We all agree that Lebanon has reached its current stage, mainly due to its corrupt political class. However, if we take a closer look as to how politicians dared to go this far, “Groupthink” is what comes to our minds. They must have felt untouchable, and above the law. Don’t you think they have undermined every person stepping their way? Weren’t they all convinced they could get away with everything they’ve done? Didn’t they all choose to hire advisors who would never confront them with the reality or give them negative feedback?
Moving forward, I will be sharing some definitions related to Compliance matters. I started with the PEPs, due to the fact that lately, rumors spread around the fact that Chairmen of banks are considered as PEPs. #compliance#pep#politicallyexposedpersons
Anti-money laundering program: This system is designed to assist institutions in their fight against money laundering and terrorist financing. In many jurisdictions, government regulations require financial institutions, including banks, securities dealers and money services businesses, to establish such programs.
Shell and Shelf companies are both accepted legally, as long as they are used for legitimate purposes. However they pose higher risks from a compliance standpoint: Shell Companies could be used to conceal the identity of ultimate beneficial owners. Therefore, it can inter alia, be used as part of an AML and/or tax evasion scheme. Shelf companies can make their purchaser appear to have admirable business attributes such as stability, legitimacy and a great credit score. Buying a shelf company can allow fraudulent business to mislead customers.
Why is the supreme leader of Taliban sanction-free?
This is because sanctions are a tool used to pressure an individual into changing his/her behavior. In Haibatullah Akhundzaha’s case, a sanction is futile because:
1- He was appointed in his current position in 2016; a time when the US had already made its decision about Taliban;
2- He does not use any official financial system, hence a sanction would not affect him; and
3- A sanction is usually a first step towards initiating a discussion with a sanctioned individual or party. In Akhundzaha’s case, the US did not have the intention to negotiate at any point in time.
he “three lines of defense” against Money Laundering and Terrorism Financing.
The principal responsibility for a bank’s Money Laundering risk management lies with the board of directors.
It is responsible for defining and overseeing a bank’s Anti Money Laundering/Combatting Financing Terrorism policy and allocating operational responsibilities and resources under the “three lines of defense”:
-The “first line of defense” lies with a bank’s business units, such as private banking or asset management divisions. These units are responsible for identifying, assessing and controlling ML/TF through the use of customer due diligence practices.
-The “second line of defense” refers to the compliance department, as well as human resources and technology. These entities should be independent of business units, give independent advice to management and act as main contact point for the relevant authorities.
-The “third line of defense” refers to the independent internal audit function.
TO KEEP IT SIMPLE: BUSINESS PEOPLE WHO ONLY CARE ABOUT GROWING THEIR PORTFOLIO, BE AWARE THAT YOU ARE FIRST IN LINE. IN CASE OF ANY DIFFERENT WITH YOUR CLIENT, YOUR JOB AND CAREER WILL BE ON THE LINE.
SO NEVER HIDE ANYTHING FROM THE COMPLIANCE DEPARTMENT, BECAUSE THEY WORK WITH YOU, NOT AGAINST YOU.
Three tips to be a great Compliance Officer: – Always be up to date on the regulations, and understand them well. – Understand your Bank, its products and risks. – Disseminate the information within the teams, and explain the “whys beneath the surface” to help them better digest new rules. It is pointless to impose new rules without explaining why. People respond better when they understand the whys and the purpose.
Terrorism Financing red flags. In this post I share few red flags for terrorism financing, compliance officers must be aware of. They are the most basic and obvious ones.
The Financial Action Task Force (FATF) has the right to place a jurisdiction under increased monitoring. This list of jurisdictions is generally referred to as the “Grey List”.
The FATF takes such decision if it considers that the jurisdiction is lacking strategic deficiencies to counter money laundering, and terrorism financing.
These jurisdictions must work closely with the FATF to improve their situation, and ultimately get removed from the Grey List.
Please check this list shared from the FATF on October 2021.
