The document discusses how regulatory requirements related to anti-money laundering, counter-terrorism financing, and anti-bribery are converging. It notes that money laundering, corruption, and bribery are intrinsically linked. It also describes how risk assessment and due diligence processes must cover areas such as know your customer, transaction monitoring, and sanctions screening to address these converging compliance needs.

1. The evolving enterprise risk model
Mark Dunn
Market Planning Manager
LexisNexis Risk
3rd October, 2011
LexisNexis Proprietary & Confidential: For internal office use only 1

2. Converging regulatory drivers
Money
Laundering
Regulations
2007
Sanctions Regime POCA
Regulatory Bribery Act 2010
FATCA
Risk
Dodd-Frank FCPA
LexisNexis Proprietary & Confidential: For internal office use only 2

3. Converging regulatory drivers
“The Money Laundering Regulations 2007 “And of course for the purposes of the
..require that firms…prevent funds or Proceeds of Crime legislation, once bribery
financial services being made has occurred, there will be a distinct likelihood
available to those on the sanctions list ” of money laundering”
FSA SFO
“What we have been doing.. is “Corruption and bribery will be one of the
to make the important link topics of our forthcoming round of thematic
between corruption investigations” FSA
and money laundering”
SFO
“Corruption in one country often “Corruption and money
leads to laundering in another” laundering are intrinsically
“We will be looking at FSA linked” FATF
investment banks’ procedures
designed to contain the risk staff
“Anti-money laundering (AML)
or agents pay or receive bribes.”
and counter-terrorist financing
FSA “FATCA…requires far more in
(CFT) measures are powerful
tools that are effective in the depth and prescriptive KYC and
fight against corruption” beneficial ownership
FATF requirements” Wolfsberg
3

4. Converging risk assessment
Country
Sectoral
Risk
Risk
Risk
Assessment
Business Transaction
Partnership Risk
Risk
Business
Opportunity
Risk
LexisNexis Proprietary & Confidential: For internal office use only 4

5. Converging due diligence tasks
Know
Your Customer
Know
Your Customer’s
Due Know
Your Supplier
Customer Diligence
Know
Your Employee
LexisNexis Proprietary & Confidential: For internal office use only 5

6. Converging due diligence tasks
Process Overview
• Approach to due diligence covers
three stages determined by risk
assessment:
Conduct
1. Conduct health check
Ongoing health check
Update records on existing entities
monitoring
1. Manage incoming checks
Conduct due diligence on new entities
Due Diligence
Core Tasks
1. Ongoing monitoring
Conduct spot checks and periodic reviews
Manage
Arrow 2
incoming checks
6

7. Converging due diligence tasks
Process Overview
Identify
Review
Risk
Due Diligence
Communication Assessment
Monitor High Level
And
Training
Process
Audit Research
7

8. Converging due diligence tasks
Sanctions PEP
screening screening
Negative Due Identity
news verification
Diligence
Beneficial
ownership
LexisNexis Proprietary & Confidential: For internal office use only 8

9. Converging due diligence tasks
AML Fraud Audit Strategy Procurem Corpora
Corporate Credit
AML Fraud Audit Strategy Procurement Credit
ent teSecurity
Security
Company M&A Employee
due diligence ID due diligence screening
Credit
verification
reference
List Third party Investigations
checking Reputation due diligence
checks
Transaction Country
monitoring Conflicts risk
checking
9

10. Adopting a consistent and more efficient process
AML Fraud Audit Strategy Procurem Corpora
Corporate Credit
AML Fraud Audit Strategy Procurement Credit
ent te
Security
Security
AML Fraud
Corporate
Security
Group Security Function
10

11. How we help clients realise a consistent process
Simplified Due Diligence
Company or individual Ongoing Monitoring
investigations across: Automated checks:
Yes Sanctions and Watch Lists
Business
ID verification data Report Approval PEP checks
Sanctions and Watch Lists Proprietary Watch Lists
PEP checks Negative Media
Proprietary watchlists No
Low / Med
Alert
Third
New Risk
Party
Interest Yes Identified? No
Med / High
Ultra High
Enhanced Due Diligence Media Monitoring
Perform in-depth checks Automated monitoring of
across: global entities:
Media and Negative News Lexis Content
Company Information Ultra High “of Special Interest” Web Sources
Legal Case History Social Media
Paid Subscription Services
11

12. How we help clients realise a consistent process
Yes
Bridger Insight™ XG Business
Approval
Bridger Insight™ XG
Report
No
Low / Med
Alert
Third
New Risk
Party
Interest Yes Identified? No
Med / High
Ultra High
Lexis®Diligence LexisNexis Analytics
Ultra High “of Special Interest”
12

13. Summary
13

14. Reference
14

15. Converging risk assessment
Commonly encountered risks can be categorised into five broad groups:
• Country risk
This is evidenced by perceived high levels of corruption, an absence of effectively implemented anti-bribery
legislation and a failure of the foreign government, media, local business community and civil society effectively to
promote transparent procurement and investment policies.
• Sectoral risk
Some sectors are higher risk than others. Higher risk sectors include the extractive industries and the large scale
infrastructure sector.
• Transaction risk
Certain types of transaction give rise to higher risks, for example, charitable or political contributions, licences and
permits, and transactions relating to public procurement.
• Business opportunity risk
Such risks might arise in high value projects or with projects involving many contractors or intermediaries; or with
projects which are not apparently undertaken at market prices, or which do not have a clear legitimate objective.
• Business partnership risk
Certain relationships may involve higher risk, for example, the use of intermediaries in transactions with foreign public
officials; consortia or joint venture partners; and relationships with politically exposed persons where the proposed
business relationship involves, or is linked to, a prominent public official.
LexisNexis Proprietary & Confidential: For internal office use only 15