9 th March 2017 Regulation and fight against

9 th March 2017 Regulation and fight against financial crime David Heynes Sales Director EMEA at Accuity accuity. com

Agenda • Examining trade-based money laundering in sub. Sahara Africa • Financial Crime Risks • Key challenges of Trade Compliance • The important role of corporates in meeting international compliance standards • Lufthansa Cargo case study

Financial Crime Risks • International trade and the processes and systems that support it, are vulnerable to abuse for the purpose of financial crime • Complex, paper-based nature of transactions provides a large amount of data on parties, goods and services and involves scrutiny of relevant documents • The overall process of reviewing trade documents by its nature cannot be successfully automated • A misrepresentation of value cannot easily be identified. • All stakeholders need to take ownership for combating money laundering and not just Financial Institutions

Key Challenges with Trade Compliance Trade Finance departments are under competitive pressure due to delays resulting from compliance processes FIs are expected to have procedures and processes in place which allow staff to record the basis of their decision that arise at any stage of a transaction. FIs are also expected to retain evidence of decision making processes for audit and regulatory purposes. Trade Operations and Compliance depts lack the resource needed to meet new regulatory pressure and business expectations There is a lack of clarity on what and how to sreen goods to meet NPWMD requirements.

Lack of resource to meet new regulatory pressure, and having to do more with less • It takes a long time to go to multiple sources to do all the checks now required. • Doing repetitive, manual screening over lifecycle of trade (which can be months), or Not doing repeated screening due to lack of resource, opening up to risk • We’re trade finance experts, not compliance experts 5

I’m struggling to understand dual-use goods regulations – “we’re not engineers or chemists!” Titanium Alloy: • A lightweight alloy made up of Titanium and other chemical elements: • Corrosion resistant • Able to withstand extreme temperatures Civilian Use: • Golf club heads • Medical devices including dental implants and bone replacements Dual Use: • Armour plating • Military vehicles including naval ships, attack helicopters and ground assault vehicles • Missile casing

Agenda • Examining trade-based money laundering in sub-Sahara Africa • Wolfsberg, ICC & BAFT Trade Finance Principles Jan 2017 review • Key challenges of Trade Compliance • The important role of corporates in meeting international compliance standards • Lufthansa Cargo case study

Lufthansa Cargo Case Study In 2011, Lufthansa Cargo became aware of emerging regulatory concerns around dual-use goods and sanctions compliance The scale of the problem meant that solving it also had some business impacts One plane could easily be carrying 150 shipments from 150 consignees and involve 150 types of goods—manually checking all this in a reasonable timeframe would be impossible

Lufthansa Cargo Case Study. By using Firco Trade Compliance, Lufthansa Cargo has been able to create an across-the-board trade compliance vetting capability very efficiently, using a team of just six people The system is invisible to customers and shipping staff, but customers are learning to accept that when extra checks occur it is both necessary for Lufthansa and in their own interests. In one year, Lufthansa Cargo has checked over 47 million records using Firco Trade Compliance, which would otherwise need to be manually verified—an impossible task. Lufthansa Cargo is already seeing a return on its investment as it has been able to resume shipping to some destinations that it had ceased to do business with and has increased business volumes to other destinations. ‘By using Firco Trade Compliance we have definitely stopped shipments that could have ended very badly for us and our customers, ’ says Pfeiffer. ‘

Thank you David Heynes Sales Director EMEA David. Heynes@accuity. com p +44(0)20 7653 3841