What were some of the deficiencies in internal controls and risk management within Mega-New York’s anti-money laundering system? Suggest possible improvements.
FAILED RISK MANAGEMENT AND INTERNAL CONTROLS
DFS highlighted several internal control problems present in Mega-New York. Firstly, there was a lack of proper segregation of duties between the compliance and business functions, due to conflicting responsibilities of certain compliance personnel. For instance, MegaNew York’s BSA/AML officer was also operations manager of the Business Division. DFS further found fault in Mega-New York’s transaction monitoring systems and policies. Compliance staff failed to regularly review “surveillance monitoring filter criteria designed to detect suspicious transactions”. Various documents were also not translated from Chinese to English, impeding effective checks and investigations by regulators. In addition to these structural deficiencies, the staff at Mega-New York lacked proper knowledge and training with regards to US regulatory requirements. These included executive staff such as the BSA/AML Officer and the Chief Compliance Officer.
SUSPICIOUS ACTIVITY
The compliance failure identified at Mega-New York further raised concern over suspicious activity involving the Panama branches. Due to the high risk of money laundering in Panama, the bank was supposed to deal with transactions between Mega-New York and the Panama branches with high-level surveillance and diligence. However, the compliance failures in the bank’s New York branch raised doubt on whether checks had been carried out properly. This was aggravated by the large sums of financial transactions between the two locations. On top of this, Mega-New York failed to give adequate explanations regarding suspicious “payment reversals” received from its Panama branches.
Required:
What were some of the deficiencies in internal controls and risk management within Mega-New York’s anti-money laundering system? Suggest possible improvements.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
