kyc & aml compliances kyc & aml compliances

59 Pages·2015·0.7 MB·English

INTRODUCTION TO CONCURRENT AUDIT
KKYYCC && AAMMLL CCOOMMPPLLIIAANNCCEESS
Concurrent Audit
(cid:1)
Part of a bank’s early warning system to ensure timely
detection of irregularities & lapses to prevent fraud.
(cid:1)
Attempts to shorten the interval between a transaction & its
eexxaammiinnaattiioonn bbyy aann iinnddeeppeennddeenntt ppeerrssoonn
(cid:1)
Checking is contemporaneous or immediately post the
transaction is completed.
(cid:1)
Emphasis on substantive or in depth checking
(cid:1)
Management process integral to a sound internal controls
Scope & Objectives
(cid:1)
Supplements bank’s efforts in carrying out simultaneous internal check
of the transactions & other verifications & compliance as per laid down
procedures.
(cid:1)
Scope focused to cover fraud prone areas like
•
Handling of cash
•
Deposits
•
AAddvvaanncceess
•
Foreign exchange business
•
Off-balance sheet items
•
Credit-card business
•
Internet banking
Identification of high risk areas & improve branch functioning leading to
risk mitigation & fraud.
Principles
(cid:1)
Ensure observations are seriously attended & closed to improve
overall branch functioning.
(cid:1)
Hold monthly meetings to create “awareness”
(cid:1)
Adopt constructive, corrective & practical approach.
(cid:1)
Adopt helpful & positive attitude & not be guided by impulsive
or hostile attitude.
(cid:1)
Good understanding of job profile, analytical capacity & sound
knowledge of existing banking procedures & practices.
(cid:1)
Sufficient knowledge & skill to work in CBS / computerized
environment.
Accountability
(cid:1)
Responsible for material omission or commission in respect of
transactions.
(cid:1)
As per RBI guidelines, accountability is failure to comment on –
(cid:1)
Fraud
(cid:1)
KKYYCC aaddhheerreennccee
(cid:1)
Income leakage
(cid:1)
Frequent recurrence of deficiencies in successive audits
(cid:1)
Any other serious irregularities
(cid:1)
Which could have been ascertained by exercise of due diligence.
(cid:1)
In a serious case of omission or commission in working of audit,
bank can consider termination & report to RBI & ICAI.
Areas to be Covered
(cid:1)
Cash
(cid:1)
Investments
(cid:1)
Deposits
(cid:1)
Advances
(cid:1)
FFXX TTrraannssaaccttiioonnss
(cid:1)
Housekeeping
(cid:1)
Other Items
(cid:1)
Audit Compliance
(cid:1)
Customer Complaints
(cid:1)
Verification of HO & Statutory returns
Items Eligible for 100% Checking
(cid:1)
Off-Balance Sheet Items (LC & BG)
(cid:1)
Investment Portfolio
(cid:1)(cid:1)
FFoorreeiiggnn EExxcchhaannggee TTrraannssaaccttiioonnss
(cid:1)
Fraud prone/sensitive areas
(cid:1)
Advances with outstanding balance > Rs.500000
Checkpoints - Advances
(cid:1)
Loans disbursed before the compliance of pre-sanction conditions.
(cid:1)
Follow-up of post disbursement sanction terms.
(cid:1)
Mechanism for monitoring of weak accounts.
(cid:1)
Advances to defaulters in other banks.
(cid:1)(cid:1)
RRaattiiffiiccaattiioonn//aapppprroovvaall ooff hhiigghheerr aauutthhoorriittiieess wwhheerreevveerr nneecceessssaarryy..
(cid:1)
Justification of repayment capacity of borrower.
(cid:1)
Tracking of penal interest – manual or automated.
(cid:1)
Timely submission of financial statements where required.
(cid:1)
Mechanism for monitoring fund diversion.
Checkpoints - Housekeeping
(cid:1)
Debits to income heads
(cid:1)
Transactions in staff accounts
(cid:1)
Detection & prevention of revenue leakage
(cid:1)
Reconciliation of ledgers
(cid:1)(cid:1)
NNoo.. ooff cchheeqquueess bboouunncceedd && ccaasseess uunnddeerr SSeeccttiioonn 113388 ooff NNII AAcctt
FX
(cid:1)
100% checking of Bills of Entry
(cid:1)
Monitoring debits & credits in FCNR & NRO A/c’s.
(cid:1)
Remittance forms (A-1,A-2)
Checkpoints – Other Areas
(cid:1)
Correctness of data entry in CBS
(cid:1)
Exceptional Transaction Reports
(cid:1)
ATM Complaints & redressal
(cid:1)(cid:1)
WWrriitttteenn ddeeccllaarraattiioonn ooff bbeenneeffiicciiaarryy oorr rreemmiitttteerr ffoorr llaarrggee
RTGS amounts
(cid:1)
Availability of adequate copies of BCSBI code & other
information manuals at the branch.
(cid:1)
Information security & BCP