Fiduciary & Investment Risk Management Association National Risk Management Training Conference April 2008      C. Rachel Raemore Romijn Senior Vice President Compliance Director Wachovia Corporation

Overview of Presentation Overview of Strong AML Program: WARRCOM – What is it? Customer Due Diligence in Detail Assessments in Detail

Alphabet Soup…. SEC FRB BSA OCC FINRA USA PATRIOT Act IRS

Overview of a Strong AML/ATF/OFAC Program WARRCOM Written Policies and Procedures Awareness and Training Regulatory and Internal Reporting Record keeping Customer and Product Due Diligence Oversight Monitoring and Assessments      

Written Policies and Procedures       Cascading Policies FFIEC Analysis and 2006 Updates 312 Implementation

Awareness and Training Everybody should get something Web based Training Module Specialized Focused Training PEPs Offshore Companies and Trust 312

Regulatory and Internal Reporting Regulatory Reporting such as SARs, CTRs, 314, 311 Centralized Escalation Score Card and MIS

Customer and Product Due Diligence Ongoing Monitoring of all Clients Independent in-country visits for certain types of clients High Risk Codes 312 New Product Committee

Specific Issues…… In a High Touch Space High Touch Due Diligence Process and Relationship…. So you should know and understand client – get to the warm body Know and continue to know their reputation Source of Wealth Proactively vet PEP risk

Specific Issues…… In a High Touch Space Mostly Managing Reputational Risk….Not Just AML Coordinate Actions for or against the client…Red Flag Committee Structure

Oversight Management – “How do you know?” Compliance & Risk Management Internal Audits External Audits Regulatory Exams

Monitoring and Assessments People and Automated Systems Assessment Program Automated Tools Escalation Ongoing Due Diligence of Customers and Products

What is an Assessment? Risk Assessment of high risk types looking at products, customers, and geography Self Assessments of policies and processes Risk Matrix and on-going Surveillance      

Four Main Elements to AML Assessment Program: WRAP W: WARRCOM Quality Assessment R: Risk Matrix or Score Card A: Audit, Compliance and Regulatory Examination Results P: Policy development based on Products and Services, Customer Types and Geographies

Policy Development Based on Products and Services, Customer Types and Geographies       Products and Services Who are you? Customer Types What do you want? Products and Services Where are you from? Geographies

(W: WARRCOM Quality Assessment) Self Assessments       What does success look like? How are GAPs resolved and tracked? Are reports issued?

R: AML Risk Matrix The Facts AML Risk Matrix or Score Card: Incorporate FFIEC Appendix J & M and Additional Questions for all AML Risk Assessment Units

A: Audit, Compliance and Regulatory, Examination Results Add Internal Audit Results Summarize Compliance Review Results Add Regulatory Results

Resources: More than FFIEC Manual Securities Industry and Financial Markets Association (SIFMA) Anti-Money Laundering and Financial Crimes Committee 2008 Guidance for Deterring Money Laundering and Terrorist Financing Activity, February 2008 FINRA a Small Firm Template, Anti-Money Laundering Program: Compliance and Supervisory Procedures SEC Anti-Money Laundering Source Tool FinCEN’s Guidance, Application of the Requiring Special Due Diligence Programs for Certain Foreign Accounts to the Securities and Futures Industries, May, 10, 2006