligations and interaction with EU and Luxembourg’s risk assessments
  • PEPs and EDD requirements and undertakings
  • Conducting effective CDD, SDD & EDD measures to mitigate risk
  • AML regulatory framework and regulations and industry guidance on customer due diligence
  • Best practices for due diligence and ongoing monitoring
• When and how to conduct enhanced Due Diligence (including source of funds & source of wealth validations for PEPs)
  • When and how to conduct risk-based periodic refresh/update of existing customer information
  • What needs to be done in practice when conducting risk-based customer due diligence
  • How to conduct independent research and background checks on complex beneficiary ownership structures
  • How to conduct third party due diligence, anti-bribery & corruption checks

The risk-based approach in more detail:

• Transaction monitoring
  • Introduction to transaction monitoring principles
  • Examine methods to identify abnormal transactions
  • The rationale behind documenting decisions and why it’s necessary to record decisions
  • The effective reporting and escalation process
• Know your asset
  • Understand what information is to be collected on regarding target assets
  • The need for and the benefits of the review cycle
  • Potential sanction impact as regards circumvention and failure to adhere to sanctions imposed by authorities
• Appropriate customer due diligence including
  • Identification and verification of the customer and of the customer’s ultimate beneficial owner (UBO)
  • A customer risk classification
  • Definition of the effort and detail required by due diligence category
  • Examination of the purpose and intended nature of the relationship
  • Examination of the source of funds
  • Examination of the representative and persons acting on behalf of a third party
  • Continuous scrutiny and monitoring of the customer
• Enhanced customer due diligence in high-risk cases, e.g., politically exposed persons (PEPs, High Risk Countries and activities, product risk)
• Immediate reporting of unusual transactions and activity (active and passive cooperation in Luxembourg)
• Reporting of financial sanctions and due diligence referred to financial sanctions

The programme will recognise and achieve:

• The varying roles that securities providers and other intermediaries may play in different transactions; for example, a securities provider may be both an investment fund manager and a depository bank
• ML/TF risks stem mainly from types of securities products and services, customers, investors, and payment methods used in the securities sector; we will examine the risk associated with such products
• Recognise the Risk associated with the cross border (and legally equivalent activities) reach of the securities sector and speed of transactions across a multitude of onshore/offshore jurisdictions and financial markets, breaking down anonymity
• The Risks associated with high liquidity of some securities products, which often enables their easy conversion to cash (assets assessment)
• How to unravel the complex products, opaque structures and obfuscation that may be associated with Private Banking, and Corporate Services (beneficial ownership understanding and identification)
• The common involvement of a multitude of securities providers and intermediaries on behalf of both buying and selling principals or agents
• Understand why this often highly competitive and sometimes incentive-driven environment, may lead to a higher appetite for risk, or failure to adhere to internal controls
• Recognise the opportunities to use transactions in securities for generating illicit income within the sector, for example, market abuse or fraud.

We will examine why:

• IOSCO reveals few reported instances of money laundering in securities markets
• FATF state there is good reason to suspect that ML may pose substantial threat in securities markets (yet offers scant evidence to support its conclusion)
• Understand why the sheer magnitude of transactions in securities markets and ease of moving funds make it obvious target
• Securities industry professionals and regulators are not fully aware of the problem and lack necessary expertise to unravel schemes to launder money through securities transactions