Regulatory Risk Report August 1, 2015

Quote of the Week “The rule before the Fed Board, imposes a risk-based capital surcharge on systemically -important US bank holding companies. A major purpose of the capital surcharge is to require firms themselves to bear the costs that their failure would impose on others.” Fed Chair Janet Yellen

Photos by Charles Skinner Articles in This Issue

US Banking: Fed systemic holding company capital surcharges, non-bank designated firms; Fed, FDIC resolution plan for $50bn BHCs; Fed modifies capital plan and stress test; Volcker banking entity on seeding of foreign funds – page 2.

US Consumer: CFPB retail sales to servicemembers; Treasury consult on marketplace lending; OCC head on cyber and compliance risk; CFPB launch monthly public reporting complaints; Agency bank call report of Jun. 2015 – page 3.

US Investment: CFTC chair on Dodd-Frank reforms to-do; SEC chairman on Dodd-Frank; FINRA municipal and fixed income rulemaking; FINRA TRACE reporting of bond mark-up indicator; SEC no relief to partial BATS display – page 4.

International: Basel foreign exchange conduct standard; HK law on broker insurance authority; APRA mortgage capital under models; HK SFC capital for firms active in OTC derivatives; Basel identifying, dealing with, weak banks – page 5.

EU: Council rescue Greece, financing banks; EBA consistency of internal models and risk weights; ESMA remuneration for UCITS managers; Council adopt insurance mediation directive; EBA suitability of management and board – page 6.

UK: PRA Interim liquidity coverage reporting; PRA sovereign risks in solvency II models; FCA firm process for handling complaints; FCA CEO Martin Wheatley early departure; UK Treasury BoE governance, consolidation of PRA – page 7.

AML & Enforcement: Basel account-opening guide for money laundering, natural and legal person customers; CFPB, OCC fine Citi $700mn re credit cards; FDIC fine Banamex $140mn re AML; FinCEN bars FBME Bank access – page 8.

Regulatory Watch List

PEeved After allocating 10% of public pension assets to private equity, officials acknowledge do not know costs. SEC asked to help find out, with mandatory disclosure of cost rules, and by bringing specific enforcement actions. Light-conductor Deposed FCA head Martin Wheatley admits unfinished business, replacement being sought. Treasury looks to appease City with lighter regulatory touch and integrates PRA in ever-stronger Bank of England. Westside Story US Treasury cites stability risk, losses on muni bonds, from disorderly default by Puerto Rico. Urged Congress to allow island to use bankruptcy laws, like the 50 States, as Governor says debts are unpayable. Pay-day SEC close to issuing CEO to median worker compensation ratio disclosure, 5 years after Dodd Frank. BoE chief economist seeks less focus on pay, shareholders and more on other stakeholders, to limit systemic risk. Reg-Room, LLC Regulatory Risk Report: August 1, 2015 1 US Banking Fed Systemic BHC Capital Surcharges Fed Modifies Capital Plan, Stress Test On Jul. 20, Fed issued rules for systemic banks to On Jul. 17, Fed proposed rules to modify its capital meet higher capital surcharges, from Jan. 1, 2016. planning and stress-testing regulations, from 2016. . Applies to global systemically important bank . Bank subject to supplementary leverage ratio holding company (GSIB) above $25bn assets. may delay including it into stress test to 2017. . GSIB would calculate its surcharge under two . Omit advanced approach risk weighted assets methods and use the higher of the two results. for largest banks from test, delay indefinitely. . First method uses GSIB's size, connectedness, . All banks would continue to use standardized substitutability, complexity, cross-border role. risk weighted assets only, for their stress tests. . Each measure makes up 20% of method score . Remove requirement that bank calculates tier and some are subdivided into lower weights. 1 common ratio, as use common equity tier 1. . Bank divides own systemic indicator value by . BHCs with $10bn-$50bn assets no longer use aggregate global measures, to calculate score. fixed dividend assumption, on company-tests. . BHC is identified as GSIB, if method 1 score . Instead, include the actual dividend payments over 130, under which steep fall to next bank. assumptions, per capital need and projections. . Method 2 assessment per first, use short-term . Large BHCs must assume no capital issuance wholesale funding, instead of substitutability. or redemption, between 2-9th quarter of plan. . Surcharges for eight GSIBs range from1% to . Assume dividend of one quarter of stock bank over 3.5% of firm's total risk-weighted assets. paid prior year as stock compensation to staff. . Also issued white paper that quantifies firms’ . Large BHC may assume new issues of capital systemic loss given default under method 1-2. associated with funding planned acquisitions. . Then identify method 2 capital surcharge that corresponds to method 2 score, of 1 to 5.5%. . Rule does not apply GSIB framework to non- bank, if FSOC-designate for Fed supervision. . Instead tailors application of the standards, by an order to the nonbank company or category. Fed Resolution Plans for $50bn BHCs On Jul. 17, Fed, FDIC issued resolution plan guide to BHCs with $50bn-$100bn assets and non-banks. . 119 BHCs and foreign banks under $100bn of non-bank assets, to file plan by Dec. 31 2015. . Guidance provided is based on the individual size and scope of each firm's U.S. operations. Volcker Rule-Seeding of Foreign Funds . 29 more-complex firms required to file full or On Jul. 16, Agencies issued Volcker rule FAQ to tailored resolution plans by specific guidance. seed registered investment company, foreign fund. . 90 firms with limited US operations, may file . An RIC and foreign public fund (FPF) are not plans focusing on material change from 2014. covered funds for purposes of Volcker Rule. . And actions taken to strengthen effectiveness . Banking entity may own a significant portion of plans, ensured bank subsidiary is protected. of the shares of RIC or FPF for a brief period. . Optional tailored resolution plan template for . During which, bank tests out fund investment nonbank operation, on connection to banking. strategy, establish performance track record. . Agency also gave feedback to three non-bank . As part of marketing, attempting to distribute designated entities, on initial resolution plans. fund’s shares, for duration of seeding period. . Detailed information, analysis of obstacles to . Agencies to not treat RIC or FPF as a banking resolvability, global, connectedness, funding. entity, solely if hold in limited seeding period. . Progress made and step remaining to be more . Without other evidence that RIC or FPF being resolvable, strengthen public portion of plans. used to evade the Volcker implementing rule. Reg-Room, LLC Regulatory Risk Report: August 1, 2015 2 US Consumer CFPB Retail Sale to Servicemembers CFPB Launch Report on Complaints On Jul. 20, CFPB warned retailers which cater to On Jul. 16, CFPB issued first monthly complaint servicemembers of restriction on payment method. report and emerging trends for month of Jun. 2015 . Allotments process allow servicemembers to . Report will highlight a product and location, direct a part of pay to companies and persons. ie debt collection, and Milwaukee complaints. . Defense Department (DoD) amended rule on . Include complaint data performance, volume, Nov. 21, 2014, is effective from Jan. 1, 2015. state/local information and trends in products. . Restricts active members using their military . Debt collection was 32% of total complaints allotment to buy or to rent personal property. submitted, attempt to collect debt if not owed. . Use of other automatic payment options, like . For products, consumer loan complaints saw ACH, avoids losing certain legal protections. the greatest percentage increase over the year. . May use their allotments for dependent care, . State information: Hawaii, West Virginia and housing, savings, insurance and investments. Maine had greatest rise in complaint volumes. . Companies that still advertise for repayments . Most-complained about companies: Experian, using allotment may potentially violate laws. Bank of America; Equifax is biggest rise 8%. . CFPB issued warning letters, although are not . Bureau expects company response in 15 days a determinations that violations had occurred. and to describe steps to resolve the complaint. Treasury Marketplace Lending Regime . Company then expected to resolve all but the most complicated complaints within 60 days. On Jul. 16, Treasury consulted online marketplace lenders on products and need of regulatory regime. . Potential for online loans to expand the credit access of historically underserved borrowers. . Have investment capital and data-driven web sites, lending to small businesses, consumers. . By balance sheet lenders that keep credit risk, often funded by venture capital, hedge funds. . Or peer to-peer loans, financed by the sale of member-dependent notes, do not keep credit. . Or by bank-affiliate online lenders, funded by regional or commercial bank, using deposits. . Ask if to peer-to-peer lender should need skin in the game on loans originated, underwritten. Agency Call Report Includes Remittances On Jul. 16, Agencies issued revised call report for OCC Head-Cyber and Compliance Risks period ending Jun. 30, 2015, includes remittances. On Jul. 24, OCC head Curry spoke about risks and . To clarify revised schedule RC-R, regulatory opportunity for banks on compliance, cyber fraud. capital, which took effect on Mar. 31, 2015. . Failure to comply with rule requirements may . Report of international remittance transfers to cause reputational damage and civil penalties. consumers, (within schedule RC-M, item 16). . Conceded compliance diverted resource from . Response to yes-no questions on international customers, especially hits community banks. remittance transfer activity (in items 16.a .b). . Community banks need to achieve economies . Banks with over 100 transactions a year must of scale, without sacrificing unique qualities. report additional information on their activity. . May be achieved by collaboration with other . Include estimated number and dollar value of banks, to pool support, compliance resource. such remittance transfers (in items 16.c 16.d). . Cyber-threat is foremost risk for banks, need . Item 16.b is only completed annually Jun. 30, for businesses and government to collaborate. while 16.a.c, d semiannually at Jun. and Dec. . Office personnel management data breach, of . Completed call report, pass FFIEC validation millions of US staff embarrassed government. must be received by agencies by Jul. 30 2015. Reg-Room, LLC Regulatory Risk Report: August 1, 2015 3 US Investment CFTC Chair Dodd-Frank Reforms To-Do FINRA TRACE Bond Mark-up Indicator On Jul. 23, CFTC Chair Massad outlined progress On Jul. 20, FINRA proposed rules for indicator on and remaining reforms planned, post-Dodd-Frank. bond trading reports if no commission or mark-up. . Work on clearinghouse strength, and consider . Dollar commission is included separately on new standards on how to conduct stress tests. TRACE trade reports for agency transactions. . Consider margin methodologies and resource . Now report total dollar commission amounts, that is available to clearinghouse in a default. if one was assessed on securities transactions. . Capital contribution of central counterparties . Does not include commission, mark-up if not (CCPs) to ensure they have skin-in-the-game. assessed at trade, or where amount unknown. . Recovery and resolution planning for CCPs, . Use no remuneration indicator if trade report cover risk management and risk surveillance. does not reflect commissions, mark-up/down. . Reconsider prior rule on margin for uncleared . E.g. if firm assesses a non trade-based charge swaps, and swap dealer de minimis threshold. such as in the case of a “fee-based account”. . Threshold for determining registering a swap . FINRA will flag these trades, when publicly- dealer drops from $8bn to $3bn in Dec. 2017. disseminated, as not including remuneration. . CFTC will analyze whether to set threshold at . Concern disseminated price information may a different level, in advance of effective date. be incomplete and, in some cases, misleading. . Work with global regulators to minimize any . Aims for rule to enhance regulatory audit trail conflict, do not over-focus on harmonization. and surveillance patterns of suspicious trades. . Concerns about financial market liquidity and the impact of new regulations on trading cost. . Noted that the decline in clearing members is long term trend, not started from Dodd Frank. SEC Chairman on Dodd-Frank On Jul. 16, SEC chair White said 5-year-old Dodd Frank reform is working, outlined remaining steps. . Regulatory reforms issued go beyond check- the box to help prevent future financial crisis. . Seeks executive compensation transparency, with claw back of erroneous awards or fraud. . Studying equity market structure and trading, SEC No Relief on BATS Displays to optimize interests of investors and issuers. On Jul. 22, SEC denied relief to BATS exchange’s FINRA Muni and Fixed Income Rulemaking One Feed data aggregation, from under Reg NMS. On Jul. 15, FINRA announced agreed rulemaking . One Feed only has subset of all market data, on working with MSRB and fixed income pricing. with 20% of daily volume of NMS securities. . FINRA will request guidance from MSRB, in . BATS sought permission, to allow brokers to relation to their interpretation of MSRB rules. reference feed to make securities quotations. . It will also provide information to MSRB on . Then enter trades in systems that use full-data FINRA enforcement action and examination. to make final trading, order-routing decisions. . Applies to exams by FINRA, covering muni . SEC vendor display rule requires provision of securities broker, dealers and muni advisors. consolidated display as well, for such stocks. . Issue regulatory notice on requiring firms to . National best bid and offer important to retail disclose fixed income trade price to customer. investor protection that they are treated fairly. . On customer confirms on corporate or agency . SEC stated reliance on One Feed alone would bonds, done with non-institutional customers. not be consistent with its vendor display rule. . Where firm’s principal trade, and customer’s . Trading & markets director would not assure offset trade taking place on same trading day. SEC will not recommend enforcement action. Reg-Room, LLC Regulatory Risk Report: August 1, 2015 4 International Basel Foreign Exchange Conduct Standard HK SFC Capital for OTC Derivatives On Jul. 24, Basel launched work on conduct code On Jul. 17, HK SFC proposed rules on capital for standards, principles in foreign exchange markets. firms with activity in over-the-counter derivatives. . Draft new single global code, by harmonizing . Hold capital and liquidity at levels which are common elements of the regional FX codes. commensurate with the risks firms undertake. . Work will build on recent agreement made by . Encourage use of advanced risk management, regional foreign exchange committees (FXC). consistent with international capital standard. . Create a market participant group (MPG) for . Minimum capital requirements for firms with input, of sell and buy side, FX infrastructures. OTC derivative, and market risk on positions. . Code covers all parts of global wholesale FX . Applies market risks on proprietary positions, market with consideration of local conditions. and counterparty credit risks for derivatives. . Develop new principles in areas inadequately . Use internal models approach to calculate the covered in existing code, with input of MPG. capital required in market risk and credit risk. . Develop proposals to promote and incentivize . Measures to address operational risks in types adherence to new global code, when in force. of regulated OTC derivative, opt in approach. . Provide guidance on what is, and what is not, . Also makes minor rule changes for firms that appropriate conduct behavior in FX markets. do not conduct any OTC derivative activities. . Target date for finalizing code, and proposals . Include lower haircut percentages for types of to ensure adherence with them, is May 2017. shares and funds, and for third-party clearing. HK Broker Independent Insurer Authority On Jul. 10, HK Government welcomed passage of law for the regulation of insurance intermediaries. . Establishes Independent Insurance Authority (IIA), for licensing insurance intermediaries. . To provide better protection for policyholders and comply with global requirement of IAIS. . IIA statutory regime over intermediaries, will replace the existing self-regulatory processes. . In first stage, provisional insurance authority (PIA) will be set up before the end of 2015. . Second stage begins one year after PIA is set Basel Identifying, Dealing with Weak Banks up, during which existing SRO will continue. On Jul. 16, Basel issued supervisory guidelines for . Consultation to include subsidiary legislation, codes of conduct, and regulatory guidelines. identifying and dealing with weak or failing bank. . Weak banks are challenge for supervisors and APRA Raises Capital on Mortgage Models resolution authorities to deal with, limit risks. On Jul. 20, APRA increased capital on mortgages . Update Basel 2002 guide of weak banks, now for banks using an internal rating model approach. reflect post-crisis supervisory best practices. . Average risk weight for domestic residential . Need for early intervention, use recovery and mortgage exposures, rises from 16% to 25%. resolution tools, new communication policies. . Residential mortgage is major credit exposure . Supervisory processes for macro assessments, and IRB banks hold the biggest share of this. stress test, business model view, governance. . Increase is interim, decide a final relationship . Liquidity shortfall, excess risk concentration, between IRB and standard weights per Basel. misaligned incentive, weak risk management. . Follows financial system inquiry request to . Expanded guidelines for information-sharing, raise IRB weight nearer to the standard level. and cooperation among relevant authorities. . To provide time to prepare for the revisions, . Covers preparatory recovery work, corrective new weights come into effect on Jul. 1, 2016. measures to assist, resolution tools for failure. Reg-Room, LLC Regulatory Risk Report: August 1, 2015 5 EU Council Rescue, Greek Bank Financing Council Insurance Distribution Directive On Jul. 17, EU Council issued €7.1bn EFSM short On Jul. 22, EU Council, EP issued agreement on a term assistance to Greece after country legislation. insurance intermediary distribution directive IMD. . Loan has maximum maturity of three months, . Regulates intermediaries, for fair competition and to be disbursed in up to two installments. among different insurance product distributor. . It will allow Greece to clear arrears with IMF . A range of firms distribute insurance product, and Bank of Greece to repay loans from ECB. include agents, brokers, insurance companies. . Until Greece starts receiving finance for new . Strengthens protection of policyholder for life program from European stability mechanism. insurance product having investment features. . Transfer profits from ECB securities program . Extend application to all distribution channels to secure non euro States (UK) risk on loans. including those who sell on an ancillary basis. . ESM will enter MoU negotiated by EC, ECB, . Requires that intermediaries identify, manage, IMF with details of three-year loan to Greece. and mitigate conflicts of interest on activities. . Follows Jul. 16, ECB €900mn rise in liquidity . Stronger administrative sanctions or measures ELA to Greece after agreement with Council. will apply if there is breach of key provisions. . Greek Treasury allowed banks to re-open Jul. . Ensure suitability, objectiveness of insurance 20, (closed from Jun. 28), not stock exchange. advice, as per need, experience of consumers. . Increased depositor withdrawals cap to €420 . Professional qualification of seller will match per week, had been limited to inly €60 a day. the complexity of the products that they sell. . Clarify the procedure for cross-border market EBA Consistency of Internal Models entry, including equivalent non-EU countries. On Jul. 22, EBA issued RWA assessment of credit and default for consistent internal model outcomes. . Reported inconsistent risk weighted assets for bonds, sovereigns low default portfolios LDP. . And calculate counterparty credit risk (CCR) exposure from internal model method (IMM). . Finds three-quarters of difference due to scale of defaulted exposures in a portfolio and mix. . Viewing portfolio separately, default explains 40% of difference within corporate portfolios. . Remaining 60% may be due to differences in bank-specific factor e.g. its risk management. . CRR analysis shows large variability in banks especially on equity and FX OTC derivatives. EBA Suitability of Management and Boards On Jul. 22, EBA identified diverging suitability of ESMA Remuneration for UCITS Managers members of management and key function holders. On Jul. 23, ESMA proposed guidelines on UCITS . Found significant continued difference in EU remuneration policy based on those under AIFMD. States and highlighted the best practices seen. . Applies to a UCITS management company in . Different practices on definition of suitability, group that also includes other regulated firms. in criteria used to assess if candidate suitable. . Non-UCITS supervisor of a group entity may . Suitability approach for key function holders, deem staff of UCITS as a material risk taker. independence of management body members. . Definition of performance fees also based on . Found existing EBA guidelines had not led to IOSCO standard for fees of investment funds. sufficiently convergent supervisory practices. . How sector rules, e.g. AIFMD, and CRD IV, . Proposed including specified best practices in apply if employee is subject to different rules. upcoming review of existing EBA guidelines. . To prevent circumvention by managers, apply . Assess candidates for key positions by use of to activity delegated out to a service provider. interview, base on proportionality, suitability. Reg-Room, LLC Regulatory Risk Report: August 1, 2015 6 UK PRA Interim Liquidity Coverage Reporting FCA CEO Martin Wheatley Early Departure On Jul. 21, PRA issued guide on interim reporting On Jul. 17, FCA stated that CEO Martin Wheatley for the new liquidity coverage requirement (LCR). will leave agency, with effect from Sep. 12, 2015. . PRA’s supervisory policy is applicable to all . Continue to advise board until Jan. 31, 2016, banks and investment firms subject to CRD4. especially on the fair market review (FEMR). . Policy in interim period from Oct. 2015 when . Wheatley was appointed as the FCA head on LCR first applicable under EC delegated act. Feb. 2, 2011 by leaders of Treasury and FSA . Until mandatory reporting in new LCR return . Tracey McDermott to be acting CEO on Sep. after EC adopts liquidity reporting standards. 12, while search for permanent head is made. . PRA will issue LCR file, formatted using the . Currently is director of investment, wholesale template in EBA standards on LCR reporting. and specialist division, ex-enforcement head. . LCR data should be submitted monthly, as at . Follows Chancellor concern that FCA’s press last day of month, and report within 30 days. pre-briefing on insurance, disrupted markets. . Firms with balance sheet under £3bn to report . Said action inconsistent to FCA responsibility some measures at last date prior Oct. 1, 2015. for integrity, good order of financial markets. . Had been damaging to FCA as institution and PRA Sovereign Risk in Solvency II Models to the UK’s reputation of regulatory stability. On Jul. 23, PRA issued guidelines on solvency II treatment of sovereign risk in internal risk models. . Capital requirement to be calibrated to reflect all quantifiable risk to which firm is exposed. . Sovereign debt as asset class can give rise to market risk or credit risk as defined by PRA. . Expects firms to consider a specific basis risk when sovereign bonds used to back liabilities. . When liabilities discounted using the relevant risk-free rate term structure derived on swap. . Spread risk can exist between sovereign bond yields, and the relevant risk-free rate changes. . Firms should include these risks in an internal model unless it can show they are immaterial. UK Treasury on BoE, PRA, FPC Governance FCA Firm Process to Handling of Complaint On Jul. 21, Treasury issued consultation document on reforms to Bank of England, PRA and the FPC On Jul. 23, FCA issued rules to improve complaint . Brings PRA into BoE, had been subsidiary, to -handling process by firms across financial sector. share agency knowledge, expertise, analysis. . Ensure calls to dedicated complaint telephone . To maximize synergy of having macro- and will not cost customers more than basic rate. micro-prudential policy done in same entity. . Extends to 3-days, period in which a firm can . PRA functions transfer to BoE and will create resolve a complaint without any formal letter. new prudential regulation committee (PRC). . If complaint resolved in three days, firm only . Membership of PRC mirrors PRA board, and need send customer simple template message. prudential regulation dep. governor is CEO. . Improve transparency, by requiring firms to . PRC will retain full independence from BoE report all complaints to FCA, not just letters. in rulemaking, policy, supervisory decisions. . A firm must inform customers in writing they . Improve BoE governance by making court of are able to take complaint to an ombudsman. directors into smaller, focused unitary board. . Provides consumers with access to more data . Legislation recognize new position of deputy on complaints made to financial companies. governor of markets and banking inside BoE. . Firms will now report all complaints to FCA, . Adjusted statutory basis of FPC, from being a which will publish data with related context. subcommittee of court, to committee of BoE. Reg-Room, LLC Regulatory Risk Report: August 1, 2015 7 AML & Enforcement Basel Guide to Account-Opening, AML CFPB, OCC Citi $700mn Card Practices On Jul. 16, Basel proposed guidelines for account- On Jul. 21, CFPB, OCC fined Citibank, ordered opening, to meet new AML standards from FATF. $700mn customer redress, $70mn fines, on cards. . Always identify customer and verify identity, . Alleged deceptive marketing, unfair billing of some ID documents more vulnerable to fraud. credit card add-ons, other unlawful practices. Natural Person Customers . Almost 1.8mn accounts deceptively charged . For natural persons, identify individual who is an expedited payment fee on collection calls. a customer or beneficial owner, based on risk. . Marketed, sold debt protection add-ons with a . At a minimum, collect person’s legal first and promise to cancel payment if client life event. last name; and a complete permanent address. . Life events included job losses, a marriage or . Also collect any other name they use, such as divorce, terms of disability or hospitalization. marital name, former legal name, or an alias. . Misrepresented or did not inform and explain, . Nationality, official identification number or costs and fees for the coverage and benefits. unique identifier, their date and place of birth. . Billed consumers who had not authorized the . Potential additional information based on risk bank to obtain their own credit information. includes a professional address and PO boxes. FDIC Fines Banamex $140mn on AML . Attributes to assess risk, include information on occupation, public positions held, income. On Jul. 22, FDIC, and CBDO fined Banamex USA $180mn for AML violations, bank will also close. . View expected account use: amount, purpose, frequency of transactions and type of service. . Banamex did not retain qualified BSA officer . Verify customer identity, using independently or sufficient staff to meet AML compliance. sourced reliable document, data, information. . Also found lacking adequate internal controls Legal Persons to detect and report any suspicious activities. . Legal persons include entities e.g. business or . Banamex also failed to give its staff sufficient non-profit, distinct from officer, shareholders. BSA training, or conduct independent testing. . Minimum verification is by name, legal form, . In 2014, Citigroup filed 8-K on $400mn fraud status, proof of incorporation of legal person. on Banamex in Mexico, from debt factoring. . Permanent address of principal business place . Follows Banamex’s Aug. 2012 consent order and company registration number and tax ID. with the DBO and FDIC due to AML failing. . Identify any natural persons with authority to FinCEN Bars FBME Bank Access operate an account or to control legal person. . Identify beneficial owner per FATF standard, On Jul. 23, FinCEN barred FBME Bank from US and powers that regulate and bind that person. as primary AML concern, under Patriot act S.311. . Risk attributes include type of entity, purpose, . FBME facilitated money laundering, terrorist activity and legitimacy, extent of account use. financing and transnational organized crimes. . Identify legal arrangements, define customer . Also facilitated fraud, evading US sanctions, risk profile based on legal arrangement types. illicit activity, due to systemic AML failures. . If an intermediary opens account on behalf of . Attracted high risk customers, and facilitated single customer, customer must be identified. transaction of no legitimate business purpose. Contact and Subscription Information Nick Paraskeva © Reg-Room LLC. Reg-Room and the accompanying [email protected] design are registered trademarks of Reg-Room LLC. All rights reserved. The information contained in this Reg-Room, LLC: www.reg-room.com document should not be copied or further distributed without permission, and does not constitute legal advice. Reg-Track system: www.reg-track.com

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