OSFI Publish Basel II Definitions and Technical Specifications

Wednesday 15th March 2006 12:14

OSFI has released the following sets of documents:

AIRB for Deposit-taking Institutions

• IRB Credit Risk Monitoring Data Instructions

AIRB Wholesale Portfolio

• IRB Wholesale Portfolio Credit Data Definitions
• IRB Wholesale Portfolio Credit Data Technical Specification Fixed Spreadsheet
• IRB Wholesale Portfolio Credit Data Definitions Fixed Spreadsheet
• IRB Wholesale Portfolio Credit Data Technical Specification

AIRB Retail Portfolio

• IRB Retail Portfolio Credit Data Definitions
• IRB Retail Portfolio Credit Data Technical Specification Fixed Spreadsheet
• IRB Retail Portfolio Credit Data Definitions Fixed Spreadsheet
• IRB Retail Portfolio Credit Data Technical Specification

AIRB Wholesale Transaction

• IRB Wholesale Transaction Credit Data Definitions
• IRB Wholesale Transaction Credit Data Technical Specification
• IRB Defaulted and Fully Resolved Credit Data Definitions
• IRB Defaulted and Fully Resolved Loans, Technical Specifications

Each document set includes two items, data definitions and their corresponding informational dimensions, and technical specifications that provide structure of the required information. A presentation is included and outlines high-level instructions and timelines for interpreting the informational categories and requirements.

Full Details here

RPI and STB Systems present “Providing World Class Solutions to Meet the BSP Anti-Money Laundering Directives for 2006” - Philippines

Friday 10th March 2006 11:04

RPI and STB Systems present “Providing World Class Solutions to Meet the BSP Anti-Money Laundering Directives for 2006”

Please join RPI and STB Systems at this executive breakfast seminar which will explain how STB-Detector, which has a large base of very successful customers can provide a solution to meet the Anti-Money Laundering Directives issued by the BSP.

March 29, 2006, 7:45am to 10:30am at Mandarin Oriental Hotel, Manila.

To register for this event, please contact Geraldine Tuason at RPI. Tel: 632 635 4140

US set to issue delayed Basel II plans in March

Thursday 09th March 2006 10:42

US federal regulators expect to make public toward the end of March their delayed final plans for implementing Basel II , Office of Thrift Supervision (OTS) Director John Reich said today.

The plans are expected to be published formally in the Federal Register in May “for an extended comment period,” Reich told the national convention in Las Vegas of the Independent Community Bankers of America (ICBA).

FSA publishes second consultation paper on Capital Requirements Directive

Wednesday 01st March 2006 10:11

The Financial Services Authority (FSA) today (28th February) sets out its proposals for implementing the EU Capital Requirements Directive (CRD).

Aim
"Strengthening Capital Standards 2" is the FSA's major consultation on this subject and includes the full set of draft Handbook rules and guidance.

The aim of the CRD is to introduce a modern, risk-sensitive prudential framework for credit institutions and investment firms across the EU. The CRD, which comes into force on 1 January 2007, was developed in line with the revised Basel framework which will apply from 1 January 2008.


The consultation paper (CP06/3) published today follows agreement of the CRD by the EU Council of Ministers on 11 October 2005. It concentrates on the main policy areas not discussed in the FSA's initial consultation, in January 2005, together with policy issues that have arisen in the intervening period. These include the outcome of the Trading Book Review.

Following its previous consultation the FSA has reviewed in discussion with the industry, areas where its proposals would have gone beyond the CRD text. A number of proposals (including those on economic cycle stress-tests and diversification benefits) have been rebalanced in this consultation in a more liberal direction. Work on others continues for the longer term. The package proposed today meets cost benefit analysis disciplines and should find broad industry acceptance.

Other key issues addressed in the consultation paper include:

• How the FSA intends to assess internal ratings based (IRB) and advanced measurement approach (AMA) waiver applications
• The latest thinking on how the CRD will affect investment firms
• The FSA's intention to establish an EU-recognised covered bond regime in the UK
• The FSA's active involvement in the Committee of European Banking Supervisors (CEBS) and Accord Implementation Group's (AIG) work on CRD and Basel 2
• Reordering and clarifying various parts of the draft Handbook rules and guidance

The consultation period for CP06/3 ends on 28 April 2006.

This is a shorter consultation period than normal, but has been agreed with industry representatives to allow as much time as possible to prepare for compliance with the new rules.

The FSA will hold a major conference on 21 March 2006 to highlight the most important aspects of the CP for firms and to discuss with them issues arising from the practical implementation of the new rules.

The FSA intends to publish a Feedback Statement in July 2006 responding to comments received on CP06/3.

The FSA plans to finalise the Handbook rules and guidance to implement CP06/3 by October 2006.

Full Document here

Seminar - FSA implementation of the Capital Requirements Directive (CRD) in the UK - 21 March 2006

Friday 23rd February 2006 14:36

The FSA will issue its second consultation paper on the implementation of the Capital Requirements Directive on 28 February 2006. This conference will be held during the consultation period and will provide an opportunity for the FSA to explain its approach and to discuss with firms and other interested parties how to interpret the new requirements and prepare for implementation.

Purpose

To provide regulated firms, their advisors and other interested parties with a valuable opportunity to hear the FSA's thoughts on the UK implementation of the Capital Requirements Directive, and to raise any issues of concern.

Who should attend?

Executive directors, senior management from firms, financial organisations, trade associations, other European regulators, professional bodies and consultants. Anyone wishing to gain a greater appreciation of the FSA's thinking and discussions with the industry on this important topic.

Format

Keynote address from Hector Sants, Managing Director, Wholesale and Institutional Markets, FSA.

Speakers from the FSA and Industry, the EU Commission, other regulatory authorities and UK industry.

Forum for questions and answers.

Other information

Date: 21 March 2006.
Timing: Full-day conference.
Location: London (venue tbc).
Delegate fee: £425 + VAT (£499.38).
Spaces are limited so early booking is advised.

Full details here

SEC Approves Amendments to Anti-Money Laundering Compliance Program Rule and Adoption of Interpretive Material; Effective Date: March 6, 2006

Friday 17th February 2006 15:18

Executive Summary

On December 28, 2005, the Securities and Exchange Commission (SEC) approved amendments to NASD Rule 3011 and the adoption of IM-3011-1 and IM-3011-2.1 The amendments and new interpretive material require a firm to conduct an independent test of its anti-money laundering (AML) compliance program on an annual basis (with the exception of certain types of firms), clarify the persons not considered to be independent for purposes of the independent testing requirement, and require a firm, on a quarterly basis, to review and, if necessary, update the information regarding the firm's AML compliance person. The new rule text and interpretive material are contained in Attachment A and are effective on March 6, 2006.

Questions concerning this Notice may be directed to Brant K. Brown, Counsel, Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-6927.

1 Exchange Act Rel. No. 53030 (Dec. 28, 2005), 71 FR 632 (Jan. 5, 2006) (SR-NASD-2005-066).

View Full Notice PDF 42 KB

SEC extends XBRL reporting test deadline

Tuesday 14th February 2006 15:34

The staff of the U.S. Securities and Exchange Commission today announced that the deadline for companies to join the Commission's interactive data test group has been extended until March 10, 2006, in response to requests for more time from potential participants.

Since it was first announced January 11, several companies have already signed up to participate in the test group. The extension responds to numerous requests from the filing community for additional time for filers and service providers to investigate and prepare for participation. The four-week extension also recognizes the demands of year end reporting requirements.

Under the test program, Commission staff will offer expedited reviews of registration statements or annual reports to registrants that participate in the test group as part of the Commission's interactive data initiative. Interactive data holds the promise of transforming the static, text-only documents companies file with the SEC into dynamic financial reports that can be quickly and easily accessed and analyzed.

http://www.sec.gov/news/press/2006-20.htm

Basel Committee issues guidance on corporate governance for banking organisations

Monday 13th February 2006 16:00

The Basel Committee on Banking Supervision today issued guidance to help promote the adoption of sound corporate governance practices by banking organisations. This guidance results from a consultative document published in November 2005, which elicited a number of helpful comments from banks, industry associations, supervisory authorities and other organisations.

The guidance, entitled Enhancing corporate governance for banking organisations, builds on a paper originally published by the Committee in 1999, as well as principles for corporate governance issued by the Organisation for Economic Co-operation and Development in 2004. This guidance is intended to help ensure the adoption and implementation of sound corporate governance practices by banking organisations worldwide, but is not intended to establish a new regulatory framework layered atop existing national legislation, regulations or codes.

The paper highlights the importance of

• the roles of boards of directors (with a focus on the role of independent directors) and senior management;
• effective management of conflicts of interest;
• the roles of internal and external auditors, as well as internal control functions;
• governing in a transparent manner, especially where a bank operates in jurisdictions, or through structures, that may impede transparency; and
• the role of supervisors in promoting and assessing sound corporate governance practices.

Firm Disciplined for Trading Violations, Failure to Supervise Suspicious Accounts, and Improper Communications During An Internet Road Show

Friday 10th of February 2006 15:44

NEW YORK, February 9, 2006 - NYSE Regulation ("NYSE") announced today that it has censured and fined a member firm, $1.5 million for trading violations in connection with index arbitrage trading; failure to supervise suspicious brokerage accounts; and improper communications by a research analyst whose remarks, made during a presentation for an initial public offering ("IPO") that was broadcast as part of an Internet road show, did not present fair and balanced information.

"These violations, though diverse in nature, all point to a weakness of internal controls," said Susan L. Merrill, chief of enforcement, NYSE Regulation. "Executives must understand that the cost of doing business always includes sufficient resources and personnel to fulfil operational and compliance requirements and also to remedy problems when they are uncovered."

This disciplinary action concerned violations of NYSE Rule 80A, Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934 (the "Exchange Act") and NYSE Rule 440, NYSE Rule 440B and Exchange Act Rule 10a-1, and NYSE Rules 342, 405 and 472.

The list of violations included index arbitrage trading violations, failure to supervise accounts with suspicious activity and improper communications by a research analyst.

Failure To Supervise Accounts With Suspicious Activity

During the period January 1998 through December 2002 the firm violated NYSE rules concerning the supervision of ten accounts controlled by a foreign customer (the "Customer.") The firm also failed to use due diligence to learn essential facts relative to this Customer and his orders.

As early as 1995, the Customer was the subject of foreign news reports alleging fraud and financial improprieties at the bank where he was chairman. From January 1998 through December 2002, there were in excess of 20 wires into the Customer's accounts totaling in excess of $20 million. On more than 95 occasions, funds totaling in excess of $18 million were wired from the accounts. On approximately 145 occasions a total in excess of $15 million was journaled between various accounts at the Firm. Many of the wires and/or journals noted above were processed without any underlying security transactions being effected in the accounts receiving the funds.

The frequency and size of the wires and journals involving the Customer's accounts at the firm should have subjected them to further scrutiny and review by the firm and its supervisory personnel, at or around the time they occurred, particularly since several of these wires and/or journals coincided with suspicious investment activity.

During the relevant period, the firm had in place written policies and procedures that were designed to detect and prevent suspicious transactions of the type that occurred in the accounts. Despite having such policies and procedures in place, the firm permitted the suspicious activity discussed above to continue without making any reasonable inquiry into the transactions. Further, the firm failed to discuss with the registered representative the manner in which the accounts were being handled and it failed to learn the essential facts relative to orders the firm executed for the accounts.

On January 5, 2006, the Division of Enforcement issued charges against a registered representative in connection with his handling of the Customer's accounts, including failing to communicate to the firm information regarding allegations of fraud and financial improprieties involving the customer, and to use due diligence to learn essential facts relative to the Customer and the Customer's accounts, in violation of NYSE Rules, including "Know Your Customer."

In settling these charges brought by NYSE Regulation, The member firm neither admitted nor denied the charges.

Full details can be found here:

http://www.nyse.com/Frameset.html?displayPage=/press/1139397230229.html#05-163

COCC signs five to AML system

Friday 10th of February 2006 10:12

COCC, a leading provider of next generation technology services for financial institutions, today announced that five institutions have committed to installing the company's automated Anti-Money Laundering system.

COCC offers the system under its Sentry Services suite of fraud prevention products.

"Increased regulatory pressure is driving many community-based institutions to rethink their approach to fighting money laundering activity," said COCC's Strategic Products Director, Linda Stahl. "Automated detection tools plus integration with the transaction processing system and comprehensive displays of potential risks and actions taken are generating exceptionally strong interest in this product."

Money laundering is estimated to involve more than $1.5 trillion dollars worldwide each year. With money center banks largely protected by sophisticated anti-money laundering (AML) technologies, the illegal activity now flows to smaller financial institutions. "Unfortunately, this creates new concerns and operational challenges for community banks just as other regulatory needs are draining their resources," said Stahl.

COCC's Sentry Services and its Anti-Money Laundering (AML) product detects money laundering activity while containing regulatory overhead, according to Stahl. "In the case of AML, this means providing a high quality, outsourced solution that implements the bank' money laundering policies in a highly cost-effective manner," she added.

COCC allied with a leading provider of anti-money laundering solutions (STB Systems, Inc.) to automate the complex tasks involved in complying with AML regulations. 175 organizations use STB's automated compliance solutions world wide.

"This is a top of the line system by any standard," said Stahl. "We are pleased to have adapted it for core and non-core clients."

Stahl explained that COCC's AML solution accumulates a permanent compliance database from multiple transaction sources. As a rules-based solution, the system uses pre-set and client-specific "anomalies" to automatically alert the bank to patterns of exception activity and to identify potential money-laundering suspects. When suspicious activity is discovered, bank personnel can view all the information involved in identifying that activity as well as decisions made and actions taken.

"Our solution automatically generates information for Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs) for review by bank officials," said Stahl. "The system fully documents the alert, research, decision and filing of the suspicious activity reports."

Jill Sung, President and CEO of Abacus Federal Savings Bank, said last year's installation of the COCC anti-money laundering service is critical to her operation. "Any financial institution performing this process manually can't possibly get the job done," said Sung. "You need a high-powered technology solution to meet the constant challenge of discovering structured transactions."

Sung adds that the bank is especially pleased with the system. "We like the system's flexibility, its ability to automatically generate information for the Suspicious Activity Reports (SARs), and to document activities supporting the SARs thereafter," said Sung. "Nobody knows what the next round of examinations will require, but we believe that our AML system will be able to adapt to additional requirements that come in the future."

Stahl expects further AML product sales as regulators step up their pressure on community banks and credit unions.

About COCC

COCC is one of the fastest growing data processing companies in the nation. Established in 1967, this client-owned company provides complete enterprise processing solutions to financial institutions using the latest open systems. COCC’s full service offering goes well beyond the traditional systems approach. Hands-on support from account processing to secure Internet access are the hallmark of COCC’s Total Quality Processing.

COCC was recognized by Cornerstone Advisors in its Gonzobanker newsletter for migrating all of its clients from a proprietary core system to an open, relational system built on an Oracle data base. COCC is the only data processor in the country to accomplish this feat.

For more information, please visit www.cocc.com or contact Bob Bessel at 860.674.7214 or at bessel@cocc.com.

FSA sets out priorities and budget for 2006/07

Thursday 02nd of February 2006 14:45

The Financial Services Authority today publishes its Business Plan for 2006/07, setting out its priorities for the year ahead and its planned budget to achieve its objectives.

Priorities

The planned priorities for the FSA in 2006/07 are to:

• Perform firm and market supervision broadly in line with its current risk appetite. Central to this will be improvements to the "ARROW" process, the way in which the FSA assesses risk and applies its resources accordingly. Over the past two years the regulator has been investing heavily in updating and improving its risk-based approach. In September 2005, a new approach to the way in which the FSA communicates individual risk assessments to firms was introduced. Following this, the FSA aims to begin the roll-out of the improved "ARROW II" process from March 2006. This is intended to provide an FSA-wide integrated risk management process that results in timely and effective decision-making.
• Begin or complete priority thematic work - where the FSA studies a particular sector or aspect of the regulated market - targeted on the basis of risk. Recent examples of thematic work include: inquiries into sales of Payment Protection Insurance and subsequent follow-up work, including enforcement investigations, with individual firms; the review of the handling of client money within general insurance brokers; and the study carried out during the first half of 2005 into current market practice on the identification and management of conflicts of interest.
• Implement the Markets in Financial Instruments Directive (MiFID) and Capital Requirements Directive to a high standard; continue its international leadership on Solvency 2 and at the international level more generally.
• Begin new enforcement cases as well as putting in place the remaining recommendations from the Strachan review of enforcement processes, published last July.
• Continue its leadership role on financial capability, driving forward in particular work in the areas of schools, higher education, young people not in education, employment or training and the workplace. It will also make further improvements to the information and services it provides to consumers.
• Strengthen its analytical research and understanding of key sectors - trends, competition drivers, supply chains, market structures - to better inform its regulation.
• Maintain effective management and oversight of finance, risk, resource allocation, legal issues and internal controls.
• Make improvements to its information systems infrastructure and functionality.
• Significantly improve performance against its service standards.
• Accelerate the change necessary to deliver its better regulation agenda, as set out in the Better Regulation Action Plan in December 2005, including raising further the quality and training of its people.

The FSA's chief executive, John Tiner, said: "Much of our work in 2006/07 will be a continuation of projects or themes already in process. We will both continue to improve our risk based approach to regulation and firm supervision and take forward our commitment to deliver a more effective regulatory regime by changing the balance significantly towards a more principles-based approach. I believe that this twin approach is right for the UK financial services industry and its customers and for delivering better regulation."

"While much of our policy work continues to be driven by initiatives at an EU and international level, we have wide discretion over much of what we do day-to-day. So we continue to be alert to market developments and we identify in this Business Plan a small number of new themes. While this plan represents our best judgement on what we currently see as priorities, we will not hesitate to reposition our resources in the event that a major new issue emerges during the year."

The Business Plan links closely with the Financial Risk Outlook 2006, published last week, which describes the wider environment relating to the financial services industry and the risks to delivery of the FSA's aim of maintaining efficient, orderly and fair markets, helping retail customers achieve a fair deal and improving its business capability and effectiveness.

Budget and fees

The budget for 2006/07 will be £276.1m, an increase of 3.25% on the previous year's budget of £267.4m. This will include £2m to fund improvements to the enforcement process recommended by the Strachan Review and funding for an overall 4.5% increase in staff pay. This is required to provide the necessary flexibility to respond to the pay pressures in some sectors. To meet the budget, the FSA will need to improve productivity by £7m.

Published alongside the Business Plan, the 2006/07 fees consultation paper (CP06/2) explains how the FSA proposes to raise the annual funding requirement from fee payers and provides an opportunity for comment on the fee proposals.

Overall the FSA anticipates that around 82% of firms will see a decrease, no change, or an increase of less than 3% in their periodic fee in 2006/07. Current projections indicate that minimum fee-payers will pay fees in 2006/07 that are no more than 2.5% higher than those they paid in 2005/06, and many of them will see no increase at all.

To help payment of fees by firms, the FSA is again looking to provide an option to pay by instalments. This will be on a similar basis to the market solution the FSA facilitated in 2005/06 under which a credit provider supplied firms with an instalment plan for fees and levies. The scheme has been very successful with more than 3,200 firms choosing to pay by instalment.

The FSA will today introduce an Online Fees Calculator on its Website which will allow firms to calculate their likely fees and levies in 2006/07 based on their fee tariff data and the proposals in the Fees Consultation Paper. The FSA will update the Fees Calculator with the actual rates once they have been finalised in May 2006.

The Business Plan 2006/07 is published today on the FSA web site. http://www.fsa.gov.uk/pubs/plan/pb2006_07.pdf

FSA's 2006 Financial Risk Outlook emphasises the need for stress testing

Tuesday 31st of January 2006 13:03

The Financial Risk Outlook 2006 highlights significant developments in the environment within which the FSA operates. It aims to draw out the links between these developments and the risks to the FSA's statutory objectives and strategic aims. This analysis is then used to help shape the FSA's strategy. By publishing this document, the FSA seeks to raise awareness of the key issues facing it and the regulated industry and to place the FSA's actions and decisions in context. The FRO's conclusions are a key element in guiding the FSA's priority-setting arrangements which will be set out in its Business Plan 2006/07, due to be published on 1 February 2006.

The Financial Services Authority has today (25th January) published its Financial Risk Outlook 2006. It highlights the risks that the FSA believes will be most important in the next eighteen months and how these could affect its ability to achieve its statutory objectives and strategic aims. The Financial Risk Outlook therefore provides the background against which the FSA sets its priorities for the year. These will be detailed in its annual Business Plan, to be published next week.

Callum McCarthy, Chairman of the FSA, said: "The Financial Risk Outlook is designed to raise awareness of the key risks which the FSA believes it, and both providers and users of financial services, should consider.

"Despite a year of growth and stability in 2005, and the prospect for broadly comparable conditions in 2006, there are risks and uncertainties which need to receive greater attention. The risks to macroeconomic stability and growth are more weighted to the downside in 2006 than in 2005: it is easy to identify an increasing number of severe risks which, although of low probability, would have high impact if they were to materialise.

"In these circumstances it is important that senior managers in financial services firms do not rely on the continuation of the low volatilities and stability of recent years, but instead identify, analyse and test the impact on their firms of differing assumptions, by carrying out effective stress tests, and learning from them."

The FSA's central assumption for macroeconomic conditions for the next 12-18 months is that the relatively benign conditions experienced in 2005 will continue: that there will continue to be strong world economic growth, without substantial change to the economic and financial stability which characterised 2005. This assumption is in line with consensus forecasts. But these relatively benign conditions are accompanied by large and growing imbalances which are in the long term unsustainable, and whose correction, if it were to occur in a rapid or disorderly manner, would pose risks to both providers and users of financial services. The Financial Risk Outlook examines in particular three possible sources of instability which could affect firms, markets, consumers and the FSA's own work. These are:

• a significant and sustained rise in oil prices;
• a slow-down in global consumption; and
• a large and disorderly depreciation of the US dollar.

The Financial Risk Outlook also identifies and discusses a number of particular risks which, would adversely affect the FSA's ability to discharge its statutory responsibilities if they were to materialise. Many would also affect financial markets. Some of these risks are events, others trends. The risks identified are:

• It is important for firms to evaluate how they would respond to extreme risk scenarios, such as a global pandemic or a major corporate bankruptcy, despite the current period of relatively low market volatility.
• The threat of terrorism poses a range of financial-crime, operational and insurance risks.
• Valuation problems with illiquid financial instruments, such as complex derivatives and structured products, raise operational and conflicts-of-interest risks.
• The level of outstanding credit-derivative trade confirmations presents operational and legal risks for firms; due to the rapid growth in the credit-derivatives markets, a backlog in unconfirmed credit-derivatives transactions has built up. * The risk of financial fraud is increasing.
• The volume of international regulatory reform creates challenges for the financial-services industry.
• High levels of consumer borrowing may create financial problems for a significant minority of consumers.
• Increasingly complex financial decisions will pose a challenge for many consumers.
• Consumers are being required to take more responsibility for financing their retirement.

The Financial Risk Outlook emphasises the need for the senior managers of financial service firms to carry out stress tests to identify how their firms would respond to these and other risks materialising, and the adverse conditions, including a sudden drying up of liquidity, that they might cause. The FSA is encouraging firms to fully embed stress testing into their day-to-day management processes. The ability to aggregate risks in stress testing will give firms a more complete sense of the risks they face, including hidden correlations across portfolios. Evidence suggests that this remains a key challenge for many firms that, if it is not addressed, leaves them vulnerable to sudden events.

FSA's 2006 Financial Risk Outlook

Bank of England release Statistical Notices to Reporting Banks 2006/01

Monday 30th of January 2006 15:50

A summary of the main points is below:

1.Reporting of write-offs on Form QX (reminder & clarification)
2.Update to the Classification of Accounts Guide(effective immediately)
3.Reclassification of British Broadcasting Corporation (BBC) and Channel 4 Wales (S4C) (effective end-January 2006 reporting)
4.Increased tolerances on Form BG (effective Q1 2006 reporting)
5.Reporting of derivatives net spread earnings on Form PL (effective Q2 2006 reporting)
6.Form BE definitions (update)
7.Form Q1(D) definitions (clarifications)
8.Reporting of credit default swaps on Forms CE and C1 (clarification)
9.Significant and/or strategic proposals for Bank of England reporting (information)
10.Publication schedule 2006/07 (update)
11.Contents page for Yellow Folder (update)

The full Stats notice can be downloaded here

OFAC Releases Sanctions Enforcement Procedures for Banking Institutions

Friday 27th of January 2006 14:35

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today published guidelines in the Federal Register titled "Economic Sanctions Enforcement Procedures for Banking Institutions Regulated by FFIEC-member Supervisory Agencies."

"As the administrator of U.S. economic sanctions, OFAC emphasizes in these internal procedures that the primary goal of enforcement actions is to promote more effective compliance within the particular institution, as well as throughout the industry," said OFAC Director Robert Werner.

The guidelines complement and expand upon OFAC's contribution to the Bank Secrecy Act Anti-Money Laundering Examination Manual published by the Federal Financial Institutions Examination Council on June 30, 2005.

The procedures spell out an institutional - rather than a transactional - approach to enforcement, taking into account risk-based efforts by financial institutions to ensure OFAC compliance, as well evaluating violations that appear to have occurred.

"OFAC recognizes the uniqueness of every institution's compliance program and how each program must be geared toward the size of a bank's accounts, its business volume, its customer base, and its product lines," Werner continued.

The procedures highlight OFAC's partnering with the functional bank regulators who will receive information related to apparent violations and compliance concerns as OFAC becomes aware of them. The regulators, in turn, will share with OFAC their evaluations of the adequacy of banks' compliance programs.

OFAC will be reviewing apparent violations on a periodic basis in the context of each institution's overall OFAC compliance program and specific OFAC compliance record. The reviews will include such factors as:

• The opinion of a bank's primary federal regulator;
• The institution's history of OFAC compliance;
• The circumstances surrounding any apparent violation, including any patterns or weaknesses in an institution's compliance program and whether those weaknesses indicate negligence or fundamental flaws;
• Whether violations were voluntarily disclosed;
• Enforcement information provided by the institution to OFAC;
• The number of transactions or accounts that the institution handled improperly during the period under review and its responses to OFAC administrative subpoenas;
• The number of transactions successfully blocked or rejected by the bank during the period; and
• The actions taken by the bank to correct any violations and to ensure that similar violations do not recur.

After evaluating the information, OFAC will contact the bank to convey a preliminary assessment. OFAC's staff will discuss the results of its review, including any patterns or compliance weaknesses and will indicate what administrative action OFAC intends to take for each transaction or set of related transactions that appear to constitute violations.

Once OFAC has reached a final decision, it will notify the institution in writing and provide a copy of its evaluation letter to the institution's primary federal banking regulator. In the event that OFAC notifies a bank of its intent to pursue a civil penalty, existing civil penalty procedures under OFAC regulations will be followed, including the opportunity for informal settlement.

OFAC is soliciting comments for 60 days from the public about the new procedures, including suggestions on how OFAC Enforcement Procedures might be made to apply to state-regulated institutions, the insurance and securities industries, and the import/export community.

A copy of the guidelines may be accessed here:

http://www.treas.gov/offices/enforcement/ofac/legal/regs/fr71_1971.pdf

FSA to streamline money laundering rules for firms

Friday 27th of January 2006 12:25

"We believe that firms will increasingly be able to target their resources where they will make the most difference in fighting crime." Phillip Robinson, FSA.

The Financial Services Authority confirmed today in a Policy Statement that it will press ahead with streamlining its anti-money laundering requirements for firms as part of its drive to simplify the FSA Handbook and remove rules and guidance that are no longer needed.

There was overwhelming support from the industry and other respondents for these proposals. The FSA will remove the existing detailed rules on anti-money laundering controls in their entirety, replacing them with high-level requirements for firms to have their own risk-based controls on money laundering. This reflects the FSA's wish to provide firms with greater flexibility to meet their anti-money laundering obligations and an increased focus on senior management responsibility to do so. This should encourage firms to target resources on activities which are most likely to result in deterring and detecting money laundering.

Philip Robinson the FSA's Financial Crime Sector Leader, said: "The changes in our Handbook do not mean we are going soft on money laundering, they are part of delivering a more proportionate and effective regime to counter money laundering. We believe that firms will increasingly be able to target their resources where they will make the most difference in fighting crime."

Existing government regulations will remain in place, supplemented by industry guidance which is currently being reviewed. The changes will come into effect at the beginning of March, but firms will have a transitional period until August 2006 to become fully compliant with the new rules.

The FSA's consultation paper last July proposed two other sets of changes to simplify and reduce the burden of regulation on firms, these were to their Training and Competence and Approved Persons regimes. Today's Policy Statement does not include feedback on these proposals. This is due to the need for the FSA to take into account the possible developments in the European Commission's measures in implementing the Markets in Financial Instruments Directive and the impact this may have on the two regimes. The FSA expects to publish feedback on these issues once the European position is clear and they have been able to determine how it may affect what they should do.

The Handbook review programme focuses on eliminating or changing requirements which are more restrictive than needed to achieve the FSA's statutory objectives, which do not deliver benefits to justify their costs, or which are not consistent with the FSA's focus on senior management responsibility. It forms part of the FSA's move towards a more principles-based approach to regulation.

Policy Statement 06/1 'Reviewing our Money Laundering regime: Feedback on Chapter 2 and made text' is available on the FSA website. http://www.fsa.gov.uk/pages/library/policy/policy/2006/06_01.shtml

Consultation paper 05/10 'Reviewing the Handbook' is available on the FSA website. http://www.fsa.gov.uk/Pages/Library/Policy/CP/2005/05_10.shtml

In reviewing the Handbook, the FSA is guided by the following principles:

• Focusing on making changes in areas where it can have real impact and only respond to suggestions to make changes to individual Handbook provisions where the benefits are clear;
• Taking advantage of opportunities to streamline the Handbook as they arise – for instance, where there is scope to redraft material when implementing a directive;
• Adopting high-level standards where these are more appropriate than detailed rules. Benefits arise from focusing our attention on senior management responsibilities and allowing firms greater flexibility in some areas; and
• Ensuring that the FSA does not leave firms without guidance that is useful.

The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000:

• maintaining market confidence;
• promoting public understanding of the financial system;
• securing the appropriate degree of protection for consumers;
• and fighting financial crime.

The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

Business Analyst Vacancy

We are currently seeking candidates for an analyst role within the Business Analysis team of our London office.

The candidate will possess a thorough working knowledge of Bank of England/FSA regulatory reporting, preferably including Capital Adequacy calculations and methodologies. Ideally the candidate will also have had exposure to FSA Investment Business reporting (former SFA) but knowledge of other regulators' reporting would be viewed favourably.

Full details here