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Financial crime compliance principles in the securities custody business
Journal of Financial Compliance,
2
(1),
22-36
(2018)
Abstract
This paper aims to introduce the reader to the purpose and content of the International Securities Services Association (ISSA) Financial Crime Compliance Principles (FCCP). The FCCP aim to become the standard in financial crime prevention across the securities industry. The Principles particularly address the risks resulting from the many layers of intermediation between the issuer and final beneficial owners, taking into account the cross-border nature of the industry. The FCCP provide guidance to custodians on how to implement adequate controls on assets holdings, and not only on the execution of transactions. Recognising that different account structures are used for holding securities interests, the FCCP propose that the due diligence performed at the account level is proportionate to the risk of the account structure used and make the distinction between proprietary accounts, segregated third party accounts and omnibus accounts. A significant aspect of the FCCP is that they foresee that custodians communicate their due diligence standards to its clients (account holders in ISSA terminology) and has to obtain contractual commitment that they will be complied with. The Principles go even further and require the custodian to compel the account holders to apply the FCCP to their clients, thereby creating a virtuous circle and increasing transparency along the custody chain.
Keywords: securities industry; due diligence; financial crime; guidance; custody
The full article is available to subscribers to the journal.
Author's Biography
Yannick Cherel is the Group Product Head of Financial Crime Compliance for Standard Chartered focusing on Cash, Securities Services, Digitisation and Client Access products. Over the past 20 years, Yannick has built his international risk management career, through his experience as an external auditor (PwC), then as Operational Risk & Compliance Head (BNP Paribas Securities Services). As part of his role, Yannick is an active representative at the International Securities Services Association (ISSA) focusing on the implementation of the financial crime compliance principles. Yannick holds a Masters in Finance and Audit completed at the Burgundy School of business. He is also a Certified Anti-Money Laundering Specialist (CAMS).
Olivier Goffard is Head of Compliance and Ethics for Euroclear Group and Chief Compliance Officer for Euroclear Bank. Olivier manages a team of professionals providing a wide range of compliance and ethics services around domains such as anti-money laundering (AML)/counter terrorist financing (CTF), personal data protection and anti-fraud. Olivier has worked as a company lawyer, internal auditor and internal consultant before taking over the Compliance and Ethics Department. Olivier is a Certified Anti-Money Laundering Specialist (CAMS).
Mark Gem is a member of the executive board at Clearstream and one of the leading product specialists in the industry. Beyond looking at financial crime risk issues in securities as its chief compliance officer, Mark has run Clearstream’s product and strategy areas, its network management department, its new issues business and risk management. He holds an honours degree in Modern History from Oxford University.
Marta González Pérez is a Senior Advisor in Financial Crime for Euroclear SA/NV, with a key focus in compliance with anti-money laundering (AML), counter terrorist financing (CTF) and international sanctions laws and regulations. She provides subject matter expertise on AML/CTF and sanctions to the Euroclear Group entities. Marta has more than 17 years of experience in the securities industry both as a compliance advisor and as an in-house legal counsel. Marta is an active member of the International Securities Services Association Financial Crime Compliance Principles Implementation Working Group. She holds a Master’s in Law from Universidad Complutense in Madrid, an MBA from Antwerp University Management School and the Association of Certified Anti-Money Laundering Specialists (ACAMS) certification.
