1. AIBA Quarterly Meeting September 10, 2015 Financial Crimes Compliance It’s a Game Changer Martin Feuer

2. AIBA – Quarterly Meeting Since the beginning of 2015 regulatory enforcement actions were taken, including:  Bank Leumi entered into a consent order with NY‐DFS to settle allegations that the bank willfully helped clients conceal assets offshore and evade taxes, paying a $130 million penalty and having to remove/discipline staff in the US and Israel.  Commerzbank admitted to sanctions and Bank Secrecy violations and entered into a settlement agreement with OFAC, Federal Reserve and Justice Department for a combined civil money penalty payment of $1.45 billion and install an independent monitor.  Deutsche Bank agreed to pay a total of $2.5 billion to four regulators in the US and UK settling claims that traders at the Bank manipulated key interest rate benchmarks, such as LIBOR.  Bank of New York Mellon paid $714 million settling claims that it misrepresented the pricing and execution of foreign exchange trades it made on behalf of clients.  HSBC has been ordered to pay a record 40 million Swiss francs (USD 37 million) and been given a final warning by the Geneva authorities for “organizational deficiencies” which allowed money laundering to take place in the bank’s Swiss subsidiary. The settlement means the Swiss will not prosecute HSBC or publish the findings of their investigation into alleged aggravated money laundering.  Citicorp entered into a settlement with the CFPB and the OCC, which accused Citicorp of misleading credit card customers into buying “add on” products that promised to protect them from identity theft or in circumstances where they could not pay their bills. Citicorp agreed to pay approximately $700 million to settle the allegations in one of the largest enforcement actions by the CFPB since it was created in 2010.  FinCEN announced a settlement with Caesars Palace where Caesars agreed to pay an $8 million civil money penalty for its willful and repeated violations of the Bank Secrecy Act. In addition, the casino agreed to conduct periodic external audits and independent testing of its anti-money laundering compliance program, report to FinCEN on mandated improvements, adopt a rigorous training regime, and engage in a look-back for suspicious transactions.

3. AIBA – Quarterly Meeting On April 1, New York state began a new fiscal year in a unique position: sitting on more than $6 billion in extra cash. But rather than seizing the opportunity to reduce the state’s reliance on debt while addressing urgent infrastructure needs, Gov. Andrew Cuomo will squander it largely on political pork and corporate welfare. The money is not “surplus” in the usual sense of the word. Rather, to an unprecedented degree, New York has reaped a multibillion-dollar harvest of fines and penalty payments from financial institutions — mainly multinational banks. The new budget allocates $5.4 billion from the windfall. The first $850 million will go to make a down payment on a much larger penalty the state owes the federal government, to compensate for overbilling Medicaid since the early 1990s. Of the remaining $4.5 billion, the new budget directs the biggest chunk — $1.5 billion — to Cuomo’s “Upstate Economic Revitalization Initiative,” based on what the governor touts (unsupported by empirical evidence) as a “successful” state-induced economic turnaround in Buffalo. Excerpt from the NY Post, April 6, 2015

4. AIBA – Quarterly Meeting Sanctions……………  OFAC, UN, EU, etc……  The challenge that is OFAC Strict liability Extra territorial reach Cuba, Iran, Myanmar Beneficial owner(s)

5. AIBA – Quarterly Meeting BSA/AML…………..  KYCRisk based Questionnaire Correspondent banking CIP, CDD, EDD Onboarding; reassessments  SARs

6. AIBA – Quarterly Meeting Anti-Corruption……….  Gifts and Entertainment Vendors, Public officials  FCPA  Record keeping

7. AIBA – Quarterly Meeting Consequences……………  MOU; MRA; MRIA  C&D; Regulatory order  Look-backs  Monitor  M&A issues  Job loss  Personal liability

8. AIBA – Quarterly Meeting Mitigate the damage……….  Identify and coordinate the three lines of defense  Robust policies, processes and procedures  Technology  Management commitment  Culture change  $$$$$$$$$$

9. AIBA – Quarterly Meeting Thank You! ------0------ Questions?