V. Conferencia Internacional Antilavado de dinero y Contra el Financiamiento al Terrorismo Anti-Money Laundering Compliance for Broker/Dealers Current Trends and Leading Practices July 2009 KPMG FORENSIC SM ADVISORY

1 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Current Regulatory Environment Increased Anti-Money Laundering (“AML”) focus of SEC and FINRA routine exams involving broker/dealers According to the SEC, a significant number of all routine exams showed deficiencies in AML Compliance Renewed focus of SEC and FINRA on fraud - ponzi schemes* New focus of FINRA on Foreign Corruption Practices Act (FCPA)* Source:

2 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Common Deficiencies According to the SEC*, most common AML exam deficiencies at broker/dealers include:  Lack of comprehensive AML programs  Lack of implementation of AML programs  Lack of / inadequate independent AML compliance testing  Inadequate transaction monitoring systems  Failure to report suspicious activity * Source:

3 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Know Your Customer (“KYC”) Who is your customer?  CIP is not sufficient to “know” parties to an account. Concealment of source and ownership of funds  Complex ownership structures  Anonymous beneficiaries Screening parties to the account against relevant lists (OFAC, Section 311, PEPs)

4 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Know Your Customer (“KYC”) Relying on customer admission is not a sufficient means to identify PEPs Commercially produced filtering systems can be used to identify PEPs  Results will only be as good as the information gathered at account opening Detailed policies and procedures essential to mitigating these risks

5 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Know Your Customer (“KYC”) Continuous Risk Assessment Monitoring Trending & Re- scoring On boarding Customer

6 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Transaction Monitoring Systems No Universal Solution Build vs. Buy  “People who design these systems should use them. Although I've said systems are not sophisticated, they are sometimes too much so for our own good” Switzerland respondent*  “We need more intelligence-based transaction monitoring with the capability to detect transactions not noted by human scrutiny” Russia respondent  “I would like to have a system that can track both behavioral and statistical transactions based on a transaction pattern (e.g. volume, country, business)” Hong Kong respondent  “We should focus on updating the enterprise-wide system, rather than different ones in different areas of the bank” Taiwan respondent *Source: KPMG Global Anti-Money Laundering Survey 2007

7 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Transaction Monitoring Systems No Universal Solution Manual vs. Automated Monitoring If automated – Build vs. Buy Decision Analysis to understand the universe of all transaction types the institution utilizes *** A critical step Assessment to determine the risks certain products and product groups pose for money laundering and terrorist financing Assessment to determine the risk related to the customer base Assessment of global operations

8 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Transaction Monitoring Systems No Universal Solution Continuous Assessment VALIDATION MONITORING & TRENDING TUNING INDEPENDENT TEST

9 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Selected Enforcement Actions* J.P. Turner & Co. Park Financial Group, Inc. Legent Clearing, LLC Crowell, Weedon & Co NevWest Securities Corporation Oppenheimer & Co Bear Sterns * Sources:

10 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Current Trends in Venezuela Permutas Rosemont Finance Corporation Current challenges for Venezuelan based broker/dealers Current perception of permutas in the U.S. Potential solutions

11 ©2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Thank You Sven Stumbauer Director, KPMG LLP All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.