Compliance Professional Resources Newsletter

FOR IMMEDIATE RELEASE
April 27, 2011
CONTACT: Steve Hudak • 703-905-3770

FinCEN to Implement CISADA Provision

Seeks U.S. Banks’ Assistance in Uncovering Iranian Financial Ties

VIENNA, Va. – The Financial Crimes Enforcement Network (FinCEN) today proposed regulations to implement section 104(e) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) to impose a reporting requirement that would be invoked, as necessary, to elicit information valuable in the implementation of CISADA.

The proposed regulations would require a U.S. bank to report to FinCEN the following information about foreign banks for which the U.S. bank maintains a correspondent account:

(1) Whether the foreign bank maintains a correspondent account for an Iranian-linked financial institution designated under the International Emergency Economic Powers Act (IEEPA);

(2) Whether the foreign bank has processed one or more transfers of funds within the preceding 90 calendar days related to an Iranian-linked financial institution designated under IEEPA, other than through a correspondent account; or

(3) Whether the foreign bank has processed one or more transfers of funds within the preceding 90 calendar days related to Iran’s Islamic Revolutionary Guard Corps (IRGC) or any of its agents or affiliates designated under IEEPA.

The proposed regulations would work in tandem with other financial provisions of CISADA to isolate financial institutions designated by the U.S. Government in connection with Iran’s proliferation of weapons of mass destruction (WMD) or delivery systems for WMD, or in connection with its support for international terrorism.

This document has been submitted to the Office of the Federal Register (OFR) for publication and is currently pending placement on public display at the OFR and publication in the Federal Register. The document may vary slightly from the published document if minor editorial changes have been made during the OFR review process. Upon publication in the Federal Register, the regulation can be found at http://www.gpoaccess.gov/fr/, www.regulations.gov, and at www.FinCEN.gov. The document published in the Federal Register is the official document. Public comments are welcome for 30 days after publication in the Federal Register.

Compliance Professional Resources David DeMartino 212.257.6500 ext.1 ddemartino@compliancepros.net

July 2011
	This issue's articles:
	CISADA/Iran Why Examiners Have Issues With the Way AML Technology is Used Everything is Negotiable Regulator's Corner

	CISADA/Iran
	by David DeMartino, CPC Managing Partner, Compliance Professional Resources, LLC Proposed regulations to implement section 104(e) have been presented on CISADA/Iran. It appears that you will need to assess your correspondent relationships with your foreign banks: Determine if those banks maintain a correspondent account for an Iranian-linked financial institution under IEEPA. Determine if the foreign bank processed one or more funds transfers within the proceeding 90 days related to an Iranian linked financial institution, other than through a correspondent account. Determine if the foreign bank processed one or more funds transfers within the preceding 90 days related to IRGC or any of its agents or affiliates designated under IEEPA. It would seem that this now creates a process in which your correspondent relationships will need to validate and certify against points 1, 2, 3 above. Given the already staggering workload in compliance please consider CPR to assist you with this project. We can help in the following ways: Provide temp contractors to assist in reviewing and acquiring the needed information from your correspondent accounts. You would simply manage the resources. Provide a project team with the associated staff and project management skills to manage the project from start to finish.	FOR IMMEDIATE RELEASE April 27, 2011 CONTACT: Steve Hudak • 703-905-3770 FinCEN to Implement CISADA Provision Seeks U.S. Banks’ Assistance in Uncovering Iranian Financial Ties VIENNA, Va. – The Financial Crimes Enforcement Network (FinCEN) today proposed regulations to implement section 104(e) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) to impose a reporting requirement that would be invoked, as necessary, to elicit information valuable in the implementation of CISADA. The proposed regulations would require a U.S. bank to report to FinCEN the following information about foreign banks for which the U.S. bank maintains a correspondent account: (1) Whether the foreign bank maintains a correspondent account for an Iranian-linked financial institution designated under the International Emergency Economic Powers Act (IEEPA); (2) Whether the foreign bank has processed one or more transfers of funds within the preceding 90 calendar days related to an Iranian-linked financial institution designated under IEEPA, other than through a correspondent account; or (3) Whether the foreign bank has processed one or more transfers of funds within the preceding 90 calendar days related to Iran’s Islamic Revolutionary Guard Corps (IRGC) or any of its agents or affiliates designated under IEEPA. The proposed regulations would work in tandem with other financial provisions of CISADA to isolate financial institutions designated by the U.S. Government in connection with Iran’s proliferation of weapons of mass destruction (WMD) or delivery systems for WMD, or in connection with its support for international terrorism. This document has been submitted to the Office of the Federal Register (OFR) for publication and is currently pending placement on public display at the OFR and publication in the Federal Register. The document may vary slightly from the published document if minor editorial changes have been made during the OFR review process. Upon publication in the Federal Register, the regulation can be found at http://www.gpoaccess.gov/fr/, www.regulations.gov, and at www.FinCEN.gov. The document published in the Federal Register is the official document. Public comments are welcome for 30 days after publication in the Federal Register.

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	Why Examiners Have Issues With the Way AML Technology is Used
	by David DeMartino, CPC Managing Partner, Compliance Professional Resources, LLC Having co-founded the premier AML/OFAC/EDD technology servicing the international financial space, I have a pretty good idea of what will get you into trouble with the regulators as it relates to you compliance technology. I cannot express how important it is for a 3rd party assessment of your technology. KEEP IN MIND CPR IS EXPERT AT DOING THIS. Here is my top 10 list. 1- Underutilization of the technology Big problem, examiners are getting better at understanding what the technologies can do. They know if a technology is underutilized in most cases, especially if they have examiner peer banks that have the same platform. Their issue is underutilization due to lack of interest in the technology or intentional underutilization so that the technology does not produce too many cases. 2- Old version of the software This is a killer; updated versions come with better ways of detecting suspicious activity. When you are multiple versions behind the regulators believe that the focus on the technology is just not there. 3- Calibration not sophisticated There are many bells and whistles with the technologies, these capabilities should be configured around what risk your firm has and what is industry best practice. Examiners don't like rudimentary calibration, especially when you have a high risk profile.	4- High false positive rates Many believe that the creation of many cases is a signal to the examiners that that system is overly sensitive and therefore they should get a pass during the exam. I would tell you that too high a false positive rate in an examiner's eyes indicates that the ability to accurately identify real issues is undermined by too much noise. 5- Undertraining of staff Yes, most staff is not kept abreast of the nuances of what their technology can do. Examiners quickly pick this up and view this a big negative. 6- Poor data mapping I have seen many instances where critical data was not mapped properly. That's a big problem especially when using rules that simply will not fire because the data is incorrectly mapped. Examiners check for this, and if severe may cause a look back. 7- Transaction types not included surveillance review Big issues here too, not having certain transactions put under review because they seem not to carry significant risk could be a red flag to the examiners. Examiners may see things differently. I would be very cautious. 8- Risk assessment issues Not consistent with what the firm has done in its risk assessment and how that is carried across to the AML system. Poor methodology. Examiners know when this is not accurate, the foundation for the use of the technology is flawed. 9- Poor case/alert investigation This is a killer. Cases/alerts are created but poorly reviewed. Examiners will see this pretty quickly, having a great system and a poor process is a recipe for disaster. 10- Budget Not an acceptable excuse, THIS IS EVOLVING TECHNOLOGY NOT MATURE TECHNOLOGY. Money must be put into the technology, else it becomes ineffective over time. Another red flag for examiners.

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	Everything is Negotiable
	by Len Adams, C.P.C. Chief Executive Officer Adams Consulting Group, LLC Managing Partner, Compliance Professional Resources, LLC Managing Partner, The A.R.D. Group Negotiation is defined as the use of information and power to affect behavior. Whether we realize it or not, we negotiate something every day of our lives. Whether it be what time your children go to bed to the final price of the car you want, a negotiation takes place. This is especially true when it comes to the job search process. There are several items to be cognizant of when it come to negotiating, whether it be for a job or in our everyday lives. Who, What, When, Where, Why? Yes, it is true that these are the same questions utilized by reporters when writing a story. However, these same questions must be examined when negotiating. 1. Who am I negotiating with? Does the person I am negotiating with have the power or authority to make the final decision regarding the issues I am confronting? All too often, particularly in a job search, the candidate spends far too much time negotiating points with someone who either may not be the decision maker, or may not be able to influence the decision maker. 2. What am I negotiating? Are the issues I am raising important enough to discuss? Are they really deal breakers? All too often, a deal may fall apart over an issue that, when examined, is really not that important to either side. 3. When do I negotiate? Again, one of the most common mistakes candidates make is beginning a negotiation far too early in the process. Most candidates mistakenly believe that the first interview is the time to begin negotiating. Nothing could be further from the truth. The first interview, and in most cases, the second interview, are times to "sell" oneself. The objective of these meetings is pure and simple: To learn as much about the position and company as possible, and to get the employer interested in you. Once sufficient interest is established, then and only then should the negotiation process begin.	4. Why? Is the issue important enough to negotiate? Negotiable Issues Contrary to popular belief, most items are negotiable when it comes to a job offer. However, some are more negotiable than others. This is the variable that a skilled negotiator can determine. There are many factors to consider. One of the most important is to realize what type of job market one is negotiating in. If it is a candidate-driven market, or if the candidate has skills that are in demand, than many other negotiable items increase. If the reverse is true, the pendulum swings back towards the employer. Some of the more common items that may be negotiated are: Salary, Title, Benefits, Hours, Perks, Review Period, Bonus, Sign-on Bonus, Location. Each of these items carries with it nuances as to how negotiable they are. It is important to remember to ask oneself the question...how important is this to me? Is it a deal breaker? To what degree do I want to negotiate this? For instance, salary may be a primary motivation factor in your acceptance or decline of an offer. It is important to look at the full picture...does the position carry other benefits with it that may outweigh the salary differential you are experiencing? In many cases, the salary differential is merely an arbitrary number that either side has focused on. Consider negotiating a review period sooner than the normal one. Many employers will view this as an indication of your willingness to demonstrate your ability and be rewarded accordingly. I have a saying that I have used for years in my business: If money is the only issue standing in the way of an offer being accepted by either side, than the issue is not the money... there is something else that has not been communicated by one or both sides. The skilled negotiator needs to find out what that issue is. The same holds true for just about each of the negotiable items. The key is to find how the employer and prospective employee can meet each other's needs in win-win environment.

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	FinCEN Releases Latest SAR Activity Reviews: By the Numbers, and Trends, Tips & Issues The Financial Crimes Enforcement Network today released two new reports based on information contained in suspicious activity reports (SARs): the 16th edition of the SAR Activity Review - By the Numbers and the 19th edition of the SAR Activity Review: Trends, Tips & Issues. FinCEN released both reports at the semi-annual meeting of the Bank Secrecy Act Advisory Group (BSAAG). *Federal Reserve Seeks Comment on Proposed Rule Related to Supervision of Designated Financial Market Utilities* The Federal Reserve Board has requested comment on a proposed rule that implements two provisions of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to the supervision of financial market utilities (FMUs) designated as systemically important by the Financial Stability Oversight Council. FMUs, such as payment systems, central securities depositories, and central counterparties, provide the essential infrastructure to clear and settle payments and other financial transactions.	Regulator's Corner

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	About CPR

	CPR is a unique regulatory compliance services firm. A unique blend of compliance recruiting services (executive, permanent, and temporary), and compliance consulting services. Add in managing partners that have essentially pioneered the industry, this makes CPR clearly a leader in the Regulatory Compliance service space. Our commitment to excellence in all phases of our business is unparalleled. As it relates to recruiting, we will provide you with the best, most skilled candidates, we work tirelessly to get the right person, after we completely understand your needs. Our Compliance consultant services are surgically focused on getting the job done as expeditiously as possible, and without crippling your budget. We only provide seasoned and experienced consultants, always with the correct skill sets. Our goal is to get it right the first time.
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