bsa - Blog - Global Risk Community2024-03-29T13:55:52Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/bsaIncreasing Risk May Not Mean What You Think It Doeshttps://globalriskcommunity.com/profiles/blogs/increasing-risk-may-not-mean-what-you-think-it-does2018-04-13T16:48:07.000Z2018-04-13T16:48:07.000ZMichael Joneshttps://globalriskcommunity.com/members/MichaelJones<div><p><a href="https://ncontracts.com/wp-content/uploads/2018/04/risk-jenga-1024x512.jpg" target="_blank"><img src="https://ncontracts.com/wp-content/uploads/2018/04/risk-jenga-1024x512.jpg" class="align-full" alt="risk-jenga-1024x512.jpg" /></a></p><p><br />When risk increases, the natural response is to take action to reduce that risk. But not every increase requires action. In fact, it may distract you from more important issues.<br /><br /></p><p>I’m talking about the risk of treating every risk the same.<br /><br /></p><p>Astute observers of risk have a variety of tools to <a href="https://ncontracts.com/solutions/nrisk/" target="_blank">monitor risk</a>, from near real-time indicators to audits, exams, and reviews. But it’s not enough to recognize that risk has increased. Its ultimate impact must be considered.<br /><br /></p><p>For example, a review might show that employees haven’t been regularly reviewing a checklist to ensure the institution is collecting all five key pieces of customer information required under the Customer Identification Program (CIP) provisions of the USA PATRIOT Act when opening an account. On its surface, this may seem like a huge increase to the bank’s BSA risk, requiring swift and immediate action. Memos should be sent. Training should be instituted. Sound the alarm!<br /><br /></p><p>But is that really necessary? Maybe not.<br /><br /></p><p>In this case, the checklist is just one control. There is also automated software to prevent an account opening from moving forward without the information and a quality control program that double checks a sample of new accounts. These two controls have a much greater impact and therefore influence residual BSA risk to a much greater degree.<br /><br /></p><p>The fact that the institution is inconsistent on the checklist, a relatively unimportant control, might not have a huge impact on the institution’s overall BSA residual risk. The institution might even decide to discontinue the control due to its ineffectiveness.<br /><br /></p><p>On the other hand, perhaps the failure to use the checklist is part of a pattern of failing to follow policies and procedures, contributing to an increase in compliance risk. In that case, the risk goes well beyond forgetting a checklist. It indicates a problem with the entire institution’s compliance culture.<br /><br /></p><p>How do you spot the difference? You need a system in place that makes it easy to understand the context of specific risks, including how they impact different business areas and categories of risk. Both inherent and residual risk should be monitored and risk exposure should be categorized by category and hierarchy to make it easy to understand the relationship between a particular risk and the institution as a whole.<br /><br /></p><p>That’s why <a href="https://ncontracts.com/enterprise-risk-management/" target="_blank">enterprise risk management</a> is so important. It’s not about immediately correcting every increase in risk. It’s understanding exactly how a single increase in residual risk fits into the overall risk picture, impacting different risk areas and categories.<br /><br /></p><p>When reporting risk to the board, make sure you communicate the global perspective. It’s not enough to know that risk is increasing. The board needs to know what it means. Not every risk increase means the same thing or requires the same attention. Good enterprise risk management allows the board and management to know what a risk increase really indicates.</p></div>File an FBAR or Find Yourself Behind Barshttps://globalriskcommunity.com/profiles/blogs/file-an-fbar-or-find-yourself-behind-bars2014-04-28T12:00:48.000Z2014-04-28T12:00:48.000ZJames McCallumhttps://globalriskcommunity.com/members/JamesMcCallum<div><div class="separator" style="clear:both;text-align:center;"><a href="http://1.bp.blogspot.com/-NJs3WoO30VE/UzGXLstEUDI/AAAAAAAAEv0/kOWO1hx87hU/s1600/fbar+screen.png" style="clear:left;float:left;margin-bottom:1em;margin-right:1em;"><img border="0" src="http://1.bp.blogspot.com/-NJs3WoO30VE/UzGXLstEUDI/AAAAAAAAEv0/kOWO1hx87hU/s1600/fbar+screen.png" height="320" width="192" alt="fbar+screen.png" /></a></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">A few years ago the IRS offered a tax amnesty program for US citizens who failed to declare assets held in foreign bank accounts. This came on the heels of a highly publicized legal action against UBS. The IRS forced the Swiss based bank to turn over the account information of US citizens. The IRS was clamping down on tax evaders, exploiting the protection of Switzerland's bank secrecy laws to hide income and assets. The IRS was looking to determine if FBARs had been filed by the banks American clients.</span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Individuals and corporations with assets greater then $10,000 held in foreign bank accounts must file a Foreign Bank Account Report (FBAR) with the IRS or face potential legal action.</span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">UBS counted 52,000 US citizens as private banking clients. It would be safe to assume that most of those accounts had balances greater then the $10,000 declaration threshold. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Any US investor participating in a foreign based fund partnership or investment vehicle must also file an FBAR. High Net Worth (HNW) investors and their tax advisers should conduct due diligence on private bankers and asset managers to confirm that FBARs and appropriate declarations and forms have been filed by investment partnerships and their administrators. HNW tax advisers should contact the chief compliance officer at the fund to request an attestation letter stating that the fund is in full compliance with foreign bank reporting requirements.</span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Bernie Madoff and Sir Allen Stanford may look good in orange prison jumpsuits but that doesn't mean it will look good on you. Don't become a slave to fashion. Get compliant. Check with your tax adviser to make sure FBARs are filed.</span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Get compliant and file an FBAR with Sum2's AML SAR Filing BSA Reporting App. The app is used by financial institutions, compliance professionals and industry service providers to comply with Anti-Money Laundering (AML) best practice provisions and regulations. Protect your clients and your business from money laundering risk with this critical compliance application.</span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Since 2002, Sum2's AML compliance products have helped investment managers, broker dealers, MSB's, banks and credit unions comply with the AML provisions of The Patriot Act, BSA Reporting and OECD best practices. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Get AML aware. Download AML SAR Filing / BSA Reporting App on Google Play</span>.</div><div style="text-align:justify;"></div><div><div><table cellspacing="0" class="tr-caption-container" style="margin-left:auto;margin-right:auto;"><tbody><tr><td style="text-align:center;"><a href="https://play.google.com/store/apps/details?id=com.rtken23.Sum2LLC.pacosar" style="clear:left;margin-bottom:1em;margin-left:auto;margin-right:auto;"><img alt="https://play.google.com/store/apps/details?id=com.rtken23.Sum2LLC.pacosar" border="0" src="http://3.bp.blogspot.com/-oCAoKr1I4wc/UzGcNIWr9fI/AAAAAAAAEwE/Cuc3k10zEPU/s1600/aml+sar+app+cover+100.png" /></a></td></tr><tr><td class="tr-caption" style="text-align:center;"><a href="https://play.google.com/store/apps/details?id=com.rtken23.Sum2LLC.pacosar">Get AML Aware</a></td></tr></tbody></table><div><span style="font-family:Arial, Helvetica, sans-serif;text-align:justify;">Risk: AML, FBAR, legal, compliance, tax, reputation, criminal prosecution, IRS, OECD, Patriot Act, MSB, private banking, hedge funds, CPA, UBS, Credit Unions, SAR filing, BSA Reporting</span></div><div><br /><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div></div></div></div></div>Conflict Minerals and Supply Chain Riskhttps://globalriskcommunity.com/profiles/blogs/conflict-minerals-and-supply-chain-risk2014-04-22T19:30:00.000Z2014-04-22T19:30:00.000ZJames McCallumhttps://globalriskcommunity.com/members/JamesMcCallum<div><div class="separator" style="clear:both;text-align:center;"><a href="http://3.bp.blogspot.com/-tSdlNDkAIHQ/U1ad28H9LtI/AAAAAAAAE2E/Yf6NTNgtx9o/s1600/5stepprocessadvanced.png" style="clear:left;float:left;margin-bottom:1em;margin-right:1em;"><br /> <img border="0" src="http://3.bp.blogspot.com/-tSdlNDkAIHQ/U1ad28H9LtI/AAAAAAAAE2E/Yf6NTNgtx9o/s1600/5stepprocessadvanced.png" height="212" width="320" alt="5stepprocessadvanced.png" /></a></div><div style="text-align:justify;">Conflict Minerals Reporting Requirement Struck Down</div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Received a timely Good Friday Alert from Nixon Peabody about a recent district court ruling on regulations concerning Conflict Minerals. Conflict minerals are mined in areas where conditions of armed conflict exist. The minerals, extracted with forced labor under conditions employing human rights abuse, is common in the Democratic Republic of the Congo. Rebel groups use the proceeds from the sale of conflict minerals to finance armies to enrich leaders and gain political power.</span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">A provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act required companies to publish notice that minerals acquired for use in production must be certified as being sourced from a conflict free zone. The National Association of Manufacturers brought suit against the Securities and Exchange Commission that the Conflict Mineral Disclosure provisions in the Dodd-Frank law violates the First Amendment right of free speech of corporations. The DC District Court agreed and overturned the reporting provision. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Nixon Peabody’s note makes clear that other provisions of the law still stand. Though the ruling provides relief from the reporting requirement, firms remain obligated to audit their supply chain to determine the source of conflict minerals and what economic and political interests are engaged in the sale. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">The Treasury Department’s Office of Foreign Assets Control (OFAC) publishes a list of people and corporations, Specially Designated Nationals (SDN) that have been identified as affiliates of terrorist organizations, known to engage in money laundering activities. Proceeds derived from the sale of Conflict Minerals like Blood Diamonds are sources of terrorist financing and financial crime. Proceeds from the sale of Conflict Minerals underwrite black market activities relating to counterfeiting, drugs, restricted chemicals, uranium, guns and slave trading. Global Financial Intelligence Units (FIU) like Financial Action Task Force (FATF) and FInCEN oversee and enforce regulations concerning money laundering to prohibit proceeds of illicit transactions from entering the regulated economy. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Manufacturers and commodity merchants engaging in transactions involving Conflict Minerals from the Central African Republic and its surrounding countries must consult the OFAC’s SDN List, conduct PEP Checks (Politically Exposed People) and certify that source of materials, countries and banking institutions comply with the provisions concerning money laundering and reporting compliance with the Dodd-Frank law. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Though the law only lists four minerals its applications span a wide range of industry groups. The following is a list of Conflict Minerals and its applications. Source is Wikipedia. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Columbite-tantalite (or coltan, the colloquial African term) is the metal ore from which the element tantalum is extracted. Tantalum is used primarily for the production of capacitors, particularly for applications requiring high performance, a small compact format and high reliability, ranging widely from hearing aids and pacemakers, to airbags, GPS, ignition systems and anti-lock braking systems in automobiles, through to laptop computers, mobile phones, video game consoles, video cameras and digital cameras. In its carbide form, tantalum possesses significant hardness and wear resistance properties. As a result, it is used in jet engine/turbine blades, drill bits, end mills and other tools. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Cassiterite is the chief ore needed to produce tin, essential for the production of tin cans and solder on the circuit boards of electronic equipment. Tin is also commonly a component of biocides, fungicides and as tetrabutyl tin/tetraoctyl tin, an intermediate in polyvinyl chloride (PVC) and high performance paint manufacturing. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Wolframite is an important source of the element tungsten. Tungsten is a very dense metal and is frequently used for this property, such as in fishing weights, dart tips and golf club heads. Like tantalum carbide, tungsten carbide possesses hardness and wear resistance properties and is frequently used in applications like metalworking tools, drill bits and milling. Smaller amounts are used to substitute lead in "green ammunition". Minimal amounts are used in electronic devices, including the vibration mechanism of cell phones. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Gold is used in jewelry, electronics, and dental products. It is also present in some chemical compounds used in certain semiconductor manufacturing processes. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">SME's with supply chain exposures need to audit its supply chain to assure compliance with the in force provisions of Dodd Frank and Treasury Department anti-money laundering provisions. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Sum2’s Credit|Redi offers managers tools to gain better insights into supply chain risk. </span></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Sum2's also offers an AML compliance tool to screen</span> <a href="https://play.google.com/store/apps/details?id=com.rtken23.Sum2LLC.pacosar" style="font-family:Arial, Helvetica, sans-serif;">OFAC and SDN</a> <span style="font-family:Arial, Helvetica, sans-serif;">lists. </span></div><div style="text-align:justify;"></div><div style="text-align:justify;"></div><div style="text-align:justify;"></div><div style="text-align:justify;"><a href="https://play.google.com/store/apps/details?id=com.wCreditRediMobileOffice&hl=en"><img border="0" src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F3.bp.blogspot.com%2F-rmQTfahhS5o%2FU1ab748osCI%2FAAAAAAAAE18%2F5Ic18TZJqnA%2Fs1600%2Fcredit%2Breadi%2B100.png&container=blogger&gadget=a&rewriteMime=image%2F*" alt="proxy?url=http%3A%2F%2F3.bp.blogspot.com%2F-rmQTfahhS5o%2FU1ab748osCI%2FAAAAAAAAE18%2F5Ic18TZJqnA%2Fs1600%2Fcredit%2Breadi%2B100.png&container=blogger&gadget=a&rewriteMime=image%2F*" /></a></div><div style="text-align:justify;"></div><div style="text-align:justify;"></div></div><div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Risk, Dodd-Frank, Conflict Minerals,</span> <a href="http://www.nixonpeabody.com/public_companies_must_disclose_source_of_conflict_materials" style="font-family:Arial, Helvetica, sans-serif;">Nixon Peabody</a><span style="font-family:Arial, Helvetica, sans-serif;">, Central African Republic, OFAC, SDN, FATF, supply chain, AML, money laundering, AML BSA Reporting, Credit|Redi</span></div><div style="text-align:justify;"></div></div><div style="text-align:justify;"></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Graphic: Source Intelligence</span></div></div>