September 18, 2008
HP-1146

Prepared Remarks by Patrick M. O’Brien, Assistant Secretarybefore the 3rd U.S.-Latin America Private Sector Dialogue

Washington, DC--Good morning, ladies and gentlemen.

It is a pleasure to see many familiar as well as new faces at our third U.S.-Latin America Private Sector Dialogue.

This dialogue could not have been realized without the tremendous organizational efforts of our Brazilian hosts at the Federation of Brazilian Banks (FEBRABAN).  Muito obrigado.  Those who have participated in past dialogues know that they require a significant amount of coordination across the Americas and I would also like to thank the Latin American Federation of Banks (FELABAN), the Banking and Financial Entities Association of Colombia (Asobancaria), the Florida International Banking Association (FIBA), and the Bankers Association for Finance and Trade (BAFT), all of whom have contributed countless resources to this important regional initiative.

The U.S.-Latin American Private Sector Dialogue – or PSD – originated in June 2006 as a roundtable discussion among senior U.S. and Latin American banking and financial regulatory officials.  Roundtable participants representing distinct jurisdictions throughout Latin America spent a full day discussing private sector perspectives on Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) implementation and agreed to move forward together with planning large conferences and seminars dedicated to addressing core areas of mutual interest and concern.

Since its inception, the purpose of the PSD initiative has been to open and encourage direct dialogue between the financial sectors in the U.S. and Latin America in order to:

(i)   raise awareness of terrorist financing and money laundering risks;
(ii)  facilitate a better understanding of effective practices and programs to         combat such risks, and
(iii) strengthen implementation of effective AML/CFT controls.

Asobancaria hosted the inaugural U.S.-LA PSD in Bogotá, Colombia in April 2007.  The first PSD addressed comparative aspects of AML/CFT regulation and liability in Latin America and the U.S.  It included discussions on cross-border barriers to supervision and compliance between our two regions, due diligence in managing correspondent accounts and relationships and managing risks associated with Non-Bank Financial Institutions.

FIBA took the lead and hosted the second PSD in conjunction with their annual AML conference in February of this year.  The second PSD was structured as an intercessional, the objective being to gather PSD stakeholders six months after the inaugural dialogue, take stock and together brainstorm ideas for this, our third PSD in Sao Paulo.  Those efforts identified key areas of concern particularly relevant to PSD "hot topics" such as correspondent banking and banking secrecy, as well as the role of law enforcement in AML/CFT implementation.

Which brings us to the present moment and our third PSD.   Asobancaria, BAFT, FELABAN and FIBA remain core supporters of the PSD initiative and we are thrilled to welcome FEBRABAN and its members into this influential steering group.  Over the course of the next two days we look forward to delving into the issues that continue to feature prominently for you, our PSD stakeholders. 

We are joined here in Sao Paulo by many highly esteemed AML/CFT professionals from both the private and public sectors, and we especially thank our panelists and moderators for their participation.  The two panels that will set the stage for the event this morning will address AML Regulation in Latin America and Financial Intelligence Units (FIUs) and Judicial Authority.  Following these panels, this afternoon and tomorrow we will discuss four topics important to this dialogue in a more in-depth manner.  Those four topics include Correspondent Banking, Banking Secrecy, Politically Exposed Persons (PEPs), and Operational Risks and AML Strategies.  Today will provide an overview of each topic, while tomorrow will offer the opportunity for a more detailed, thorough and we hope free-flowing and informal discussion during small break-out sessions.  At the end of each session, we will reconvene and present highlights – and compare and contrast conclusions – from the break-out discussions.

The principal objectives of today and tomorrow's dialogue in the context of the broader PSD initiative – what we encourage all participants to achieve – are:

• a better understanding of the money laundering and terrorist financing risks presented by correspondent banking and Politically Exposed Persons (PEPs) and how to address those risks through implementation of effective AML-CFT controls;
• a deeper knowledge of what is meant by bank secrecy and the challenges that it can present to AML/CFT, and how to overcome those challenges;
• greater awareness of the essential components of an organization's AML/CFT compliance strategy, and the tools and resources available to help address the unique operational risks of your institution and/or jurisdictions; and
• the development of relationships between private sector and public sector counterparts that will enable individuals and institutions to follow up on any AML/CFT related issues of interest or concern.

Like previous PSDs, we anticipate that the discussions today and tomorrow will help enhance the level of cooperation and coordination between regulators and financial sector operators within and across national boundaries.  Latin American government participation at this and previous PSDs covers the gamut – from Central Banks and Ministries of Finance to Financial Intelligence Units and Bank Superintendents.  On the U.S. regulatory side, we are pleased to have the Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve present here in Sao Paulo, and to be able to rely on the continued support and involvement of the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC). 

The PSD is a unique collaborative venue for the private sector to talk about its perspectives on risk, and the efficacy of different mitigation efforts.  Our goal is that the PSD serve as a mechanism for collaborative and mutually beneficial discussions on regional AML/CFT priorities, on achieving harmonization between the benefits and the burdens of risk mitigation, on balancing the effective use of risk mitigation resources with practical considerations for financial institutions.

As part of our effort to ensure the PSD remain viable throughout the year and not just when we have the opportunity to meet such as today, we are pleased to announce that, thanks to FEBRABAN, the U.S.-LA PSD is now on-line and can be accessed through FEBRABAN's main page.  On the PSD website, stakeholders can find comprehensive information on past and future PSDs.  Since the PSD attracts a large group of regulatory and financial sector participants – including banks, consulting and law firms – from over 20 different countries, we anticipate the PSD website to have an even greater reach.

Additionally, we have begun outreach to the South American Financial Action Task Force (GAFISUD) in an effort to ensure private sector feedback is channeled to regulatory decision makers.  We are excited that fellow PSD founder and President of the Brazilian Financial Intelligence Unit, Gustavo Rodrigues now leads the Financial Action Task Force (FATF), which is increasingly working with the international private sector to strengthen AML/CFT implementation.  Our goal is to contribute to that process at the regional level.  We believe that strengthening the GAFISUD relationship with the private sector would provide an opportunity to further advance discussions regarding AML/CFT implementation challenges, identify ways to address those challenges, and further promote international business with the Latin American region.

More immediately, we wish to highlight our appreciation for the work of FELABAN's Latin American Committee for the Prevention of Money Laundering and Financing of Terrorism (COPLAFT) and to reiterate our support as COPLAFT member associations commit to PSD deliverables.  In addition to the overall objectives of this conference, we encourage COPLAFT members to identify topics that can be incorporated into their work plan.  We have discussed with COPLAFT, for example, the idea of a jurisdictional risk assessment describing AML/CFT risks faced by certain industries throughout the region.  We want to be a sounding board by offering to collaborate closely in this endeavor.  We believe that such an undertaking could serve as a viable means of deepening public-private sector dialogue and cementing public-private relationships.

In conclusion, extend my gratitude to our panel facilitators, including those from the private and public sectors in the U.S. and across the Latin American region for their work and leadership in preparing us for today's dialogue.  We must maximize this unique opportunity to develop insights and innovative solutions to the daily challenges of protecting our global financial community.

I look forward to continuing our work together to advance these goals.

Thank you, muito obrigado and muchas gracias.