Tackling Money Mules

ABA Foundation Webinar December 10, 2020 3:00 – 4:00 ET Moderator

• Name: Sam Kunjukunju • Organization: ABA Foundation • Title: Senior Director of Bank Community Engagement • Focus Areas: Elders & Community Development • Phone: 202-663-5418 • Email: [email protected] Speakers

• Jackie Blaesi-Freed, Assistant Director, United States Department of Justice

• Catheryn Eisaman-Avalos, Vice President of Financial Crimes Risk Strategies, Zions Bancorp

• Gauri Sharma, Vice President of Professional Certifications, American Bankers Association Agenda

DOJ Money Mule Initiative

Banking, Recognizing and Addressing Money Mules

ABA Professional Development Resources

Free ABA Foundation Materials

Questions and Answers Tackling Money Mules

Jacqueline Blaesi-Freed Assistant Director Consumer Protection Branch Department of Justice CONSUMER PROTECTION BRANCH

• Enforce laws that protect consumers’ health, safety, and economic security • Civil and criminal authority • Embedded law enforcement agents, investigators, and analysts • Coordinating role in the Department’s Elder Justice Initiative, Transnational Elder Fraud Strike Force, and Money Mule Initiative

6 Money Mules

7 THE MONEY MULE PHENOMENON • Growth in transnational criminal organizations targeting consumers, businesses, government funds • Romance fraud, lottery fraud, government imposter fraud, technical support fraud, person-in-need scams • Business email compromise/CEO fraud • Unemployment insurance fraud/PPP

• Need for U.S.-based financial infrastructure, obfuscation of money mule trail

8 WHAT ARE MONEY MULES? • An individual who receives money, directly or indirectly, from victims and sends it, directly or indirectly, to perpetrators.

• An individual who sets up financial infrastructure allowing perpetrators to receive victim money.

Someone who relays money from victims to fraudsters.

9 HOW DO PEOPLE BECOME MONEY MULES?

• Begin as victims of scams, particularly romance fraud and lottery scams • Job posts on online boards, social media—promise easy money for little effort • Recruited by fraudsters to facilitate the scheme

10 DIFFICULTIES FOR LAW ENFORCEMENT

• Volume of individuals involved • Proving money mule knowledge • Balancing need to limit victim lists while building complicated, international investigations

11 SPECTRUM STRATEGY • Warning letters • Civil injunctive actions • Criminal Prosecution

12 WARNING LETTERS • Provides potentially unwitting mules information about conduct and consequences • Language formula • We have reason to believe you are facilitating a scheme. • Here is what the scheme is and how it works. • There are potential consequences for such activity. • Acknowledge receipt.

13 CIVIL ACTIONS

• Civil actions predicated on involvement in fraud scheme • Enjoin continued conduct

14 CRIMINAL ACTIONS

• Criminal charges: mail and wire fraud, money laundering, unlicensed money transmitter

15 Money Mule Initiative

16 MONEY MULE INITIATIVE • Eight agencies involved • Coordinated by DOJ Consumer Protection Branch; U.S. Postal Inspection Service, Federal Bureau Investigation • Department of Labor Office of Inspector General, FDIC Office of Inspector General, Homeland Security Investigations, Social Security Administration Office of Inspector General, U.S. Treasury Inspector General for Tax Administration, Treasury U.S. Secret Service. • Action component in October and November • Push for public awareness

17 18 19 Money Mule Initiative: Lessons Learned

20 LESSONS LEARNED

• Financial institutions’ front-line vantage point is key to combatting money mules. • USAOs and LEOs use SARs prolifically. • Observations and interventions by employees matter. • Warnings work. • Public education is critical.

21 IMPROVING COLLECTIVE EFFORTS • Build a network—strengthen public and private collaborations • Build a community—encourage smart interventions • Build knowledge—educate consumers and caregivers and those who interact with them

22 A Final Note

23 ROLE OF SARS IN ELDER FRAUD EFFORTS

SARs are invaluable to DOJ’s elder fraud work. • Help DOJ direct resources geographically • Help DOJ direct resources topically • Help DOJ direct resources specifically

24 25 DOJ Elder Justice Efforts MONEY MULE

Catheryn Eisaman – Avalos CFE CAMS Zions Bancorporation Intersection of Fraud and AML Where to find them

ACCOUNT OPENING TRANSACTION EMPLOYEE MONITORING REFERRALS New Walk in Client/No Ties to Bank Account Opening Customer Indicates Solicitation •Government •Donation •Work from home

Opening new business accounts •Limited information regarding line of business •Limited knowledge of expected activity

Reading from email, text, or on the phone receiving guidance while opening account Automated Cash Alerts Wire alerts System ACH alerts Transaction Monitoring Unusual Check Deposit Activity Monitoring

Monitor Returned Deposited Item Activity

Monitor Early Return Warnings Employee Referrals

◦ Employees are the best referral source ◦ Requires ongoing training on red flags ◦ Transaction Red Flags ◦ Cash withdrawals ◦ Wire requests ◦ Cashiers check requests ◦ Client receiving instructions via phone/text/email ◦ Encourage intellectual curiosity Addressing Clients

01 02 03

Ask lots of questions Encourage to partner Inform the client you •Are you buying something? with managers if they suspect they may be a •How long have you known have concerns victim the person you are giving/sending money to? •Dow did you meet this person? •How did they send you the wiring instructions? Connecting with Law Enforcement and APS

Escalate to Agencies How to Secure Funds

◦ APS ◦ Hold harmless ◦ Local Law Enforcement ◦ Encourage client to return funds received via ACH/Wire for Fraud ◦ Federal Agencies ◦ HSI ◦ Request Seizure Warrant ◦ IRS Account Closure

Develop Procedures For CFPB Account Closure Prevent ongoing activity Monitoring complaints for closures Reduce litigation/reputational risk Claims of unfair activity Fair Complaints about use of report agencies Consistent Advice

01 02 03 Develop a Provide front Partner with law strong training lines with enforcement program contacts to agencies in • Bankers escalate your market • Customers activity Changing Landscape

Threats/Coercion Transaction Types Unemployment SBAD EIDL

https://www.fincen.gov/sites/default/files/advisory/2020-07-07/Advisory_%20Imposter_and_Money_Mule_COVID_19_508_FINAL.pdf Contact Information

◦ Catheryn J Eisaman – Avalos ◦ [email protected] ◦ (602-200-3446) ABA Professional Development Resources

Training, Certifications, and Conferences

aba.com | 1-800-BANKERS 39 Understanding the Connections

As the industry experts in compliance, ABA understands the dynamics of money mules and their activities pertaining to fraud and money laundering.

Training • Certificate in BSA and AML Compliance • Certificate in Fraud Prevention • NEW – In 2021 ABA will be launching a special partnership with K2 Integrity, the preeminent global risk, compliance, investigations, and monitoring firm. ABA member banks can gain access to the Dedicated Online Financial Integrity Network (DOLFIN) e-learning platform, an industry-leading training and continuing education resource for financial crimes compliance professionals.

aba.com | 1-800-BANKERS 40 Demonstrating Expertise

ABA offers the industry’s foremost certifications in Regulatory Compliance (CRCM), Enterprise Risk (CERP) and BSA/AML & Fraud (CAFP)

Understanding the Certified AML and Fraud Professional (CAFP) • Recognizes the increasing collaboration of fraud and AML professionals • Explores synergies between money laundering and fraud, and their confluence in cyber-enabled crimes • The only designation of its’ kind that is focused only on banks, and on US-banking regulations

aba.com | 1-800-BANKERS 41 Ongoing Access to Experts

ABA/ABA Financial Crimes Enforcement Conference • Annual conference, bringing together the industry’s foremost AML and fraud experts • Unique opportunity to hear from the nation’s top financial crimes experts, such as – Kenneth Blanco, Director, FinCEN – Christopher Wray, Director, FBI – Juan Zarate, Global Co-Managing Partner and Chief Strategy Officer, K2 Integrity To purchase the recorded conference, go to www.aba.com/FCE

ABA Experts • Rob Rowe, VP & Senior Counsel, Regulatory Compliance and Policy • ABA Compliance Hotline (800-551-2572; [email protected])

aba.com | 1-800-BANKERS 42 ABA Foundation Resources Consumer Tips

www.aba.com/moneymules • Defines money mules • Discusses criminal targets • Reviews witting vs. unwitting mules • Shares ways to protect yourself • Offers guidance on how to respond scams • Includes flyers and links to DOJ, FBI, and Europol webpages on money mules Infographics on Scams

Be sure to visit: aba.com/consumers

Go to Protect Yourself and Your Money

Romance Phishing Money Mule Imposter Fake Check Safe Banking for Seniors

• Current Modules: – Avoiding and Identifying Scams – Preventing Identity Theft – Choosing a Financial Caregiver Presentation Slides – Acting as a Responsible Financial Caregiver Presenter’s Guides • January 2021 Additions: – Choosing an Executor – Understanding Powers of Attorney • Registration opens in January Resource Sheets aba.com/seniors Activity Sheets Podcast

Visit: https://bankingjournal.aba.com/ Search: Red Flags for Money Mule Scams Contact Information