1. money laundering Prevention system at BBVA Investments
Groups Members: Chun-Lu Chuang, Dana Portley, Dora Chen, Eduardo Vieyra, Kara Schmitz, Hsing Fang Wei

2. Introduction: Dora Introduction of the team members - Dora
BBVA Background – Dana
Development History – Eduardo
Company Analysis – Chun-Lu
Industry Analysis – Hsing Fang
Compliance Department Value Chain - Dora
Recommendation – Kara

3. BACKGROUND Money Laundering Definition
Three processes of money laundering
From illegal to legal
Many transactions
Finance more illegal activities
Prevention
Money laundering is a serious issue in society
Money laundering is, “process by which on conceals the existence, illegal sources, or illegal application of income, and then disguises that income to make it appear legitimate” (p. 61).
3 Processes of money laundering
-Launder places the illegal money into a legal enterprise
-Money goes through many and separate transactions to obliterate the origin of the money.
-The ‘clean’ money is then used to finance more illegal activities.
What can be done to prevent it? Establish compliance department-establishes rules and procedures to detect and deter money laundering activities Report red flags of money laundering.

4. BBVA INVESTMENTS
A subsidiary of BBVA, the eighth largest bank in the world.
Major clientele in Mexico and South America.
Established compliance department and anti-money laundering policies

5. Developmental history

6. Developmental History
BBVA Investments, Inc. was incorporated in the United States in 1993 as a brokerage firm.
It is regulated by the Securities and Exchange Commission (SEC).
BBVA Investments is a member of the Financial Industry Regulatory Authority (FINRA)
The Company is located in Houston, Texas, in "The Galleria" Financial Center and has branches in Laredo, San Antonio, El Paso McAllen, and Tucson (to open in 2009).
BBVA Investments Inc. has specialized in providing brokerage services to international clients

7. Developmental History
The anti money laundering systems in BBVA Investments consists of two systems- OFAC and Assist. OFAC is a proprietary system developed by the Information Technology department in BBVA Investments, and Assist was purchased from a third party vendor.
OFAC: This system comply with The Office of Foreign Assets Control regulations of the US Department of the Treasury administers.
ASSIST: Americas Software - TranSactIonS MoniToring- compliance software tool that allows a user to analyze suspicious activity
through account and transaction trend monitoring. 7

10. Company Analysis

11. Strengths Strong ethical and compliance standard since 1990.
ASSIST and OFAC are flexible enough so that it allows the IT department to perform some customization.
The OFAC system was developed by BBVA.
ASSIST and OFAC are flexible enough so that it allows IT department to perform some customization.
The OFAC is developed by BBVA itself, and it would fit this company perfectly.

12. May out grow the company needs.
Weaknesses
Not fully automated.
May out grow the company needs.
The system still requires many manual steps to load the customer profile from the master database at New York.
The current process may not be as efficient as the company increases in size and could probably increase the rate of human error.

13. Successes Assist: processing a large number of transactions.
OFAC: preventing people with poor reputation from laundering money.
No major system crash.
Two protection systems of BBVA
-Assist: processing confidential customer information.
-OFAC: preventing people with poor reputation for doing anti money laundry.
BBVA is able to process many transactions daily without a major system crash.

14. Difficulties
It is really hard to keep the systems and computer equipment up-to-date.
Technology keeps changing.
Terrorists are always trying to find a new way to launder money.

15. Management Level Operational Management level.
First line of defense against money laundering
The security protection systems are considered the Operational Management level.
They are the frontline of the bank, so everyone in the company would use them.

16. Implementation Effectiveness
Much more cost effective using compliance information system
OFAC security system :
minimizes human error
more convenient and saves time
ASSIST security system:
user-friendly and easy to navigate around
Keep current with newest regulation

17. Industry analysis

18. BBVA analysis Clients for BBVA Investment in South America & Mexico.
New entrants are a threatening force for BBVA.
Anti-Money Laundering System- Assist & OFAC.
Clients for BBVA Investment ranges form individual to business, including corporation clients, and the bargaining power of client increases when new competitors exist.
New entrants are a threatening force for BBVA.
Experian in BBVA provides security system, such as Assist in connection with the industry’s largest propriety consumer databases. Experian is a supplier in the BBVA company.

19. Security System for BBVA
Assist: Assist is for detecting transactions that deviate from the client’ profiles.
OFAC: OFAC System prevents BBVA Investments from conducting business with the individuals on the government’s and BBVA Group’s lists.

20. Competitors
UBS Investment Bank: Three global core businesses are included wealth management, asset management and investment banking, and securities trading
Santander Bank: International financial services. It is also engaged globally in wholesale banking means of payment, asset management, insurance and private banking.
UBS Investment Bank: Three global core businesses are included wealth management, asset management and investment banking, and securities trading
Santander Bank: International financial services. It is also engaged globally in wholesale banking means of payment, asset management, insurance and private banki

21. Value chain

22. Value Chain Model Michael Porter invented the model in 1985.
Using manufacturing firms business processes.
Primary activities - directly add value to the firm.
Secondary activities - support and optimize the primary activities.
Michael Porter invented the model in 1985.
Using manufacturing firms business process.
Primary activities - directly add value to the firm, including inbound logistic, operations, sales and marketing, service, and outbound.
Secondary activities - support and optimize the primary activities, including administration and management, human resources, technology, and procurement.

23. Compliance Department Value Chain
Steps and Processes

24. recommendation

25. Recommedations Training needs.
Investigate system from the acquired firm
Enterprise system
The proposed system would include: Customer Identification Program, OFAC system, Customer Due Diligence Program and Suspicious Activity Report system.
BBVA should train more than one person to maintain the OFAC system. A good training system would help flatten the learning curve
BBVA Investment should keep an open mind and investigate whether the acquired firm has a better and more cost effective system. This should be done before integrating the money laundering system with the newly acquired firm.
BBVA should implement a comprehensive system that combines all software into one system. It would provide all compliance reports much more effectively.
The proposed system would include: Customer Identification Program, OFAC system, Customer Due Diligence Program and Suspicious Activity Report system.

26. questions