Tuesday, February 13, 2007

AML & High Risk Accounts

NASD recently fined Banc of America Investment Services, Inc. (BAI) US$3m in connection with the firm's failure to comply with anti-money laundering (AML) rules.

NASD found that BAI failed to obtain required additional customer information for high risk accounts. The 34 accounts at issue involved trust and private investment corporations domiciled in Isle of Man and apparently affiliated with one family. The offshore entities located in Isle of Man collectively held from US$79m to US$93m in assets and engaged in multi-million-dollar wire transfers across international boundaries.

At the time the accounts were open in Aug 2003, BAI had established AML procedures designed to address certain customer account risks by requiring additional information from the account holders, specifically the names of beneficial owners, before conducting substantial transactions.

Nevertheless, from Aug 2003 to Oct 2004, BAI did not require the names of beneficial owners and never restricted the account activities. BAI allowed the accounts to engage in large wire transactions despite the advice from a senior lawyer of BAI, a determination by the BAI risk committee and repeated requests by its clearing firm that the beneficial ownership information must be obtained.

BAI's compliance program for reporting suspicious transactions was also inadequate. While BAI relied on its parent bank to determine whether a suspicious activity report (SAR) should be filed, BAI did not ensure that there was adequate communication between BAI and its parent.

This case should be shared among those private bankers in HK.

2 comments:

  1. Anonymous8:53 AM

    Banks are serious about high risk accounts and are willingly to put into effort to fulfill the requirements of the Guidelines.

    Securities firms ... it is a joke.

    ReplyDelete
  2. Anonymous2:03 PM

    Talking about AML, I wonder how compliance officers of securities firms see PRC clients with huge sum of money in account, bearing in mind there is FCY exchange restriction.

    ReplyDelete