SEVENTH LAW ENFORCEMENT EDITION
The Magazine for Career-Minded Professionals in the Anti-Money Laundering Field
JUNE–AUGUST 2017 VOL. 16 NO. 3 A publication of the Association www.ACAMS.org of Certified Anti-Money Laundering www.ACAMSToday.org Specialists® (ACAMS®), Miami, FL, USA acamsriskassessment.com
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New York Hong Kong London Silver Spring (DC Metro) Singapore Toronto Governance. Risk. Compliance. acamsriskassessment.com | acams.org | +1 305.373.0020 JUNE–AUGUST 2017
EXECUTIVE VICE PRESIDENT John J. Byrne, CAMS
EDITOR-IN-CHIEF Karla Monterrosa-Yancey, CAMS
ACAMS Today, an award-winning | EDITORIAL AND DESIGN | magazine, is designed to provide accurate and authoritative information EDITORIAL ASSISTANT Alexa Serrano, CAMS concerning international money laundering controls and related GRAPHIC DESIGN Victoria Racine subjects. In publishing this work, neither the authors nor the association are engaged in rendering legal or other professional services. The services of | EDITORIAL COMMITTEE | a competent professional should be sought if such assistance is required. ACAMS Today is published four CHAIR Debbie Hitzeroth, CAMS-FCI times a year for ACAMS members. Kevin Anderson, CAMS To join, contact: ACAMS Brickell City Tower Brian Arrington, CAMS 80 Southwest 8th Street Suite 2300 Edwin (Ed) Beemer, CAMS-FCI Miami, FL 33130
Tel. 1-866-459-CAMS (2267) Robert Goldfinger, CAMS or 1-305-373-0020 Fax 1-305-373-7788 Jennifer Hanley-Giersch, CAMS Email: [email protected] Websites: www.ACAMS.org Eric Sohn, CAMS www.ACAMSToday.org Joe Soniat, CAMS-FCI To advertise, contact: Andrea Winter Amy Wotapka, CAMS Tel. 1-305-373-0020 ext. 3030 Email: [email protected] Elaine Yancey, CAMS
ACAMS Today © 2017 by the Association of Certified Anti-Money Laundering Specialists (ACAMS). All rights reserved. Reproduction of any material from this issue, in whole or in part, without express written permission of ACAMS is strictly prohibited.
4 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG VOL. 16 NO. 3
| SENIOR STAFF |
PRESIDENT AND MANAGING DIRECTOR Tim McClinton HEAD OF ASIA Hue Dang, CAMS-Audit SENIOR DIRECTOR OF OPERATIONS AND CUSTOMER SERVICE Pierre-Richard Dubuisson VICE PRESIDENT OF SALES Geoffrey Fone, CAMS HEAD OF EUROPE Angela Salter
| SALES AND REGIONAL REPRESENTATIVES |
SENIOR VICE PRESIDENT OF BUSINESS DEVELOPMENT Geoffrey Chunowitz, CAMS HEAD OF GLOBAL ACCOUNTS Sonia Leon, CAMS-Audit HEAD OF AFRICA & THE MIDDLE EAST Jose Victor Lewis, CAMS HEAD OF CARIBBEAN Denise Perez, CAMS DIRECTOR OF SPONSORSHIP & ADVERTISING DEVELOPMENT Andrea Winter, CAMS
| ADVISORY BOARD |
CHAIRMAN Rick A. Small, CAMS Luciano J. Astorga, CAMS Jim Candelmo, CAMS Robert Curry, CAMS William J. Fox María de Lourdes Jiménez, CAMS Frank Lawrence, CAMS Dennis M. Lormel, CAMS William D. Langford, CAMS Rick McDonell Karim Rajwani, CAMS Anna M. Rentschler, CAMS Anthony Luis Rodriguez, CAMS, CPA Nancy Saur, CAMS, FICA Markus E. Schulz Daniel Soto, CAMS
| ADVISORY BOARD SPECIAL ADVISORS |
Samar Baasiri, CAMS Vasilios P. Chrisos, CAMS David Clark, CAMS Susan J. Galli, CAMS Peter R. Hazlewood
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 5 IN THIS ISSUE Contents From the editor...... 8 The success of public- private partnerships...... 46 Member spotlights...... 10 How the St. Paul Police Department’s A message from the Criminal Proceeds Unit maintains executive vice president. . . . . 12 public-private partnerships.
Ending modern slavery: Advancing AML programs The financial industry’s role. . . 16 while adopting new What the financial industry can do technology ...... 48 to identify and disrupt human Six fundamental management trafficking. principles needed to meet the challenges of adopting new technology.
The importance of having a solid compliance culture ...... 52 A culture of compliance can effectively assist law enforcement in combating money laundering. 62
Artificial intelligence: The implications of false positives and negatives...... 62 The differences between false positives and false negatives and how they can negatively affect FIs and law enforcement.
Islamic terrorism from a risk perspective...... 64 20 Tactical measures to help thwart terrorist attacks.
The true walking dead: The road to money The apocalypse...... 20 laundering centricity...... 68 How financial institutions can A look into the evolution help fight the heroin epidemic. of money laundering.
Ethically enhanced due 56 Joann Alicea: The fight diligence and human against human trafficking/ trafficking...... 30 The blocktrain has smuggling continues ...... 72 Increased focus on human trafficking left the station...... 56 A discussion of how the public and has added to the ongoing narrative private sectors can work together to The risks, trends and solutions of what is required to satisfy EDD help shape the future of SARs for associated with blockchain requirements. human trafficking and smuggling. technology and cryptocurrency transfers.
6 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG IN THIS ISSUE
ON THE COVER: About this issue: This edition is dedicated to bringing awareness to cybercrime.
The human side of cyber risk. . .14 Identifying potential employees Effectively auditing the Dr. Ali Muhsin Ismail: susceptible or vulnerable to four pillars of the The Iraqi financial system. . . . 86 committing an illegal act. screening process...... 74 Governor Ali Muhsin Ismail discusses How to develop a well-organized how the Central Bank of Iraq has periodic auditing system to ensure a been improving the Iraqi financial strong compliance environment. system.
Combating cyber fraud in correspondent banking . . . . . 24 Steps financial institutions can take to protect themselves from cyberattacks.
Stemming the flow of cybercrime payments. . . . . 34 Various ways in which cybercriminals and identity thieves 76 88 earn money in a cybercrime economy.
From law enforcement to AML Beyond dedication: and fraud compliance ...... 76 AML professionals Ways to find meaning after retiring in Yemen...... 88 from a law enforcement career. A group of AML professionals take the CAMS exam in Sana’a—a city under Interviewing tips for siege in Yemen. Cybersecurity: non-IT financial crimes Indicators of Compromise. . . .40 professionals...... 78 Community Banking Three data points to review in order to be How non-IT financial crimes Corner...... 92 better prepared to file cyber-related SARs. professionals can prepare for an An introduction to a new ACAMS interview. Today section that will provide useful tips for BSA/AML community bank White-collar crime: professionals. The carousel of VAT abuse. . . .82 Meet the ACAMS staff...... 93 The EU’s efforts to combat value- added tax abuse. CAMS and Advanced Certification graduates...... 94 Cybersecurity and BSA/AML. . .44 Tips for BSA/AML officers venturing into the cybersecurity realm.
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 7 FROM THE EDITOR You got emailhacked
have a friend who works for the “U.S. The Seventh ACAMS Today Law Enforce- State Department” and is equipped ment edition is dedicated to bringing I with a certain skillset. A few years awareness to cybercrime and the differ- ago, my friend and I were visiting a ent ways this security breach touches mutual acquaintance who was having everyone, everywhere and at any time. computer problems. As many of us do nowadays, our mutual acquaintance The human side of cyber risk identifies potential employees who could be sus- had his own personal laptop, a family The MENA Report section contains an desktop, a work laptop, iPads, etc. Our ceptible to committing cybercrime and inspiring article about the dedication of acquaintance also lived in a typical sub- how they might be a financial institu- our members in Yemen in the midst of a urban neighborhood, with the white tion’s greatest risk. war-torn country. picket fence and the manicured lawn— well you get the picture. Combating cyber fraud in correspondent Furthermore, we are also introducing a banking describes how cybercriminals new section to the ACAMS Today publi- My friend with the special skillset pro- have changed their focus on attacking cation: The Community Banking Corner. ceeded to use his own laptop to help our banks directly and what steps you can The Community Banking Corner will acquaintance with his computer prob- take to secure your financial institution. contain tips for community bankers and lems. Within minutes my friend (with the focus on all Bank Secrecy Act/anti- special skillset) was asking our acquain- Stemming the flow of cybercrime pay- money laundering aspects. tance about different networks, specific ments discusses the international folders and even email accounts. My nature of cybercrime and how cyber- I would like to thank our law enforce- friend had accessed not only our criminals monetize their gains and ment members for their dedication and acquaintance’s work laptop and his work move their funds. commitment in the fight against finan- server, but he also accessed all the infor- cial crimes. Finally, I would like to mation of the entire neighborhood. This In addition to more cyber-related arti- encourage everyone to be more vigilant was my first experience actually witness- cles, the Seventh Law Enforcement edi- so that we do not become victims of ing the rapid speed of hacking that could tion contains articles on human cybercrime. eventually lead to cybercrime. trafficking prevention, partnerships Years later, I had another friend whose between the financial sector and law company had been a victim of email enforcement, blockchain technology spoofing. The interesting part of cyber- and cryptocurrencies, career guidance crime is that it does not discriminate— for those leaving the public sector and any person, or race of any socio or moving into the private sector and inter- Karla Monterrosa-Yancey, CAMS economic class can be duped. viewing tips for landing your next job. editor-in-chief
Produced by: ComplianceComm
8 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG Know the unknowns.
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S045054_B.indd 1 3/21/17 3:21 PM MEMBER SPOTLIGHTS
Allan Clare, CAMS, FCII, FCILA, Scott DeRycke, MBA, CAMS Christine Miller, CAMS CFE, Dip (Fin.Crime), MICA Mahomet, IL Millbury, MA, USA Birmingham, U.K. Born and raised on a family farm in Cen- Christine Miller’s banking career spans Allan Clare has held a number of anti- tral Illinois, Scott DeRycke graduated over 30 years. She has always been pas- fraud, financial crime compliance and from Illinois State University in 2006 sionate about compliance and has risk management leadership roles with with a degree in criminal justice. In 2012, worked independently to develop her the U.K. and global financial institu- he graduated from Utica College with an knowledge and skills in the compliance tions. Clare is currently the head of MBA in economic crime and fraud man- field. As a compliance officer at her pre- financial crime compliance at HSBC agement. He received his CAMS certifi- vious company, she utilized her passion U.K., the newly created ring-fenced cation in 2014. He has over six years of and compliance knowledge to develop bank, formed to comply with the U.K.’s experience in mortgage compliance, the institution’s compliance policies and Banking Reform Act. Clare, who sits on mortgage due diligence, mortgage ser- procedures and train employees. the HSBC U.K. Executive Committee, is vicing, enhanced due diligence and In 2015, she became the Bank Secrecy responsible for the financial crime risk anti-money laundering compliance Act/anti-money laundering (AML) offi- management program, including anti- with banks and consulting firms. cer at Millbury Federal Credit Union and money laundering (AML), sanctions and DeRycke is currently working as a con- in 2017, she was appointed as the secu- anti-bribery and corruption across all sultant for Mission Capital Advisors, a rity officer. As part of her goals to con- lines of business. mortgage due diligence firm. Mission tinue increasing and enhancing her In addition, he is a Certified Anti-Money Capital Advisors works on due diligence compliance knowledge, she studied for Laundering Specialist, Certified Fraud projects for several small and large and obtained her CAMS certification in banks. As a consultant, DeRycke is Examiner, Member of the International 2016. According to Miller, the knowledge responsible for compliance file reviews, Compliance Association with whom he that she attained through the CAMS collateral file auditing and due diligence holds a Diploma in Financial Crime, program has helped prepare her for the reviews. In addition, he has been a Chartered Insurer and Fellow of the investigations that she performs in her member of ACAMS since 2012 and has Chartered Insurance Institute, Char- current role. In addition, she is a tered Loss Adjuster and Fellow of the attended several webinars, seminars and conferences as a member. member of the Eastern Mass Compli- Chartered Institute of Loss Adjusters ance Network and Worcester County where he was instrumental in forming Risk Management. the Institute’s Fraud Special Interest Group and was its inaugural chairman. As a security officer, Miller is responsible for all AML and counter-terrorist financ- Clare is actively involved in numerous ing investigations and all OFAC respon- U.K. financial services industry and sibilities for the credit union. She reports trade body groups and is a member of Did you know that all pertinent information for review to the management board of the Joint the board of directors. Money Laundering Intelligence Task ACAMS’ new Cyber- Force. Previous roles include chairman As an active member of her community, of the Financial Intelligence Unit Work- Miller has volunteered at financial liter- ing Party at the Wolfsberg Group, board Enabled Crime acy outreach programs for a variety of director of the Insurance Fraud Bureau, local groups and she volunteered at director of CIFAS, deputy chairman of Certificate course veteran associations, Girls Choice, ESL the Insurance Fraud Investigators Group programs and other community organi- and member of the Association of British begins in June? zations. In addition, as security officer, Insurers Financial Crime Committee, she is developing a program to reach out where amongst other responsibilities he to senior citizens to better educate them led the project that created the indus- on how to protect themselves against try-funded City of London Police Insur- the different scams that are targeting the ance Fraud Enforcement Department. elderly.
10 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG Reduce fraud. Mitigate risk. Improve productivity. And lessen customer friction.
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12426 ACAMS-Today-PtAd.indd 1 4/18/17 1:15 PM A MESSAGE FROM THE EXECUTIVE VICE PRESIDENT
CONTINUING OUR TRIBUTE TO LAW ENFORCEMENT WITH NO ALTERNATIVE FACTS
n writing this article for the to thrive and combat this global outrage. We have been very vocal about the seventh law enforcement excellent work of government agencies Iedition of ACAMS Today such as the Department of Homeland Security (DHS) in the U.S. and FINTRAC and recognizing the Law enforcement must be at the policy and law enforcement in Canada (Project “table” while we tackle this problem, but many successes of law Protect). All of those entities would also others frequently forget that. enforcement, I am struck admit to the need for private sector part- nerships and those are happening. What by the missed opportunities frustrates those of us that follow this Cyber—Our greatest for anti-money laundering problem is a diversion of resources challenge? toward arresting and deporting (AML) professionals non-criminals instead of those that prey This is our first law enforcement edition to communicate how on trafficking victims. Again, you cannot dedicated significantly to one subject. have it both ways. Cyber-enabled crime and cybersecurity important that group is to encompass so much in 2017 and demands In our Washington, D.C. chapter, we our collective attention. In this edition, fighting financial crime. had a compelling presentation and dia- you will see articles dedicated to govern- I also wonder if true law logue on the opioid epidemic that ment guidance, electronic banking vul- harms people of all ages. Led by ACAMS nerabilities and the potential misuse of enforcement “supporters” award winner and frequent ACAMS law enforcement information for nefari- actually listen to themselves. Today author Jim Cox, those in atten- ous purposes. dance not only learned about the We would also point out that ACAMS severely addictive nature of opioids and is posting a “Cyber Resource” page For example, ACAMS is fortunate to the potential “red flag” financial indica- and we would love your feedback and have a number of members who work or tors, but also about how best to raise comments. have worked for the Internal Revenue awareness on this societal scourge. Service (IRS). IRS investigators deal with What is missing, however, is supporting A tribute to a retiring a wide array of issues such as money law enforcement by getting the medical laundering, identity theft, cyber and of community to stop prescribing unusu- public servant ally high doses for prescriptions and to course, tax evasion. They are a respected By the time we publish, IRS-CI Chief call policymakers to task for cutting agency by our community, but politi- Rich Weber will have left that agency. funding for needed programs. cians will try to benefit by attacking the He will still give us the benefit of his mission of the IRS and then pretend Finally, ACAMS has spent a great deal expertise in a new role in the private they support law enforcement—you of time in the past year working on the sector, but we would be remiss if we did cannot have it both ways. infamous “de-risking” (financial not thank Rich for his public service and access) issue and I have to point out work with financial institutions on a This edition focuses intensely on the that we were the first to emphasize the number of critical issues. global problem of cyber-related crimes impact on law enforcement when and security issues. Policymakers of all Thanks, Rich! We look forward to your financial institutions exit or fail to stripes will bemoan the danger of next endeavors in assisting the AML onboard certain entities because of attacks on the internet, but then some community. risk. It is clear that some financial insti- will support allowing broadband provid- tutions have a greater risk appetite and ers in their efforts to roll back “net neu- mitigation protocols than others, so trality” and permit more use of personal the loss of oversight, whether due to information. regulatory confusion or revenue loss, The area of human trafficking also con- can harm law enforcement’s access to tinues to harm our society and needs data, financial intelligence and suspi- John J. Byrne, Esq., CAMS public-private partnerships to continue cious activity reports. executive vice president
12 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG Spot the dirty money. Stay compliant.
If money laundering were an economy, it would be the fifth largest in the world. We have to unite against this underground economy. It’s time for industry, government, technology and compliance specialists to join forces and tackle money laundering.
It’s not just security. It’s defense.
Learn more at BAEsystems.com/financialcrime
Copyright © 2017 BAE Systems plc. All rights reserved.
ACAMS_Fin_Crime_Ad_Apr17.indd 1 16/04/2017 18:25 AML CHALLENGES
THETHE HUMANHUMAN SIDESIDE OFOF CYBERCYBER RISKRISK
pend time with retired four-star General James Jones and you will likely hear his ominous bifurcation of “those Scompanies that have been a target of a cyberattack, and those that will be.” As former U.S. National Security Advisor to the President and Commandant of the Marine Corps, General Jones dedicated his career to understanding, mitigating and preventing security risk at all levels.
Commercial industry has been actively Today, companies not only defend against cybercrime but aim to stop emerging addressing cyber risk for decades while threats posed by the insider by expanding their focus to the human side of this risk. attacks have only increased in frequency Most cyber experts agree that people (employees) are usually the most vulnerable link and severity. Most people associate in a company’s cyber defense. Many organizations view this employee risk through cybercrime with external threats and the lens of careless keystrokes or poor cyber hygiene (“do not click that link,” “do not nation states and criminal hacking into a open that document,” “do not use the word ‘password’ as your password”). This company’s network. A lot of investment human risk is a function of undereducated or inadvertent behavior. Risk caused by has been dedicated toward protecting the perimeter and keeping these bad negligent behavior can be addressed through proper training and procedure. actors out. The reality is that cybercrime Unfortunately, not all human risk is driven by error. Insiders can also consciously is committed by a combination of indi- engage in illegal activity, so companies must understand and address the motivational viduals outside and inside a company. aspects of crime. Consider that employees do not just suddenly show up for work one Insiders, those who the company either day and decide to defraud their company or commit an act of cybercrime. Certain recruited or hired, often account for half the financial loss and crime. specific events and circumstances pre-date workforce crime. Criminal theory tells us that crime is a The key for companies is to identify those employees that are susceptible to commit function of motivation and opportunity. an illegal act or vulnerable to the influence of nefarious external actors looking to To address the rising concern of insider exploit them for financial gain. These are employees who, unbeknownst to their com- threat, most organizations have almost pany, are under criminal, financial or other personal stress. These individuals are the entirely focused their efforts on the hardest of threats for an organization to defend against. Because of their insider status opportunity side of this equation: mon- they can understand and learn the company’s defense systems and work to bypass or itoring digital activity within the work- suppress them. place and controlling access to limit opportunity. This form of internal net- For the good of the employee, coworkers and the organization, companies must work monitoring may include access always be aware of material changes to employee behavior both in and outside of the and movement of files, folders, docu- workplace. Know your employee initiatives emphasize the need to seek a holistic pic- ments, websites, as well as internal ture of your employees over time, as well as the timely identification of aberrations or email communication. The objective is unusual patterns of high-risk behavior (for example, repeat or escalating criminal to identify, understand and document activity outside the workplace or sudden and drastic changes to someone’s personal suspicious, illicit or illegal activity and financial condition). Such behavior, which would have been disqualifying in the then limit or shut down access to sensi- hiring process, may occur six months, a year or five years later and remain unde- tive, confidential or financial data. tected, thus unadjudicated by the organization. Think of this as the final line of defense. The threat has become active. The crime People’s lives change all the time for common reasons (e.g., they get married, have is being attempted now. The plan is to children, buy and change homes, care for family members, pay for college and/or identify the initial activity fast enough to cope with medical challenges). Significant change can produce a level of personal remove or negate the opportunity and stress that often is temporary or addressed through constructive and positive behav- protect the organization from a crime in ior. However, sometimes high levels of stress can spiral out of control, and many times progress. it is not obvious to family, friends, coworkers and managers.
14 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG AML CHALLENGES
The human side of cyber risk management is inherently people-oriented. The key to Finally, insider risk management is not any organization is finding the balance between the risk management goal of pro- limited to solely protecting the organi- tecting an organization and the personnel goal of building a culture of trust. The zation from cybercrime. With early answer is not to accumulate as much employee data as possible (i.e., sifting through leading indicators and warning signs of good and bad behavior hoping to identify risk). In addition, it is not about continu- behavioral risk, companies can now ally rerunning background checks or monitoring the everyday, common behavior of assist employees who are not asking but your employee base when they leave the office. need help. The company can intervene at a time where behavior can be posi- The solution must be event-based, seen in real time, actionable and driven by those tively modified through training, coun- specific behaviors your organization deems high-risk within the context of your seling or one-on-one interaction. Course industry, your company, and each employee’s role. For example, a company would correcting behavior can better ensure an almost certainly define a financial controller being arrested for check fraud or an employee’s success in a current role and employee who drives a company car being arrested for DUI as high-risk behavior. a long-term career path. The ultimate Certain roles are indeed mission critical and timely alerting is essential to risk miti- win is realized when companies prevent gation. Contextual policy is important because not every employee has the same insider risk from occurring well before it level of access to financial transactions, customer personally identifiable informa- places an employee’s job at risk or tion, credit card accounts or sensitive data. becomes an actual insider threat to the The solution must also support the rights and privacy of employees. Technology can organization. help standardize execution, ensure legal and regulatory compliance, drive proactive and transparent cyber risk policy and most importantly remove personal bias and ad-hoc judgmental decision-making. That is how you strike a balance in protecting Tom Miller, CEO, ClearForce, Vienna, VA, both the organization and the individual for success. USA, [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 15 AML CHALLENGES
ENDING MODERN SLAVERY: The financial industry’s role 16 AML CHALLENGES
184 convictions for trafficking, which shows the disparity between reports uman trafficking—a form of modern and arrests.9 slavery—is one of the fastest growing As former Secretary of State John Kerry criminal activities in the world. It exploits an said in the 2015 Trafficking In Persons Report, “Whether we are talking about 1 estimated 45 million people a year and generates the sale of women and children by ter- Happroximately $150 billion in profits.2 Though the rorists in the Middle East, the sex traf- ficking of girls lured from their homes in concept of human slavery is certainly not new, Central Europe, the exploitation of farm some are unaware of the impact and extent of workers in North America, or the human trafficking in the 21st century, both at enslavement of fishermen in Southeast Asia, the victims of this crime each have home and abroad. a name.”10 Each victim has a name Tenancingo, Mexico is widely considered The good news is that the financial across international borders every year, the sex trafficking capital of the world. It industry can play a part in disrupting of which 80 percent are female and half is the single largest source of sex slaves to this heinous crime. With proper educa- are children.6 the U.S.11 Men who are masters of tion, knowledge of red flags and victim The Action Means Purpose (A-M-P) manipulation kidnap boys and girls as indicators, and by building strong rela- model7 on page 19 is helpful in under- young as 14 years old from Tenancingo’s tionships with law enforcement, the standing the definition of human traf- surrounding villages. They trick, threaten financial industry can help disrupt the ficking. Yet the extent of the problem or seduce them into working for the sex problem of modern slavery. remains a bit more difficult to define. trade. Many times these pimps capitalize “Hidden in plain sight” is a term used in on the residents’ values by pretending to Hidden in plain sight the Department of Homeland Security’s start a relationship with them, telling Blue Campaign, an effort that aims to them they love them and tricking them According to the Foundation for a Slav- combat human trafficking. This phrase into a life of slavery. ery Free World,3 there are 20 to 30 mil- represents the difficulty of spotting Ultimately, the victims find out that they lion slaves in the world today. The Global human trafficking on the surface. have been lured away from home in a Slavery Index4 estimates upwards of 40 In a 2015 edition of Frontline, the Public prostitution or labor scheme, getting million. In the U.S., the statistics are Broadcasting Service illustrated the paid very little for very poor working equally jarring. The National Coalition divergence between reported instances conditions against their will. “He said Against Domestic Violence reported that of human trafficking and actual arrests the money was to buy land so we could approximately 80 percent of trafficking in the U.S.8 The article noted that in build a little house, but it was all false, involves sexual exploitation and 19 per- 2014, a federally funded hotline for U.S. even the name he’d given me was false. cent involves labor exploitation.5 trafficking victims received more than He made me live a very sad, ugly, des- According to the U.S. State Department, 21,000 calls. During that same period, perate life,” one victim told The Guard- 600,000 to 800,000 people are trafficked the Department of Justice made only ian in 2015.12
1 The Global Slavery Index, 2017, http://www.globalslaveryindex.org/findings/ 2 International Labour Organization, 2014, http://www.ilo.org/global/topics/forced-labour/lang--en/index.htm 3 Foundation for a Slavery Free World, 2015, https://www.slaveryfreeworld.org/ 4 The Global Slavery Index, 2017, http://www.globalslaveryindex.org/findings/ 5 The CNN Freedom Project, CNN, October 18, 2013, http://thecnnfreedomproject.blogs.cnn.com/category/the-facts/the-number/ 6 Trafficking In Persons Report, United States Department, 2004, https://www.state.gov/documents/organization/34158.pdf 7 National Human Trafficking Resource Center (NHTRC), 2017, https://humantraffickinghotline.org/resources/actions-means-purpose-amp-model 8 Caroline Reilly, “Human Trafficking: A Crime Hard to Track Proves Harder to Fight,” Frontline, July 29, 2015, http://www.pbs.org/wgbh/frontline/article/what-is-human-trafficking-and-why-is-it-so-hard-to-combat/ 9 “Trafficking In Persons Report,” U.S. Department of State, July 2015, https://www.state.gov/documents/organization/245365.pdf 10 Ibid. 11 Natasha Bertrand, “This Mexican Town is the Sex Trafficking Capital of the World,” Business Insider, February 10, 2015, http://www.businessinsider.com/this-mexican-town-is-the-sex-trafficking-capital-of-the-world-2015-2 12 Nina Lakhani, “Tenancingo: The Small Town at the Dark Heart of Mexico’s Sex-Slave Trade,” The Guardian, April 4, 2015, https://www.theguardian.com/world/2015/apr/05/tenancingo-mexico-sex-slave-trade-america
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 17 AML CHALLENGES
However, trafficking is not just contained bank would, and they know that the law enforcement is more limited and they’re not to communities like these. The problem going to be conducting sting operations, for example,” said Jimenez. These examples is happening in our own backyards and illustrate that sex trafficking and labor trafficking are happening in the U.S., in large even in wealthy neighborhoods and cities and in small towns, and even in our own backyards. non-border states. Human trafficking affects people of all genders, ages and How can the financial industry make an impact? nationalities — even domestically. Law enforcement is not the only group that is challenged by the “hidden in plain A close-to-home example is Backpage. sight” problem. The financial industry can often find it difficult to identify signs of com. Backpage is the world’s largest human trafficking. The money is moved quickly and quietly, and the transactions may classified ad company. According to not always appear suspicious on the surface. However, anti-money laundering (AML) Dawn Hawkins, executive director of the National Center on Sexual Exploitation, professionals can make an impact to identify and prevent human trafficking if they Backpage posts 1 million prostitution are armed with the proper knowledge. ads a day.13 Earlier this year, a Senate The first step in being able to identify and disrupt human trafficking—from a financial subcommittee published a report, after institution’s perspective—is awareness. It is important not only for compliance pro- a 21-month investigation, finding that fessionals to be educated and keep up-to-date with the issue, but also to train other Backpage knowingly facilitated online staff on it. AML professionals can incorporate information about human trafficking child sex trafficking on the “adult” sec- into their required training—what it is, red flags to look for on the front end and more. tion of its website.14 Many of the girls advertised were victims of trafficking. Counter-human trafficking activities should also be built into an institution’s cus- The adult section was taken down, but tomer due diligence policies and procedures. Asking the right questions, knowing according to CNN, sex advertisements what to look for, and thinking holistically about known patterns and indicators of began to appear on a different section of human trafficking all play a part in customer due diligence. Bank Secrecy Act/anti- the website.15 money laundering software automation can also be a significant factor in the ability to flag potentially suspicious transactions based on rules, behaviors and/or typologies related to human trafficking. Financial red flags for human trafficking The first step in being able There are hundreds of red flags that may indicate human trafficking, from victim indi- cators to transaction traits. Sometimes this requires thinking outside the box, beyond to identify and disrupt just the cash intensive businesses. Jimenez used business customers in the service human trafficking—from industry as an example. “It goes back to know your customer,” he said. For example, in doing due diligence on how many employees a company has, AML staff would look a financial institution’s at whether the business has a payroll account. “You’d be surprised how many massage parlors and nail salons that are being involved in sexual exploitation don’t have a pay- perspective—is awareness roll account, because nobody’s getting paid,” he said. In addition, there are certain victim indicators of trafficking, which can indicate coer- “It’s not just a border issue,” said Harry cion, brainwashing and so on. For instance, a trafficking victim may be accompanied Jimenez, deputy chief of Bexar County by a controlling person or boss and will not speak on his or her own behalf. Individuals Sheriff’s Office in San Antonio. “More may have a lack of control over their personal schedule, money, ID or travel docu- and more human trafficking victims are ments. They may be transported to or from work, or living and working in the same found in the interior of the United States. place. “Many of these victims of sexual exploitation and human trafficking… [are] They are trafficked through the major unable to identify themselves as victims,” said Jimenez. “These individuals are unable highways of the United States, and the to go to a police officer and say, ‘I need help.’” traffickers are looking for smaller com- Customers’ profiles can also contain red flags. Customers with excessive numbers of munities with smaller banking commu- accounts, consumers with discrepancies between account funding and known cus- nities,” said Jimenez. “They believe the tomer profile, and businesses or industries easily exploitable by traffickers (immigra- bankers have fewer resources than a big tion attorneys or labor intermediaries) can all require further investigation.
13 Dawn Hawkins, “Statement: Backpage.com Block Prostitution Ads in U.S. Under Pressure for Sex Trafficking,” National Center on Sexual Exploitation, January 10, 2017, National Center on Sexual Exploitation. http://endsexualexploitation.org/articles/statement-backpage-com-blocks-prostitution-ads-u-s-pressure-sex-trafficking/ 14 Ibid. 15 Andrea Powell, “The Fight Against Sex Trafficking is Bigger than Backpage,” CNN, January 19, 2017, http://www.cnn.com/2017/01/18/opinions/backpage-sex-trafficking/
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There are also several transaction traits that can be red flags, many of which are “What we recommend as law enforce- detectable using a suspicious activity detection engine. One example is a high volume ment,” said Jimenez, “is to develop this of round-dollar deposits via wires, ACH, or cash in the range of $2,000 to $3,000, which relationship with your law enforcement could indicate payment to the trafficker. The person is moved to a large city like New community. State and local law enforce- York, for example. The money is transferred to the trafficker in another location, pos- ment will have someone working in sibly a border town. The dollar amounts are low, as a human commodity continues to human trafficking or organized crime. generate profits. Look for those individuals.” Other indicators include excessive interstate or intrastate cash deposits less than $1,000 at multiple branches daily, as well as cash deposits just below the currency On the federal side, Homeland Security transaction reporting threshold but deposited at several branches. A high volume of Investigations is a resource. “There will debit or credit card transactions using specific merchant codes, airline/rental car/ be a Homeland Security Investigations bus/taxi charges in multiple cities and states, and excessive hotel charges with high close to you,” said Jimenez. He pointed percentages or purchases made at high-end merchants and casinos, can also be red out that Homeland Security offers free flags. Extensive payments to web advertisers that cater to the sex industry, extensive training. They will provide the latest red purchases of money orders to pay bills, wire transfer activity inconsistent with the cus- flags for communities and financial tomer’s business, and wires to or from origin or staging countries that are inconsistent institutions. “These are the same indi- with the customer’s known profile can be indicators as well, just to name a few. viduals that will come and respond to The problem with human trafficking may never be visible in plain sight. However, your SARs,” he said. there are certain indicators for which AML professionals can monitor. When red flags When in doubt, file the suspicious activ- are identified or suspected, the next step is reporting it. ity report (SAR). Even if it is just a suspi- cion that human trafficking may be Working with law enforcement to bridge the gap present, include the following in the SAR AML professionals know the importance of working with law enforcement to prevent narrative: “It appears like possible financial crime, and this is particularly relevant to counter-human trafficking efforts. human trafficking.” Trust your gut Strong partnerships and relationships with law enforcement, nongovernmental organi- instinct as a professional. If it looks sus- zations, consortiums and anti-trafficking coalitions can be critical in disrupting the issue. picious, it probably is. “You may not know it’s human trafficking, but the fact that you’re writing the SAR is the first step,” said Jimenez. Human trafficking is a billion dollar industry and it is impacting the entire globe. Even in the U.S. people are being sold as sex and labor slaves, confined to T -M-PO L working in illegal and dangerous condi- tions against their will. Many of them are children, and many of them will die in servitude. However, financial institu- AI M N * PPE tions have the power to identify, prevent Induce and disrupt human trafficking activity. Recruits Force Commercial Sex As a society, we still have a long way to Harbors (Sex Tracking) go. Yet as AML professionals, our work Fraud truly makes a difference in bringing Transports or or Labor/Services justice to victims and ending modern slavery for good. Provides Coercion (Labor Tracking) or
Obtains Terri Luttrell, CAMS-Audit, manager of professional services, Banker’s Toolbox, Austin, TX, USA, * Minors induced into commercial sex are human tracking [email protected] victims—regardless if force, fraud or coercion is present. Emily Gasper, marketing content Source: National Human Trafficking Resource Center (NHTRC), 2017, specialist, Banker’s Toolbox, Austin, TX, https://humantraffickinghotline.org/resources/actions-means-purpose-amp-model USA, [email protected]
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The true walking dead: THE APOCALYPSE
s written in the 2016 does have legitimate use—it treats WHY THIS ARTICLE IS ACAMS Today law chronic pain. However, like other legally prescribed drugs such as oxycodone and TITLED THE TRUE WALKING enforcement edition, oxycontin, it is abused by persons look- DEAD: THE APOCALYPSE this article is not meant to ing to get high. In addition, fentanyl is A As a local law enforcement agency, we being disguised in different pill forms. It embarrass, put down, or will look like a pill of a different drug, but cannot go anywhere we want and offend persons suffering it is in fact pure fentanyl. enforce drug laws. With that said, we just pick up the telephone and contact a from addiction. However, Carfentanil is another synthetic opioid local or federal partner. We are currently it is a wakeup call to the created in 1974 and is reported to be working on a case where a person is 10,000 times more potent than mor- readers of this article, to buying heroin for us to build a case on a phine. It is mostly used as a general anes- dealer supplying our county. A detective us as a society, and to thetic for large animals like elephants. In went to a local city not far from Fairfax the world we share. the 2000s, Eastern Europe saw a surge of County with a federal partner. While sit- illicit use by persons and in 2016, the U.S. ting on a street waiting for the deal to began to see it being abused by users take place, the detective described searching for that ultimate high. The use seeing at least 20 people walking down In 2015, 52,404 people died from an and abuse by humans across the globe the sidewalk at different times as if in a overdose in the U.S. Brothers, sisters, have led to numerous deaths. aunts, uncles, mothers, fathers, and our zombie-like state. If you have ever seen own children abused legitimate and ille- Local dealers who either cut it with heroin anyone on heroin, you will understand gitimate drugs, suffered an overdose and or sell it in its pure form sell both of these the meaning behind the title. died. This is not just a U.S. problem, drugs. States across the U.S. are reporting search the internet and look at the num- more and more overdose deaths from DRUGS ARE NOT A bers in your country. both of these drugs. States are also seeing VICTIMLESS CRIME As 2016 numbers are totaled across the illicit dealers selling a street named drug county here in Virginia, 1,420 died from called “Gray death.” It is a combination of If you think that this epidemic does not an accidental overdose, once again this heroin, fentanyl, carfentanil, and a syn- affect you because you do not know number surpassed motor vehicle and thetic opioid branded U-47700, also anyone suffering from addiction, think gun-related deaths. These numbers can known as “Pink” on the street. Users do again. Society’s lack of education on this rise as bodies lay in morgues awaiting not care what is in the dose they are taking crisis places people in harm’s way. lab results to the cause of death. as long as it gets them high. Last year in Fairfax County there was a Case one SYNTHETICS FLOOD house party hosting young adults and A car is dropped off at a tire repair shop THE MARKET juveniles. The attendees, mostly high for four new tire replacements. The technician goes into the glove compart- Fentanyl, created in 1960, is a synthetic schoolers, enjoyed each other’s com- opioid and reported to be 50 to 100 times pany, listened to music and danced. A ment to look for the locking lug key. As more powerful than morphine. It can young man sold morphine during the he searches, he feels a sharp pain imme- also be 10,000 times more potent than party. The next day a 17-year-old girl diately in his finger. He realizes he is morphine, depending on production. In was found dead. She overdosed on the been pricked by an uncapped and used 2016, the U.S. began to see heroin cut morphine she purchased. The young syringe. The car owner is a daily heroin with fentanyl and at times pure fentanyl man was tried and convicted and is now user. The technician must now go was being sold by illicit dealers. Fentanyl serving eight years in prison. through a battery of medical tests and
20 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG AML CHALLENGES will constantly have to worry if he will contract a variety of diseases common with heroin users.
Case two A dental assistant is at the office meeting with patients cleaning teeth and provid- ing dental aid to the dentist. In between patients the assistant enters the office restroom, uses heroin laced with fenta- The true walking dead: nyl, overdoses and dies. The fire depart- ment is called as they cannot get into the bathroom. The door is removed and the assistant is found. This can easily be the THE APOCALYPSE dentist you have been going to for years.
Case three You are shopping with your family at your local grocery store. Unbeknownst to you, a young woman is in the rest- room shooting up heroin. Her boyfriend tries calling her to see what is keeping her and cannot reach her. He finds her in the restroom unconscious and over- dosing. Instead of calling 9-1-1, he drags her unconscious body (still with a syringe in her arm) through the store in front of your family, in hopes of not being arrested.
Case four A husband and wife go to their local drug dealer and purchase heroin. They drive to a park where children are playing soccer. It is a nice day, so the couple open the car doors and the husband is the first to inject himself with the heroin pur- chased. He immediately overdoses and falls partially out of the car. The wife thinks to herself, “Wow that must be good heroin,” so she pulls out the needle from her husband’s arm and injects her- self with the remaining dose. She begins to overdose and falls partially out of the car unconscious. It is first reported to 9-1-1 as a double homicide. It is later determined to be a heroin overdose. This occurred in front of kids playing soccer. Unfortunately, these are true stories and there are thousands like them. This epi- demic is happening all around us. The picture on page 22 was put on the inter- net by the East Liverpool Police Depart- ment. Notice the child in the back seat. This vehicle was being driven and was stopped by police for erratic driving behavior. The vehicle was directly behind a school bus carrying children. The driver was charged and pled guilty in his court proceeding. The grandmother in the passenger seat was charged as well
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opioid that would otherwise lead to an overdose. It has been described as the wonder drug or the lifesaving drug and it has saved countless lives across the U.S. It was until recently only available by prescription. This is now changing throughout the nation. When adminis- tered it will counteract the opioid over- and is awaiting her trial. The child was accessible to our children? If you do not dose within minutes. Does it work all the placed with county child services. This need them, get rid of them. If you are time? Unfortunately not. In some cases, all occurred in front of the gazing eyes of taking them, then lock them up. If you do the overdose victim just cannot be children onboard a school bus. Do you not know how to get rid of them, use the revived. However, there are more success still think there are no victims? internet. There are several safe ways to stories than failures. The Fairfax County dispose of unused prescription drugs. fire department has saved many lives. I EDUCATION I know I am repeating myself, but, I know this firsthand, since I am contacted In the article I wrote in the June-August should not have to. Several times each about every overdose case that occurs in ACAMS Today 2016 edition I discussed year the DEA sponsors a drug take-back our county. Time after time I am told that and asked the readers to view the film program across the U.S. and every time Narcan was administered with the Chasing the Dragon: The Life of an several tons of unused pills are turned desired effect (the victim is alive). in. The DEA also reports that the U.S. Opiate Addict. Just recently, the ACAMS Police and Sheriff Departments are makes up less than 5 percent of the U.S. Capital and Virginia Chapters held a beginning to carry Narcan as a daily tool world’s population, but we consume 80 joint event to discuss this continuing to help keep people alive. Parents are epidemic. I was amazed when I asked percent of the opioids manufactured in attending Revive training to save their the crowd of more than 70 if they have the world. Again, I am not saying you children’s lives in the event of an over- seen the film—only a handful raised may not need these drugs to fight their hand. The event started with the chronic pain. All I am saying is do not be dose. Churches are promoting it and in showing of the film. The film was eye the cause of a family member’s curiosity Fairfax County a sister who lost her opening to some. Someone in the audi- that can potentially lead to addiction brother is a strong advocate for it. Ginny ence shared that they live with a family and death. (Atwood) Lovitt started the Chris Atwood member who suffers from addiction. Foundation. I encourage you to go to One of the most rewarding parts of my Others were shocked to see ordinary http://www.chrisatwoodfoundation. job is meeting the public when I do people going through the horrors opioid org/, read her story, learn about Nalox- public speaking on drug identification addiction creates. one/Narcan and see how you can help. and drug awareness. I have attended I am a firm believer that knowledge is countless parent-teacher association When it comes to Naloxone/Narcan, I power and that you can never know (PTA) meetings. The saddest realization have asked that a warning label be enough. To truly defeat an enemy you I am always faced with is the lack of placed on the prescription or on the drug must first understand and study it. Only attendance by parents. I go to PTAs at itself, such as the warning label on a pack then will you have the tools to defeat it. the request of the schools and parents, of cigarettes. This drug is not a cure for Thus I ask you again to please take 49 but when I attend a school with over addiction. I have seen users with an minutes out of your day to view the pro- 1,500 students, only seven parents ample supply to ensure they stay alive to gram Chasing the Dragon: The Life of an attend and this has happened all too continue chasing that high, but I will Opiate Addict (viewer discretion advised often. I recently attended one where never be the one to say, “Do not use it.” due to strong language and graphic none of the parents attended and the However, I will say, “If you have cheated images). This film can be viewed at film was shown to school staff only. death once. It is time to seek help.” www.FBI.gov/ChasingTheDragon. I would implore you to not be the next On April 6, 2017, I attended a summit put According to the Drug Enforcement family used to make the next heroin on by the Police Executive Research Administration (DEA), three out of four documentary and to not be the next Forum held at the New York City Police heroin users started by abusing prescrip- person interviewed because of your Headquarters. The summit, “Responding tion pills. Medical experts will tell you addiction. Also, do not be the one who to the Opioid Epidemic,” was attended that opioids in a bottle are no different gets the call in the middle of the night by law enforcement from across the U.S. than the heroin you buy in a glassine from the police letting you know that bag. The majority of persons have a your child has died from an overdose. and Canada. It was also attended by the medicine cabinet somewhere in their Drug Enforcement Administration, the home. Most parents I know lock their Office for National Drug Control Policy, wine/beer coolers in their home in order IS THERE HOPE? community services, health profession- to remove the temptation from their Naloxone, also called Narcan, was pat- als, prosecutors, chiefs of police and kids. If they cannot access it, they will not ented in 1961 and its use was approved sheriffs. Each participating agency drink it. So, why do we keep dangerous by the Food and Drug Administration in shared how they were dealing with the pain killers in medicine cabinets that are 1971. It is used to block the effects of an current crisis.
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The federal government understands the bank statement is found in his car at the squad for saving her life. She was proud current epidemic facing the U.S. More time of his arrest. CDD and know your to share that she had been clean for U.S. dollars are being spent to combat customer can help save a life. This dealer almost a year, had regained custody of this plague. Different rehabilitation was selling a lot of heroin for some time her three-year-old son and was now a treatments are available and more bed before he was caught. Just a point (tenth manager at her business. She felt she spaces are being created. There is hope. of a gram) of heroin can cause an over- had us to thank for saving her life. dose and death. This person invited us to her upcoming FINANCIAL INSTITUTIONS I spoke about this case at an ACAMS U.S. one-year anniversary of sobriety. It gave Capital Chapter event and was asked (FIs) CAN HELP IN SO us renewed energy in battling this epi- MANY WAYS what led to this person’s arrest. Old fash- ioned police work, surveillance, heroin demic. We reached out to her to tell her First and foremost, there is the suspicious purchases and our police helicopter. story to a larger audience to let people activity report that has been talked about This individual was followed several know there is hope. After unsuccessfully and discussed so many times. When I times to establish a pattern of his selling reaching out to her we were notified she speak to financial institutions, I always habits. This also enabled us to identify had died from a drug overdose. ask them to think about the big picture several purchasers/users in our county. My heroin group of detectives and I have and to always apply commonsense at Our police helicopter assisted us the work. For instance, if a doctor banks with aerial surveillance, which led to the dis- seen too much death and misery caused your institution, what is their normal covery of a bank in Washington, D.C. Our by addiction. Families torn apart or deposit? Did a sudden change take place Street Crimes Unit was called on to make destroyed, children suffering because where large cash deposits are suddenly an arrest after he sold heroin. The arrest their parents are addicts. As a society, I being made? There are doctors out there was conducted to perfection and a ask you again to research this increasing who sell prescriptions for the right price. search incident to the arrest led to the crisis in our world today. Become a vol- However, there are bad apples in every discovery of cocaine, heroin and finan- unteer to help end this epidemic. Talk to profession. Recognizing them is where cial records. A search warrant was exe- your family (children) about drugs and educating yourself comes into play. cuted at his home in Washington, D.C. by addiction. Do not ever think that this Fentanyl and carfentanil are manufac- the U.S. Park Police (partnerships). They will never happen to you. tured in legitimate labs. They are also found cocaine, heroin and firearms. John has pled guilty to numerous counts of manufactured in illegitimate labs. When CONCLUSION a company opens an account with your distribution in Fairfax County and is institution and provides an address for awaiting court on the federal charges on I did not think that the heroin epidemic the business, does someone search the the items seized from his home. could get any worse until the reintro- address on the internet, use a map engine I am also a strong proponent of forming duction of fentanyl and carfentanil. Now to get a satellite look at it, and/or get an partnerships between law enforcement just a pure microgram of either drug can onsite inspection of the company? and financial institutions. I am sure you kill an unsuspecting law enforcement When dealing with a correspondent have heard me say this time and time officer through accidental contact con- bank, you are told that all the homework again in past articles or at conferences. ducting a field test of an unknown white has been done and that customer due How hard is it to pick up the phone and powder. More synthetic drugs are being diligence (CDD) has been completed. talk to your local police department or created to avoid law enforcement detec- Do you take them at their word or do federal agency? Find out who is working tion and seizure. Our youth are living the you do your own homework to protect in your area and set up a meeting. Hold Superman syndrome where they believe a joint sharing of information, I know the integrity of your institution? nothing will hurt them. People buying this sounds crazy, but it works. Only A local financial branch is probably not together can we strive to accomplish the heroin take their local dealer’s word that going to identify a heroin user due to the goal of saving a life, protecting our what they are buying is safe. However, to several withdrawals conducted at an home, protecting our community, pro- be on the safe side, dealers are now ATM. Most of the time heroin users have tecting our institution, and most impor- giving away free Narcan with their drug depleted their life savings buying illegal tantly passing on a better earth than the sale. A dead client is a bad client and it drugs. However, dealers are a different one we are living on now. means that no money comes in. As a story. For example, take the case of John society we cannot let this epidemic con- the drug dealer (this is a recent case still A PERSONAL NOTE tinue to spread. Only through education going through the justice system, so his and partnerships does our planet have name has been changed). John enters a In my first article, I included the “My any hope. financial institution and opens a busi- Safety Plan” that was enclosed in a ness account under the name “John’s packet with material on how to get help. distribution services, LLC.” He provides As a police department, we passed this a fictitious business address and begins safety plan out to 120 people suffering James A. Cox III, CAMS, second to sell heroin and cocaine. He then from addiction. Out of those 120 packets lieutenant, Fairfax County Police makes cash deposits under the report- provided, one person agreed to get help. Department, Fairfax, VA, USA, ing requirement. He is arrested and his That person thanked members of our [email protected].
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COMBATING CYBER FRAUD in CORRESPONDENT Current context When looking to identify current threats, the first thing to understand is that orga- BANKING nized cybercrime can take a number of different forms, ranging from a scatter- gun approach to sophisticated high- ybercrime is a major concern for banks end, targeted attacks. around the world. Until recently, the David Ferbrache, technical director for cybersecurity at KPMG U.K., explains Cfocus of attacks has tended to be on that fraudsters typically start with com- banks’ customers through card and account moditized attacks, whereby organized crime groups send millions of emails detail compromises. But as criminals have containing phishing links to malware. “If become more sophisticated, they have raised clicked on, these can result in the system being compromised and the potential their ambitions, and in a change of focus are for money to be extorted by ransomware now directly targeting banks themselves. In demands,” explains Ferbrache. “Only a light of these threats, what steps can financial small number of these attacks prove successful, but it’s a numbers game.” institutions take to protect themselves from The second stage is tailored or targeted cyberattacks, detect suspicious activity more attacks. As Ferbrache explains, “The readily, and improve their chances of recovering organized crime groups spend a couple of weeks researching the organization quickly from any cybercrime attacks? they want to compromise, and the phishing attacks they undertake are just that bit more credible, targeted and spe- cific.” One example of this is business email compromise schemes, which have already led to losses of over $3 bil- lion, according to figures published by the FBI in June 2016.1 Sophisticated fraudsters are now mounting focused high-end attacks. Organized crime groups have begun directly targeting bank systems. Unlim- ited cash-out attacks, for example, have seen criminals compromise the net- works of card-issuing banks, enabling
1 “Business E-mail Compromise: The 3.1 Billion Dollar Scam,” FBI, June 14, 2016, https://www.ic3.gov/media/2016/160614.aspx
24 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG AML CHALLENGES
Organized crime groups have begun directly targeting bank systems
25 AML CHALLENGES
them to modify withdrawal limits and Preventing and clean out groups of ATMs in coordinated assaults.2 Ferbrache says that one nota- detecting attacks ble attack in 2013 saw a $40 million loss across 24 different countries in a single The shift from targeting banks’ custom- night. ers to targeting banks themselves rep- resents a very significant change and an In other cases, malicious software is increasing threat to the correspondent uploaded to ATMs through banks net- and the wider banking community. works, so that the machines respond to However, it is important to note that codes entered by the organized crime while compromises have taken place in groups. Last year, such attacks were car- banks’ own environments, there is no ried out in countries including Taiwan, evidence that the SWIFT network and Thailand, Russia, Armenia, Belorussia, core messaging services were compro- Poland, Germany, Georgia, Romania, mised in any of the attacks. Kyrgyzstan, Estonia, Spain, the Nether- lands, the U.K. and Malaysia. The attackers are very well organized and sophisticated in terms of how they Last year’s attack on the Bank of Bangla- carry out back-office attacks. They desh, which resulted in the loss of $81 million, is of particular concern to corre- follow a four-step process: spondent banks. While the attack itself 1. Compromising the customer’s took place in early February 2016, the environment, introducing malware ultimate beneficiary accounts in the using techniques such as phishing Philippines had allegedly been opened a or email compromise scams. year earlier, which is likely to have been 2. Capturing valid operator credentials, when the attackers began their initial typically through access to password reconnaissance. Software on the bank’s files or by putting keyloggers in place interface server was modified, not only to capture password details, and to enter fraudulent payment requests, but also to conceal this activity so that thereby gaining an understanding fraudulent transactions would not of the payment environment appear on daily logs. and associated behaviors. 3. Using fraudulent credentials to attack the back office; for example, by sending fraudulent MT 103 payment messages. The shift from targeting 4. Hiding transaction activity. For banks’ customers to example, by removing payment information from local databases, targeting banks modifying incoming statement themselves represents a information or rendering the local environments inoperable and very significant change thereby delaying the discovery of the attack and increasingly the likelihood that funds will be settled.
2 Chris Strohm, “Most-Wanted Cybercriminal Extradited to U.S. From Germany,” Bloomberg, June 23, 2015, https://www.bloomberg.com/politics/articles/2015-06-23/ turkish-man-accused-in-global-atm-heist-extradited-to-u-s-
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Protecting the Environment Protecting the Business Detection, Response & Recovery
Policy & Standards Education & Awareness Security Monitoring
Network Security & Architecture Business Access Management Log & Intelligence Analysis
Infrastructure Maintenance Organizational Culture Response
Access Management Recovery
Physical Access Continuous Improvement
People Processes Technology
Information & Cybersecurity Frameworks
ISO 2700 NST Cybersecurity CESG 10 Steps to Cyber Essentials ISO 27032 Information Security Framework Cybersecurity Certification Scheme Cyberspace PCI-DSS / SWIFT / Other
Table 1: Cybersecurity Best Practice Considerations
As attackers begin to understand banks’ Establishing a 2016, the New York State Department of internal processes and infrastructure, it is Financial Services (DFS) issued a pro- clear that they are becoming more dan- strong foundation posal building on existing guidance in gerous. As such, there is a greater need for relation to cybersecurity. As cyberattacks become more prevalent, financial institutions to take steps to pro- the industry and regulators are taking A common feature of all of these tect their key systems and gateways. steps to understand, address and miti- approaches is the need to get basic secu- While financial institutions would ideally gate the risk. In May 2016, SWIFT rity hygiene in place. While cyberattacks be able to prevent any cyberattack from launched its Customer Security Pro- are becoming more sophisticated, the taking place, it is impossible to eliminate gramme to strengthen existing cyber importance of getting basic security the threat entirely. As well as putting con- controls and provide a collaborative right should not be underestimated. As framework for its 11,000+ member insti- trols in place to prevent attacks, institu- show in Table 1, the following areas tutions to manage evolving cyber tions need to be able to detect attacks should be addressed: threats. The Programme focuses on the when they occur, and should prepare need for institutions to secure and pro- • Protecting the environment— This recovery and response procedures. tect their own environments and share includes defining and applying the From information sharing across the information within the SWIFT commu- appropriate policies and standards, banking community to the adoption of nity, as well as the importance of man- as well as access management, and appropriate market practice, there are a aging relationships with counterparts. putting suitable security measures number of tools, techniques and initia- SWIFT’s initiative comes at a time where in place for the institution’s network tives that can help banks mitigate the there is also increasing scrutiny and and architecture. Institutions risks, identify suspicious activity and guidance on banks’ cybersecurity from should also apply measures such as recover from incidents. regulators. For example, in September segregating duties across key staff,
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Using the correct SWIFT message format can increase the likelihood of successfully canceling payment transactions when fraud is suspected.
dealing appropriately with new and the use of proper processes avoiding the sending and receiving of and departing staff and controlling to monitor critical events. unwanted messages and reducing the privileged access to systems. Specific measures should also be risk that someone within either institu- • Protecting the business— In some put in place, such as reviewing tion initiates unauthorized transactions. relationship management cases, institutions may focus on However, transaction patterns can applications (RMAs) and adopting cybersecurity without necessarily change over time. As a result, as many as relevant market practice. understanding the business 60 percent of RMA relationships are dor- context. Research has indicated Reviewing RMAs mant or inactive, meaning that institu- that a majority of SWIFT customers tions may be needlessly exposing see human factors as the greatest When it comes to managing relation- themselves to particular corridors. area of weakness where cyber ships with counterparts, there are a Superfluous RMAs can also result in threats are concerned. Therefore, number of steps that financial institu- unnecessary costs, as compliance education is critical when it comes tions can take. The first is to review the requirements will often dictate that KYC to raising awareness of current relationships covered by the RMA. reviews are carried out on counterparts threats. In some cases, institutions with whom open RMAs are in place. As RMAs are ‘digital handshakes’ between use simulated phishing messages such, institutions should regularly financial institutions that specify within their organizations so review the RMAs they have in place, for whether transactions can be exchanged. both cost and security reasons. that they can identify the need Without an RMA in place, institutions for reinforcement training if cannot receive SWIFT messages from Guidance published by the Wolfsberg staff click on malicious links. counterparts. Using RMA Plus, banks Group last year noted that financial • Detection, response and recovery— can exercise further control by specifying institutions “should incorporate RMA Institutions should ensure that which particular types of messages they due diligence standards into their the required security monitoring wish to exchange over the network and Financial Crime/AML/KYC pro- measures are in place, such as with whom. Therefore, RMA and RMA grammes,” for example, by segregating continuous policy monitoring Plus enable banks to mitigate risk by RMA requests between customer
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relationships and non-customer RMAs. • Activity monitoring— By Disaster recovery/business The guidance notes that “due diligence obtaining an aggregated record continuity on the RMA holder should consider the of daily activity, banks can gain message types used by the RMA holder a clearer understanding of their As the final stage of defense, financial and the risk associated with the activity payment activity and identify any institutions need to have measures in conducted.”3 significant changes in activity. place that enable them to respond • Risk monitoring— By monitoring risk appropriately to cyberattacks and Market practice in their transaction environments, restore usual business operations as banks can counteract fraudsters’ quickly as possible. This requires a There are other actions financial institu- efforts to hide their transaction strong link between cybersecurity and tions can take in order to detect fraud activity, as well as identifying unusual business continuity/disaster recovery, more readily and respond more effec- single or aggregated transactions. as well as an understanding that cyber- tively to any threats. For example, it is security is intrinsically connected to the good practice to reconcile accounts, Institutions should source and store core business. “Cyber is not something provide payment confirmation and such information separately to ensure you can separate from the core busi- have policies in place around payment that it cannot be compromised in an ness,” comments Ferbrache. “All of our amendments. Institutions should also attack that disables or damages their businesses are digitally dependent now, know how to cancel payments rapidly, own payment systems and records. and all of them deal with digital threats.” should the need arise. In order to have effective recovery pro- One step that institutions can take is to Response cesses in place, institutions should have send—and require counterparts to send and recovery worked through different scenarios and —SWIFT MT 900 and MT 910 confirma- understood their consequences. Institu- tion messages. While these messages are It is also important to have robust pro- tions need to plan how they will contain not currently mandatory, they provide cesses in place so that financial institu- or mitigate the consequences of an additional transparency between coun- tions can respond quickly and effectively attack, as well as knowing how they will terparties. By the same token, banks if they detect a cyberattack. This may deal with communications, regulatory should also review the MT 940/MT 950 involve canceling fraudulent messages, or and legal issues. They also need to have statement messages that they receive in taking steps to facilitate business conti- a plan in place stating how they will order to check that the amounts and nuity if transactions cannot be canceled. bring the business back online quickly balances recorded on their statements and securely. match their own records of transaction Canceling fraudulent activity. transactions Conclusion As a further step, banks should avoid the In some cases, it may be possible to As cybercriminals turn their attention use of free format messages such as MT cancel a fraudulent instruction by send- deeper into the banking world, it is 199 to amend or change payment ing a cancellation message. In order to imperative that financial institutions instructions, as this can impede recon- cancel a payment instruction, banks take appropriate steps to secure their ciliation. Instead, banks should cancel should immediately send an MT n92, environments. There are a number of the original instructions or send pay- where ‘n’ refers to the category of the areas in which actions can be taken both ment adjustments if payment instruc- original message. For example, an MT to prevent attacks, as well as to increase tions need to be changed or canceled. 103 would require a MT 192 cancellation the likelihood of an attack being message, and an MT 202 would require detected in time. Last but not least, insti- Monitoring an MT 292. tutions need to have a clear business transaction data When using a cancellation message, it is continuity plan in place covering the also important to use the correct fraud steps to take in the event of a successful Given the growing tendency of code, as this is used to prioritize the attack. cybercriminals to conceal their fraudu- request and improve the likelihood that lent activity, banks should also carry out the instruction will be successfully can- activity monitoring and risk monitoring, celed. The required code is the use of the Tony Wicks, head of AML both to prevent fraud and to detect code word /FRAD/ in field 79 of the can- initiatives, SWIFT, London, U.K., attacks that do take place. cellation message. [email protected]
3 “Wolfsberg Guidance on SWIFT Relationship Management Application (RMA) Due Diligence,” the Wolfsberg Group, http://www.wolfsberg-principles.com/pdf/standards/SWIFT-RMA-Due-Diligence.pdf
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Ethically enhanced due diligence and human trafficking
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In the U.S., CNN reported on ‘The Trucker Army’ against human trafficking—big rig truckers on the n 2016, ACAMS Today published the lookout for and rescuing victims of human traffick- ing. In addition, various states including Texas, article, “Raising Awareness About Human Kansas, Arkansas and Ohio, are enacting laws to Trafficking,” which talked to the value of require prospective truck drivers to undergo com- I pulsory human trafficking awareness training.5 public-private partnerships and a Canadian anti-human trafficking initiative called Internationally it is refreshing to see recent human trafficking arrests in places like Fiji and Kenya.6,7 In 1 Project Protect. February 2017, Peter Warrack had the privilege of presenting on a project to combat human traffick- ing in the Caribbean as part of an Interpol training program held in St. Lucia. Also, human trafficking As a result of Project Protect, the Financial Transactions and Reports was on the agenda at a Financial Action Task Force Analysis Centre of Canada (FINTRAC) has identified that suspicious (FATF) typologies meeting in Moscow on April 24, transaction reports (STRs) received during 2016 had increased by 500 per- 2017. cent over the previous year and by extension disclosures to law enforce- In keeping with the global narrative, on March 15, ment by 537 percent. 2017, the U.N. Secretary General António Guterres FINTRAC, working closely with the private sector, law enforcement and urged governments to implement laws to prose- cute traffickers8 and called for governments, (and victims of human trafficking also published a comprehensive operational by extension law enforcement) to engage with the alert, which was circulated to 31,000 law enforcement agencies and private sector and cautioned that any support reporting entities.2 The alert focused on indicators of money laundering related to human trafficking as sexual slavery, and complements the 2014 FinCEN guidance on human trafficking, which also addresses human smuggling and trafficking for labor exploitation.3 Last year was globally catalytic in raising awareness on human trafficking, with awareness now being translated into action that addresses the prob- Last year was globally lem using a multifaceted approach, albeit arguably often in a patchwork catalytic in raising quilt of well-intentioned, but often competing effort. awareness on human “A patchwork quilt” should not be seen as a criticism, rather as ground- swell recognition of the inhumanity of human trafficking and a desire to trafficking, with awareness end it across its multiple fronts (sex trafficking, labor trafficking, organ now being translated trafficking, etc.) accompanied by multiple initiatives. into action that addresses In Canada, examples of initiatives include numerous law enforcement agencies and nongovernmental organizations promoting human traffick- the problem using a ing campaigns resulting in arrests and interdictions. For example, on April 11, London (Ontario) Police announced the results of Project Equi- multifaceted approach nox, which resulted in 78 arrests of traffickers and their clients and 18 vic- tims of human trafficking being rescued from the clutches of their pimps, the youngest aged 15 years.4
1 Karla Monterrosa-Yancey, “Peter Warrack and Constable Lepa Jankovic: Raising Awareness about Human Trafficking,” ACAMS Today, June-August 2016, http://www.acamstoday.org/warrack-jankovic-raising-awareness-human-trafficking/ 2 “Indicators: The Laundering of Illicit Proceeds from Human Trafficking for Sexual Exploitation,” FINTRAC, December 15, 2016, http://www.fintrac.gc.ca/publications/operation/oai-hts-eng.asp 3 “Guidance on Recognizing Activity that May be Association with Human Smuggling and Human Trafficking—Financial Red Flags,” FinCEN, September 11, 2014, https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2014-a008 4 “London-Area Police Help 18 Women and Girls Leave Sex Trade after Human Trafficking Operation,” CBC News, April 11, 2017, http://www. cbc.ca/news/canada/windsor/london-area-police-help-18-women-and-girls-leave-sex-trade-after-human-trafficking-operation-1.4065745 5 Eoghan Macguire, “Eyes of the Highways: Raising a ‘Trucker Army’ for Trafficking Fight,” CNN, April 12, 2017, https://amp-cnn-com. cdn.ampproject.org/c/s/amp.cnn.com/cnn/2017/04/12/world/truckers-human-trafficking-freedom-project/index.html 6 Praneeta Prakash, “Cases of Human Trafficking in Fiji,” Fiji Broadcasting Corporation, April 6, 2017, http://www.fbc.com.fj/fiji/49675/cases-of-human-trafficking-in-fiji 7 “Seven Somali Men Arrested Over Human Trafficking Ring in Kenya,” Eyewitness News, April 6, 2017, http:// ewn.co.za/2017/04/06/7-somali-men-arrested-over-human-trafficking-ring-in-kenya
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forms of human trafficking not as preva- lent in Canada (i.e., the issues of forced labor and supply chain due diligence) were of major concern to the interna- tional audience in attendance. Standard Chartered Bank (Netherlands) provided a compelling presentation on supply chain due diligence centered on the diamond industry in the Democratic Republic of Congo. In identifying the elements of the supply chain (i.e., production, distribution, preparation and sales), the presenter opined on increasing public and regula- tory expectations that institutions pro- viding financial services (e.g., banks) to entities in the supply chain would con- duct due diligence on the customer’s customer to provide a level of comfort that there was no association to human trafficking (or as in this example slavery and forced labor). I refer to this as ethically enhanced due diligence (EEDD) and, according to lawyer, Michael Volkov, in an article published online on April 4, 2017: “There are specific legal risks for U.S. companies that may arise from federal contracting regulations and possible AML implications. More important, is the reputational risk for global compa- nies that may fail to implement basic hiring and employment controls to avoid human trafficking. Companies have to monitor and regulate their supply chains to avoid the serious harm from human trafficking and possible needs to incorporate the voices and the esteemed audience viewed this as hiring or facilitation of hiring of human views of the people affected (i.e., the vic- positive, revolutionary and a takeaway trafficking victims. tims of human trafficking). to present back to the U.N. Since 2015, every company with a U.S. government contract must comply with Working in partnership with the public The need for all stakeholders to work U.S. regulations governing human traf- sector is not new in Canada (as seen by together in fighting all forms of human ficking. Companies that have a contract Project Protect) and there are similar ini- trafficking was a clear message in the 10 over $500,000 must implement a spe- tiatives in the U.S. However, when the RUSI report “Disrupting Human Traf- ficking: The Role of Financial Institu- cific compliance program and certify public and private sectors (Canada’s FIU each year to compliance. Companies FINTRAC and a major bank) co-pre- tions” as presented by Tom Keatinge at the Grace Farms Workshop. have to implement compliance pro- sented on the subject at the U.N. Uni- grams to detect and prevent human traf- versity event, Breaking the Financial As the two-day workshop unfolded, it ficking by third-party agents and Chains Workshop,9 held at Grace farms became clear that whilst Project Protect subcontractors that may recruit poten- in Connecticut on April 2017, many in addressed human sex trafficking, other tial employees from overseas or may use
8 “At Security Council, UN Officials Urge Governments to Implement Rules on Prosecuting Traffickers,” UN News Centre, March 15, 2017, http://www.un.org/apps/news/story.asp?NewsID=56355#.WO46XS0rLIU 9 http://gracefarms.org/ 10 Royal United Services Institute—a U.K. Think Tank, https://rusi.org/sites/default/files/201703_rusi_disrupting_human_trafficking.pdf
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such employees in overseas positions. This requirement extends to monitoring and auditing of third-party agents and subcontractors for compliance with human trafficking prohibitions. Prime contractors are required to exer- cise vigilance in making sure that their subcontractors comply with specific contractual requirements.”11 Volkov’s useful article alludes to possible AML implications, but does not spell them out. It would arguably make sense that if goods are manufactured using slave labor, which is a crime in many countries, then those goods and the funds derived from selling them become the proceeds of crime. If the funds are then transmitted through the financial system, it is at this point where money laundering may occur and be reportable via a STR or suspicious activity report (SAR). Ethical Due Diligence is gaining mo- mentum internationally and is becoming further embedded into law, and by on other guidance issued in other juris- aware and corresponding action by law extension compliance. In February, dictions, primarily the U.S. However, it is enforcement is addressing it. This is Dutch legislators adopted a new bill, likely that this appropriation of intelli- good news, but more needs to be done. which if enacted would require certain gence can see diminished results as not companies to investigate the existence ACAMS has always been at the forefront all indicators are constant across inter- of raising awareness about human traf- of child labor in their supply chain and national borders. on March 27, 2017, the French Parlia- ficking as evidenced by the human traf- ment adopted a law establishing a duty In summary, it is an uncomfortable but ficking panel at the recent AML and of vigilance for parent and subcontract- realistic assumption that human traf- Financial Crime conference in Florida ing companies. The law amends the ficking, in its many different forms, is not and numerous publications and chapter Commerce Code and requires compa- going away any time soon. According to events over the years. Let us keep the nies to establish and implement a plan the Pope, in a message read out by the message alive. for improving human rights, the envi- under secretary of the Migrants and Ref- ronment, and health and safety issues in ugees Section of the Dicastery for Pro- their supply chains. moting Integral Human Development, Peter Warrack, CAMS, CBP, CFE, director of AML advisory and compliance officer, Another takeaway from the U.N. Univer- to the Organization for Security and Co- sity were findings from Liberty Asia, an operation in Europe (OSCE)’s 17th Alli- Bank of Montreal, Toronto, Ontario, NGO that “aims to prevent human traf- ance against Trafficking in Persons Canada, [email protected] ficking through legal advocacy, techno- Conference, in Vienna, it is getting worse. Joseph Mari, CAMS, CBP, senior logical interventions, and strategic manager—major investigations collaborations in Southeast Asia.”12 However, although it may be getting team, AML FIU, Bank of Montreal, Liberty Asia reported that out of 18 coun- worse in many parts of the world with Toronto, Ontario, Canada, tries surveyed only six had formal guid- respect to migrant smuggling and forced [email protected] ance issued from their respective FIUs labor situations, in North America, as far on the topic of human trafficking.13,14 as human trafficking and sexual slavery Disclaimer: The views and opinions Furthermore, it was noted that many are concerned, there is reason to be opti- expressed in the article are solely those countries without formal guidance relied mistic as the public is becoming more of the authors.
11 “Human Trafficking and Smuggling—A Compliance Requirement,” JDSUPRA, http://www. jdsupra.com/legalnews/human-trafficking-and-smuggling-a-41216/ 12 https://www.libertyasia.org/about/ 13 Australia, Cambodia, Canada, China, France, Hong Kong, India, Indonesia, Liechtenstein, Malaysia, New Zealand, Singapore, Switzerland, Thailand, Netherlands, United Kingdom, United States and Vietnam. 14 Australia, Canada, Thailand, Netherlands, United Kingdom and the United States.
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STEMMING THE FLOW OF CYBERCRIME PAYMENTS
34 AML CHALLENGES
ybercrime for profit is a global economy that causes most of our cybersecurity and fraud woes and it is a problem to which all anti-money laundering (AML) Cand financial sector professionals should pay close attention. It is adaptable, ingenious and lucrative, while imposing vast costs on us. It victimizes financial institutions and their customers, and it uses our financial system as a conduit to transmit illicit profits and payments. Cybercrime for profit also provides a foundation for many other types of cybercrime, including hacktivism and nation-state attacks.
Cybercrime exploits companies and from them. Thus, finding a way to reduce • Cybercrime money individuals throughout the world and it the flow of the profits would make it less laundering techniques is perpetrated from all over the world, lucrative and it would reduce the size of • Methods cybercriminals and identity victimizing and using financial institu- the criminal economy. thieves use to achieve anonymity tions everywhere. Thus, it is important • Methods to pierce veil of anonymity that the global community works When foreign-based cybercriminals together to fight cybercrime. The U.S. is commit cybercrime and fraud that vic- Successful identity thieves and cyber- one country that is a lucrative target and timizes the U.S., funds representing criminals are good at what they do, reap pipeline due to its wealth and robust illicit profits are transmitted through considerable profits, maintain anonym- financial sector. and outside of the U.S. financial system, and into the hands of the cybercriminal. ity and evade law enforcement. However, Crime has existed since the dawn of civ- In order to detect and stem this flow, one this financial success provides evidence ilization, but cybercrime presents a must understand the cybercrime and of both criminality and identity. defining change. Previously, criminals identity theft economy (i.e., how the The key to reducing the cybercrime and needed physical proximity to the victim. participants earn money and how they identity theft economy is understanding Now, criminals can victimize institu- pay each other). it. The economy revolves around the tions and individuals from afar and theft of data, its resale and use to commit across international borders. This shift The cybercrime and identity theft. Within the marketplace means a global pool of attackers, are many different actors, each perform- decreased odds of apprehension, identity theft economy ing different roles, all trying to make increased profitability and reliance on One of the first criminal investigations money. Many successful participants the financial industry to perpetrate to explore the full nature of this global reside internationally, which means these crimes from afar. Traditionally, law cybercrime economy was People v. they need to rely on the U.S. financial enforcement plays a major role in keep- Western Express International, Inc., et system and U.S. participants to mone- ing crime suppressed to a manageable tize cybercrime. level, but with cybercrime it has not yet al., a case brought against a corrupt dig- gained such traction. All of this demon- ital currency exchanger and some cus- strates the important role the financial tomers who were cybercriminals and How cybercrimes are 1 sector can play in reducing cybercrime. identity thieves. Underpinning the case were valuable lessons that hold true monetized internationally The immense profitability of cybercrime today and teach us about: demonstrates the high cost of victimiza- Email account hacking • The relationship between tion and the massive amount of theft, Email account hacking is a lucrative international cybercriminals but it also presents an opportunity. Law cyber fraud against which we should and domestic identity thieves enforcement and the AML community protect ourselves. Criminals might try to can “follow the money” among the facil- • The marketplace for stolen data monetize a compromised email account itators and to the ultimate perpetrators. and the crimes they are used for through a simple scheme where the Furthermore, cybercriminals commit • Value transfer methods to support hacker sends a blast email to all of the these frauds because they make money the trafficking of stolen data victim’s contacts:
1 The investigation and prosecution spanned nearly a decade, most defendants pleaded guilty, while three proceeded to trial and were convicted of every count. See, e.g., Kim Zetter, “Ukrainian Carder in $5 Million Ring Sentenced to 14-Plus Years in Prison,” WIRED, August 8, 2013, https://www.wired.com/2013/08/carder-eskalibur-sentenced/.
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“Help, I’m stranded in [insert foreign by bank wire. A criminal hacks the email system as it uses traditional bank city], please wire money ASAP. account of a Company B employee, accounts and bank wires to steal, laun- der and send funds out of the country. Don’t try to call me because I lost my impersonates that employee and sends phone.” an email to Company A, providing “new” bank wiring instructions. The Payment card fraud A greater threat is criminal use of a employee in Company A is fooled and Payment card fraud requires many par- hacked email account to cleverly misdi- Company A wires funds to the “new” ticipants, and each needs to get paid for rect bank wires and steal the funds— bank account, which is controlled by the their part in making the fraud possible. representing an evolution of social fraudster who immediately wires the �This fraud relies on three basic steps engineering skills that has stolen hun- that are depicted in Figure 1: dreds of millions of dollars. Such scams funds out of the country. The fraud can are termed “business email compro- be quite sophisticated and believable, 1. The theft of credit card data, such as mise” fraud, “CEO fraud,” or “CFO comes in variations that do not require through the data breach of a retailer fraud,” and every employee in the finan- email account hacking, and the scam 2. The sale of this stolen data cial sector must be aware of them. Sup- can deceive victims to delay detection to identity thieves pose Company A regularly receives for days or weeks. This fraud directly 3. The use of this stolen data invoices from Company B and then pays affects the conventional financial to commit fraud
Figure 1: Payment Card Fraud
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Here, the hacker is located outside of the Bank wires Digital currency U.S., and steals data pertaining to mil- lions of credit card accounts from a Bank wires, through the conventional Digital currency has existed for two decades, and cybercriminals and iden- retailer in the U.S. Stealing this data financial system, remain an essential tity thieves embraced it early on. The does not itself earn money for the crimi- part of global funds transfer and are regulated digital currency industry is nal, so he must sell it to others to make essential to the cybercrime economy. just a few years old. Though some digi- money. Since this data was stolen from Financial institutions face a triple threat: tal currency proponents can be sensi- 1) they are repeatedly attacked and risk the U.S., the best market for this data is tive about its linkage with cybercrime, becoming a fraud or data breach victim, identity thieves in the country, since there are synergies that should be attempting to use these payment cards 2) they need to prevent their customers acknowledged and understood. They in foreign countries would likely trigger from becoming fraud victims and 3) are ignored at the peril of the industry, fraud alerts. they need to prevent themselves from since understanding makes it possible being used as an unwitting conduit for The identity thieves pay for this stolen to keep the digital currency system criminal funds or activity. data in a manner that maintains ano- clean, and thus ensure it is sustainable as a regulated industry. nymity, and each payment may be Bank wires might be initiated or misdi- small, a few hundred or thousand dol- rected based on fraud, including Digital currency’s connection to crime lars. Payment could be sent through a through the email account compromise does not make it unique as a payment money transfer service while using fic- scenario previously discussed. Banks method. Consider how cash currency titious sender and recipient names or it have procedures to detect if the cus- has been intertwined with traditional could be sent via digital currency, such tomer has been hacked, but sometimes street crime, as with the drug trade. as Bitcoin, WebMoney and Perfect procedures to detect other frauds are When illegal drugs are sold, the criminal transactions are in-person, and drugs Money. Through these payments, a lacking. If the account holder relies on a are exchanged for cash. Successful drug single vendor of stolen credit card data third party who is hacked, or if the could earn millions of dollars per year. dealers need to integrate mountains of account holder is otherwise deceived or cash into the financial system, and thus Many other types of cybercrime fraud used as a tool for cybercrime-related developed sophisticated money laun- that exist ultimately require payment fraud, banks might fail to detect it. Fur- dering schemes to make this possible. In or transfer of funds from the U.S. to thermore, some bank customers may contrast, cybercrime and data traffick- international cybercriminals based out use a variety of techniques to conceal ing criminal transactions are completed of the country. the true ownership, source and destina- online, and cash is inadequate. Payment tion of funds, including through money needs to be made online, instantly and Moving the money mule accounts and shell corporations. anonymously, in order for the stolen Bank wires also play a significant role data to be delivered to the purchaser. When sending and receiving payments, with digital currency. Digital currency can do that; thus, it criminals—like legitimate business merely does for the cybercrime econ- people—try to balance financial cost, Money transfer services omy what cash does for the illegal drug convenience, speed and reliability. economy. Compared to cash, there are Criminals have the additional need for Money transfer services, such as West- both benefits and drawbacks for AML anonymity and secrecy. AML profes- ern Union, are an important tool for and law enforcement professionals. sionals should consider four basic con- identity thieves and cybercriminals, Digital currency is affiliated with con- duits that cybercriminals use to move because it allows them to pay for stolen ventional banking and bank wires. Every their funds: data, cybercrime services, and to pur- digital currency exchanger needs a con- • Bank wires through the chase digital currency. To maintain ano- ventional bank account, and interna- conventional financial system nymity, fake names are used when tional bank wires are necessary to sending and receiving the payments. • Money transfer services transmit funds in order to equalize the Successful cybercriminals earning mil- inherent trade imbalance that occurs • Digital currency lions of dollars per year may employ the when the cybercrime economy uses dig- • Money mules and shell corporations services of other criminals to receive ital currency. Criminals have been misusing the finan- and process these money transfer pay- This digital currency trade imbalance cial system and payment methods since ments. Occasionally, one recipient name occurs because there are identity thieves their respective creations. It should be becomes blocked because of associa- within the U.S. who continually pur- no surprise that cybercriminals con- tions with criminal conduct, in which chase digital currency, which is then tinue this trend and misuse whatever is case criminals can move on to another used to pay international cybercrimi- available to them. recipient name. nals for stolen data. This creates a
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Figure 2: Digital Currency Repatriation
continual flow of digital currency payments from the U.S. to the destination country, Money mules and shell and this digital currency needs to eventually be “repatriated” back to the U.S., so that corporations it can be reused. Cybercriminals located internationally Consider Figure 2 and the basic steps depicted: rely on institutions within the U.S. to 1. Identity thief obtains digital currency receive and process payments. Where funds are stolen from victims in the U.S., 2. Identity thief pays cybercriminal for stolen data and ultimately destined for cybercrimi- 3. Cybercriminal exchanges digital currency for fiat currency nals overseas, a money mule provides a convenient waystation through which 4. Repeat — identity thief needs more digital currency to buy more stolen data to deliver the funds. A money mule is The individual digital currency payments may be hundreds or thousands of dollars. In essentially a witting or unwitting person the aggregate, this represents an annual flow of millions of dollars. who receives and then transmits illegally acquired funds. Also, consider ransomware, an unchecked and lucrative fraud that also relies on digi- tal currency, earning international cybercriminals millions of dollars per year. Ran- Consider the email account compro- somware is malware that infects a user’s computer and then encrypts the user’s data mise scam previously mentioned, where and holds it hostage, unless and until payment is made by digital currency from the Company A thinks it is wiring funds to victim to the fraudster. Thousands of ransomware victims purchase digital currency, Company B’s “new” bank account, but instead is wiring it to a money mule which they then pay to international cybercriminals. account, under the control of the fraud- All of these digital currency payments to international cybercriminals create a digital ster. Company A is fooled by this fraud currency trade imbalance, which is cured through repatriation of this digital currency because the money mule’s account is back to the U.S. This return of digital currency can be accomplished through aggre- within the U.S. If Company A had been gate transactions of digital currency, with reciprocal bank wires from U.S. accounts to told to wire the funds internationally, international accounts in order to pay for this digital currency. they would have known it was a fraud,
38 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG AML CHALLENGES
because Company B would not use a ing your front door at night. Every fictitious names are used by the sender foreign bank account. Thus, the domes- unsuspecting person is an avenue and recipient. With enough data and tic money mule account is required to through which criminals can compro- experience, it is possible to distinguish receive the funds, which can then be mise computer or financial systems. criminal payments from legitimate pay- wired internationally. By the time the This starts with each person at home, ments. Similarly, though many digital fraud is detected, the funds are outside which protects the individual and currency accounts may be anonymous, of the U.S. and cannot be recovered. family, and then extends to the organi- payments can still be analyzed to dis- There are many ways through which zation. Each person can transform from cern criminal purposes. Furthermore, money mules are recruited. Some crude, being a potential attack victim to a patterns indicating repatriation of digi- some quite sophisticated, backstopped detection sensor. tal currency to the U.S. should be closely with legitimate looking corporate iden- You should harden yourself by employ- researched. tities, websites and documents. ing basic cybersecurity steps: The advent of digital currency regula- Though money mules are often “dispos- • Enable two-factor authentication tion within the U.S. brought know your able” (used for a single incidence of (two-step login) on financial, email customer (KYC) requirements to domes- fraud and then cast away by the and other important online accounts tic digital currency exchangers, meaning cybercriminal), there are more perma- identity thieves may be inclined to use • Ensure your computing devices are exchangers located outside the country. nent waystations for funds. Shell corpo- kept malware free and updated rations (or shelf corporations) and their Thus, international money transfers can • Back up your data regularly be used to purchase digital currency, bank accounts require more setup and and store it offline and those patterns should be analyzed. management, and thus are less dispos- • Do not open suspicious attachments able. The underlying purpose remains or click on suspicious links KYC methods that rely on telephone or the same: to disguise the true purpose of online identity verification have inher- the account and the true owners. Once • Have verbal conversations to ent weaknesses when it comes to iden- fraud or money laundering is detected, confirm any payment instructions tity thieves and cybercriminals. These it is difficult for regulators and law • Use common sense criminals have nearly unlimited access enforcement to identify the ultimate to stolen personal identifiable informa- beneficiaries of the fraud. Increased review and scrutiny tion, thus the mere provision of pedigree by the financial system such as name, address, birthdate and The financial system faces the triple social security number may be of lim- threats previously discussed, and is well ited use to confirm identity. In addition, suited to combat cybercrime funds if a payments company identifies suspi- Every unsuspecting person transfer because of their resident exper- cious activity and merely blocks pay- is an avenue through which tise, systems and access to significant ments to one criminal alias, the criminal datasets. The financial system is ulti- will merely establish another. Thus, criminals can compromise mately the conduit through which deeper analysis and a deeper remedy may be required. Finally, the ability of computer or financial aggregate cybercrime profits exit the U.S., so deeper analysis can help iden- these criminals to make convincing systems tify that. forged identifications must also be con- sidered, whether the identifications are Cybercriminals will continue to find vic- presented online or in person. tims and money mules within the popu- lace of the U.S., and financial institutions Conclusion Stemming the flow should use their expertise in fraud and money laundering detection to identify Our collective steps as citizens of the Stemming the flow of cybercrime funds these situations and stop illicit funds world to combat the cybercrime epi- requires emphasis in the following from exiting the country. Certain coun- demic have not been adequate yet, and areas: tries and banks are more likely to receive there is room for improvement on many • Personal cybersecurity cybercrime fraud derived funds, and fronts. The financial and AML commu- and fraud awareness have proven uncooperative about trac- nities should recognize the crucial role ing or recovering stolen funds. Overseas they can play in this fight, and should • Increased review and scrutiny wires to such destinations should be by the financial system work to reduce the flood of ill-gotten scrutinized carefully before they are gains that criminals earn from these • Increased payments scrutiny sent, because they are not recoverable crimes. once they are sent. Personal cybersecurity and fraud awareness Increased payments scrutiny John Bandler, Esq., CAMS, founder, Cybersecurity and anti-fraud is not just International money transfers for the Bandler Law Firm PLLC and for experts, but an individual responsi- purpose of purchasing stolen data Bandler Group LLC, New York, NY, bility, like putting on a seatbelt or lock- follow discernable patterns, even when [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 39 AML CHALLENGES
CYBERSECURITY: INDICATORS OF COMPROMISE
he U.S. Department of the Treasury’s Financial Crimes Enforcement The IPv4 address scheme supports 4,294,967,296 Network (FinCEN) recently issued an advisory to financial institu- unique addresses and it uses the format nnn.nnn. Ttions on cyber-events and cyber-enabled crime,1 along with fre- nnn.nnn (n = number) with periods between seg- quently asked questions.2 ments. In contrast, the emerging IPv6 address FinCEN’s advisory encourages the preparation of suspicious activity scheme supports 340,282,366,920,938,463,463,374, reports (SARs) that evidence significant electronic activity and behavior, 607,431,768,211,456 unique addresses and it uses which prompts a timely review of challenges associated with three data the format cccc:cccc:cccc:cccc:cccc:cccc:cccc:c- points: Internet Protocol (IP) addresses (which serve as unique internet ccc (c = character) with colons between segments, connection identifiers for online computers or servers), other online iden- some of which are alphanumeric. Reportedly, up tifiers and Indicators of Compromise (IOCs). to 99 IP addresses in either format may be entered into FinCEN SAR form item 44.5 IP addresses The accuracy of IP address geolocation tracking is relevant to a recent federal lawsuit. Plaintiffs Various websites are publicly available for internet users to look up their allege that about 600 million IP addresses are own IP address—whether it is dynamic (changeable) or static (fixed)—and mistakenly associated with their rural Kansas IP addresses of other internet users.3 farm that is near the geographical center of the Demand for IP addresses has skyrocketed, given surges in growth for social U.S. This mistake has led to plaintiffs alleging media and Internet of Things connectivity for handheld and other devices. that they have been unfairly investigated for run- This demand is being met by IP addresses that are longer and more com- away children, attempted suicides, child por- plex, requiring greater attention to accuracy when they are reported in nography, and computer fraud and email spam.6 SARs. The more familiar IPv4 32-bit numeric IP address scheme is being A federal judge recently denied the defendant’s replaced by a longer IPv6 128-bit alphanumeric IP address scheme.4 motion to dismiss.7
1 “FIN-2016-A005 Advisory to Financial Institutions on Cyber-Events and Cyber-Enabled Crime,” United States Department of the Treasury - Financial Crimes Enforcement Network, October 25, 2016, https://www.fincen.gov/ sites/default/files/advisory/2016-10-25/Cyber%20Threats%20Advisory%20-%20FINAL%20508_2.pdf 2 “Frequently Asked Questions (FAQs),” United States Department of the Treasury - Financial Crimes Enforcement Network, October 25, 2016, https://www.fincen.gov/sites/default/files/shared/FAQ_Cyber_Threats_508_FINAL.PDF 3 WhatIsMyIPAddress.com, http://whatismyipaddress.com 4 John D. Schanz, “How IPv6 lays the foundation for a smarter network,” Network World, June 27, 2016, http://www. networkworld.com/article/3088322/internet/how-ipv6-lays-the-foundation-for-a-smarter-network.html 5 “FinCEN Suspicious Activity Report (FinCEN SAR) Electronic Filing Instructions,” Version 1.2, Financial Crimes Enforcement Network, October 2012, https://www.fincen.gov/sites/default/files/shared/FinCEN%20SAR%20ElectronicFilingInstructions-%20Stand%20Alone%20doc.pdf 6 Complaint, James and Theresa Arnold vs. MaxMind, Inc., United States District Court for the District of Kansas, August 5, 2016, https://consumermediallc.files.wordpress.com/2016/08/gov-uscourts-ksd-null-null-0.pdf 7 Memorandum and Order, James and Theresa Arnold vs. MaxMind, Inc., No. 16-1309-JTM, United States District Court for the District of Kansas, October 20, 2016, https://ecf.ksd.uscourts.gov/cgi-bin/show_public_doc?2016cv1309-16
40 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG AML CHALLENGES
This Kansas farm case was cited by the Electronic Frontier Foundation (EFF), when Website operators and app providers challenging reliance on IP addresses to identify the location of crimes and the identity that collect EU personal data—on local of individuals involved. EFF recommendations to law enforcement and the courts or cloud servers15—should check on encourage proper evaluation of IP address data and early corroboration.8 how IP address collection might be affected by GDPR requirements. This Fraudulent IP addresses have been central to the Methbot botnet that is associated could include stricter consent, retention with losses exceeding $180 million. Methbot uses U.S.- and Netherlands-hosted serv- and cross-border data transfer obliga- ers to power more than 850,000 bots with falsely registered IP addresses, which tions, although exceptions may apply.16 allowed cybercriminals to carry out the largest ad fraud scheme ever discovered. This scam reportedly yielded $3 to $5 million per day in fraudulent ad revenue by fraudu- Countries like Argentina,17 Canada,18 lently obtaining IP addresses from overseas internet registries, and then registering Hong Kong,19 Japan20 and Switzerland21 them falsely to U.S. internet service providers. The IP addresses evaded fraud detec- classify IP addresses as personal data tion by appearing to originate from real users in the U.S.9 when combined with identifiable data. IP addresses are generally associated with a specific computer or server, but they may Brazil takes a notable approach with IP or may not be associated with an individual user, which could lead to data privacy addresses. To facilitate the identification concerns. Federal Trade Commission (FTC) officials regard the IP address as person- of users who have been engaged in ally identifiable information that should be protected appropriately when it, or other criminal acts or personal data infringe- persistent identifiers, may be linked to a particular individual, computer or device.10 ment, Brazil requires retention of user IP addresses in connection logs (which FTC officials have cautioned website operators that collect persistent identifiers track the user’s internet connection) and against making general statements that personal information is not being collected or application access logs (which track the that collected data is anonymous. Data protection measures and risk assessments user’s internet application use). Con- should be appropriate to all collected data, not just data like the individual’s name or nection logs must be retained in a secure email address.11 environment for one year and applica- The Court of Justice for the European Union (EU)12 recently ruled that a dynamic IP tion access logs for six months. Police or address may be classified as personal data when combined with identifiable data administrative authorities may require about the individual user.13 This is consistent with the EU General Data Protection longer log retention periods. Users must Regulation (GDPR), which will apply to EU countries on May 25, 2018. be informed about data protection and log retention practices.22 GDPR Recital 30 states that natural persons may be associated with online identifiers, such as IP addresses. Such online identifiers may leave traces which, when combined Since October 2012, the Federal Bureau with unique identifiers and other information received by servers, may be used to of Investigation, the Department of create profiles of natural persons and identify them.14 Homeland Security and other federal
8 Aaron Mackey, Seth Schoen, Cindy Cohn, “Unreliable Informants: IP Addresses, Digital Tips and Police Raids,” Electronic Frontier Foundation, September 2016, https://www.eff.org/files/2016/09/22/2016.09.20_final_formatted_ip_address_white_paper.pdf 9 “The Methbot Operation,” White Ops, December 20, 2016, http://go.whiteops.com/rs/179-SQE-823/images/WO_Methbot_Operation_WP.pdf 10 “Protecting Consumer Privacy in the Digital Age: Reaffirming the Role of Consumer Control, Keynote Address of FTC Chairwoman Edith Ramirez Technology Policy Institute Aspen Forum,” Federal Trade Commission, August 22, 2016, https://www.ftc.gov/system/ files/documents/public_statements/980623/ramirez_-_protecting_consumer_privacy_in_digital_age_aspen_8-22-16.pdf 11 Jessica Rich, “Keeping Up with the Online Advertising Industry,” Federal Trade Commission, April 21, 2016, https:// www.ftc.gov/news-events/blogs/business-blog/2016/04/keeping-online-advertising-industry 12 Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom 13 “Case C‑582/14, Patrick Breyer v Bundesrepublik Deutschland,” Judgment of the Court (Second Chamber), October 19, 2016, http://curia. europa.eu/juris/document/document_print.jsf;jsession...qMbN4PahaLe0?doclang=EN&text=&pageIndex=0&docid=184668&cid=90876 14 “Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016,” Official Journal of the European Union, April 5, 2016, http://ec.europa.eu/justice/data-protection/reform/files/regulation_oj_en.pdf 15 “Managing the Challenges of the Cloud Under the New EU General Data Protection Regulation,” Netskope, 2016, http://cloudfseurope. com/wp-content/uploads/sites/3/2016/05/Netskope-EU-GDPR-Managing-the-Challenges-of-Cloud-White-Paper.pdf 16 Alex van der Wolk, Hanno Timner, “European Court of Justice: IP Addresses Are Personal Information,” Westlaw Journal Computer & Internet, November 4, 2016, https://media2.mofo.com/documents/161104-wlj-european-court-of-justice.pdf 17 Maximiliano D’Auro, Florencia Rosati, Manuela Adrogué and Ambrosio Nougués, “Data protection in Argentina: Overview,” Practical Law, September 1, 2016, http://us.practicallaw.com/3-586-5566 18 “What an IP Address Can Reveal About You,” Office of the Privacy Commission of Canada, May 2013, https://www.priv.gc.ca/media/1767/ip_201305_e.pdf 19 “Data Protection Principles in the Personal Data (Privacy) Ordinance – from the Privacy Commissioner’s perspective (2nd Edition),” Office of the Privacy Commissioner for Personal Data, Hong Kong, 2010, https:// www.pcpd.org.hk/english/resources_centre/publications/books/files/Perspective_2nd.pdf 20 Mangyo Kinoshita, Shino Asayama, Eric Kosinski, “Data protection in Japan: overview,” Practical Law, November 1, 2014, http://uk.practicallaw.com/5-520-1289 21 Tom Espiner, “Swiss fileshare software broke DP law, says court,” ZDNet, September 10, 2010, http:// www.zdnet.com/article/swiss-fileshare-software-broke-dp-law-says-court/ 22 Raphael de Cunto, Julia Arruda, “A civil rights framework for the internet in Brazil,” Financier Worldwide, July 2014, https://www.financierworldwide.com/a-civil-rights-framework-for-the-internet-in-brazil/#.WFiuJ7GZMmo
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government agencies have disclosed IP cookies, fraud, anti-money laundering, and as needed notification to law enforce- addresses associated with cyber threats ment and regulatory authorities,28 in part because website users may use such tools to through unclassified Joint Indicator Bul- bypass identity verification and geo restrictions.29 letins (JIBs). JIBs have referenced IP Financial crimes investigators may benefit from ExoneraTor, a Tor Project database addresses and domain names associ- that allows the public to check whether an IP address was a Tor network relay on a par- ated with malicious cyber activity to ticular day.30 mitigate cyber threats from botnets and Distributed Denial of Service (DDoS) Detecting IP addresses that use VPN or proxy tools is not as easy, although media attacks, and have been distributed to firms, like Netflix and Hulu, have been blocking users who use VPN or proxy tools to U.S. financial institutions and overseas bypass geo restrictions.31 Moreover, Fortune reported how demand for VPNs has partners through secure channels.23 surged recently, given the U.S. Congress’ vote to repeal limits on how internet service providers can collect and sell customer data.32 Cybercriminals and terrorists may con- ceal their IP address locations or identi- FinCEN’s advisory provides examples of mandatory and voluntary SAR reporting, and ties with The Onion Router (Tor), Virtual encourages the filing of a single SAR to cover interrelated cyber-enabled crimes and Private Network (VPN) or proxy tools cyber-events, like a DDoS cyber-event designed to conceal a cyber-enabled crime that that enable anonymous web surfing,24 meets the mandatory filing threshold. Basic details on spoofing attacks,33 for example, especially with news of criminals getting should illustrate how criminals launch complex DDoS cyber-events that impersonate caught after not using such anonymous users or devices by manipulating IP addresses and other online identifiers, and how web surfing tools.25 With TORWallet, IP financial crimes investigators might describe succinctly such complex cyber-events addresses are deleted every 30 seconds in SARs. to anonymize Bitcoin wallet activity.26 New provisions of Rule 41 of the Federal Other online identifiers Rules of Criminal Procedure went into Like IP addresses, online identifiers provided by devices, applications, tools and pro- effect on December 1, 2016. The Elec- tocols could be treated as personal data when combined with identifiable data. tronic Frontier Foundation asserts in According to GDPR Recital 30, such online identifiers may include cookie identifiers part that Rule 41’s new provisions will and radio-frequency identification tags.34 make it easier for law enforcement to obtain search warrants if a computer Online identifiers could also include geolocation data, device identifiers like media uses anonymity-protective software like access control (MAC) addresses, operating system and browser attributes, application Tor, a VPN or proxy tools, and urges data, website activity, and app usage data. Electronic signature authentication forms additional safeguards.27 require detailed attention to device and other online identifiers, as demonstrated by DocuSign’s privacy policy.35 Online gambling websites, like 10Bet, may address anonymous web surfing As financial services evolve toward greater online and mobile device accessibility, directly in their terms and conditions cybercriminals attempt to evade fraud detection by manipulating online and diverse policies related to privacy, identifiers.36
23 “Sharing of Cyber Threat Indicators and Defensive Measures by the Federal Government under the Cybersecurity Information Sharing Act of 2015,” The Office of the Director of National Intelligence, The Department of Homeland Security, The Department of Defense, The Department of Justice, February 16, 2016, https://www.us-cert.gov/sites/default/files/ais_files/Federal_Government_Sharing_Guidance_(103).pdf 24 Mark Wilson, “The best free tools for anonymous browsing 2016,” Techradar, October 11, 2016, http:// www.techradar.com/news/software/best-free-tools-for-anonymous-browsing-1321833 25 Catalin Cimpanu, “Crook Who Used His Home IP Address for Banking Fraud Gets 5 Years in Prison,” Bleeping Computer, December 21, 2016, https://www.bleepingcomputer.com/news/security/crook-who-used-his-home-ip-address-for-banking-fraud-gets-5-years-in-prison/ 26 “Anonymous Bitcoin Wallet,” TORWallet, https://torwallet.com 27 Jamie Williams, “Expanded Government Hacking Powers Need Accompanying Safeguards,” Electronic Frontier Foundation, December 14, 2016, https://www.eff.org/deeplinks/2016/12/expanded-government-hacking-powers-need-accompanying-safeguards 28 “Terms and Conditions,” 10Bet, December 15, 2016, https://www.10bet.com/help/terms-and-conditions/ 29 “The prevention of money laundering and combating the financing of terrorism - Guidance for remote and non-remote casinos,” Gambling Commission, July 2016, http://www.gamblingcommission.gov.uk/PDF/ AML/Prevention-of-money-laundering-and-combating-the-financing-of-terrorism.pdf 30 ExoneraTor, https://exonerator.torproject.org 31 Chris Hoffman, “How to Watch Netflix, Hulu, and More Through a VPN Without Being Blocked,” How-To Geek, January 20, 2016, http://www.howtogeek.com/239616/how-to-watch-netflix-hulu-and-more-through-a-vpn-without-being-blocked/ 32 “Congress Voted to Roll Back Internet Privacy Rules. Now People Are Looking to VPNs,” Fortune, March 28, 2017, http://fortune.com/2017/03/28/congress-internet-privacy-rules-vpns/ 33 Neil DuPaul, “Spoofing Attack: IP, DNS & ARP,” Veracode, https://www.veracode.com/security/spoofing-attack 34 “Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016,” Official Journal of the European Union, April 5, 2016, http://ec.europa.eu/justice/data-protection/reform/files/regulation_oj_en.pdf 35 “Privacy Policy,” DocuSign, December 15, 2016, https://www.docusign.com/company/privacy-policy 36 “Mobile Fraud Gone in a (Device) Flash,” DataVisor, July 5, 2016, https://www.datavisor. com/threat-blogs/mobile-fraudsters-gone-in-a-device-flash/
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Money transfer firms, like PayPal, address device and other online identifiers directly framework48 to deter cyberattacks, in their EU website’s terms and conditions. Diverse policies related to privacy, cookies, including those attributable to nation fraud, anti-money laundering and as needed notification to law enforcement and reg- states.49 ulatory authorities are addressed.37 In conclusion, this timely review of chal- lenges associated with IP addresses, Indicators of Compromise other online identifiers and IOCs should For at least 10 years, IOCs have been used by computer security firms, like IBM, to enhance SAR preparation by raising rel- refer to cyberattack forensic digital evidence. Such forensic digital evidence may evant operational issues, such as IPv6 report anomalies, such as IP addresses, domains, files and digital clues that readiness, the proper evaluation and appear to connect the cyber-attacked network with the alleged cyber-attacker,38 corroboration of IP address data, and with endpoint management tools that may detect security incidents and remedi- the treatment of IP addresses and online ate the environment.39 identifiers as personal data. IOCs may capture unexpected network access details, based on IP addresses associ- Updates to website privacy notices and 40 ated with certain geolocations. Cybersecurity firms, like Kaspersky Lab, may publi- terms and conditions may also be cize IOCs, so that organizations might identify traces of financial cyberattack groups, timely, along with operationalizing like Metel, GCMAN and Carbanak 2.0, in their networks.41 stricter international data protection In contrast, over the last few years, the term Indicators of Attack (IoAs) has been used requirements like the EU’s GDPR. by computer security firms, like IBM,42 Intel43 and CrowdStrike, to refer to forensic dig- ital evidence that a cyberattack is occurring or will likely occur in the future, in con- Education may be directed at topics like junction with endpoint protection tools that may detect security incidents and how cybercriminals attempt to evade remediate the environment. fraud detection by manipulating IP addresses and other online identifiers, To Crowdstrike, IOCs reference malware, signatures, exploits, vulnerabilities and IP along with how Tor, VPN and proxy tools addresses. IoAs reference code execution, persistence, stealth, command control and have been used to bypass identity verifi- lateral movement.44 cation and geo restrictions. In addition Crowdstrike’s presentation on IoAs echoes the Cyber Kill Chain® framework,45 which to IOC data, consideration of IoA data Lockheed Martin, the largest U.S. defense contractor, developed to identify and pre- may also enhance SAR preparation pur- vent cyber intrusion activity through seven steps: reconnaissance, weaponization, suant to FinCEN’s advisory. delivery, exploitation, installation, command and control, and lateral movement.46 The importance of IOCs to the computer security industry is emphasized in a recent assessment about the drawbacks of portraying IoAs as better reporting tools for Miguel Alcántar, CAMS-FCI, cyberattack detection and remediation.47 Commercial and not-for-profit compliance advisor, Oakland, CA, USA, organizations may reference IoAs more, as they weigh the Cyber Kill Chain® [email protected]
37 “Privacy Policy for PayPal Services,” PayPal, January 27, 2017, https://www.paypal.com/uk/webapps/mpp/ua/privacy-full 38 “Indicators of compromise,” IBM, 2015, https://pcatt.org/techblog/wp-content/uploads/2015/10/IndicatorsOfCompromise.pdf 39 “How BigFix Helps Investigate a Threat in Forensic Activities,” IBM, https://www.ibm.com/developerworks/community/ wikis/form/anonymous/api/wiki/90553c0b-42eb-4df0-9556-d3c2e0ac4c52/page/2a87e237-39ca-4489-81c5-c81124f91a48/ attachment/446c7dd5-8737-4342-9acb-3712b0c57556/media/Investigating_threats_with_Bigfix.pdf 40 Jason Andress, “Working with Indicators of Compromise,” ISSA Journal, May 2015, https://c. ymcdn.com/sites/www.issa.org/resource/resmgr/journalpdfs/feature0515.pdf 41 “APT-style bank robberies increase with Metel, GCMAN and Carbanak 2.0 attacks,” Kaspersky Lab, February 8, 2016, https:// securelist.com/blog/research/73638/apt-style-bank-robberies-increase-with-metel-gcman-and-carbanak-2-0-attacks/ 42 IBM BigFix Detect, IBM, https://www.ibm.com/us-en/marketplace/bigfix-detect#product-header-top 43 “Indicators of Attack (IoA),” Intel, http://www.mcafee.com/us/resources/solution-briefs/sb-indicators-of-attack.pdf 44 Jessica DeCianno, “Indicators of Attack versus Indicators of Compromise,” CrowdStrike, December 9, 2014, https://www.crowdstrike.com/blog/indicators-attack-vs-indicators-compromise/ 45 “Cyber Kill Chain®,” Lockheed Martin, http://www.lockheedmartin.com/us/what-we-do/aerospace-defense/cyber/cyber-kill-chain.html 46 Lysa Myers, “Cyber Kill Chain is a Great Idea, But is It Something Your Company Can Implement?,” Infosec Institute, May 31, 2013, http://resources.infosecinstitute.com/cyber-kill-chain-is-a-great-idea-but-is-it-something-your-company-can-implement/#gref 47 Dave Dittrich, Katherine Carpenter, “Misunderstanding Indicators of Compromise,” Threatpost Op-Ed, April 21, 2016, https://threatpost.com/misunderstanding-indicators-of-compromise/117560/ 48 Lysa Myers, “The practicality of the Cyber Kill Chain approach to security,” CSO, October 4, 2016, http://www.csoonline. com/article/2134037/strategic-planning-erm/the-practicality-of-the-cyber-kill-chain-approach-to-security.html 49 Dave Dittrich, Katherine Carpenter, “Misuse of Language: ‘Cyber’; When War is Not a War, and a Weapon is Not a Weapon,” Threatpost Op-Ed, August 9, 2016, https://threatpost.com/misuse-of-language-cyber-when-war-is-not-a-war-and-a-weapon-is-not-a-weapon/119740/
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CYBERSECURITY AND BSA/AML n October 2016, the Financial Crimes Enforcement Network (FinCEN) published an advisory document Iwith frequently asked questions concerning cyber- events and cyber-enabled crime to financial institutions.
When filing suspicious activity reports • Social media accounts/screen names Communication within the financial (SAR) it is important for financial institu- related to suspicious activities institution is key. It is also important tions to review this FinCEN guidance, in that the BSA/AML team reviews the order to receive key information as to System modifications: bank’s incident response plan address- what to include on the SAR. Some exam- • System registry modifications ing cyber-events and cyber-enabled ples of the information are noted in the • Indicators of system compromise crimes in order to establish the BSA/ excerpt below: 1 AML team’s role within the event han- • Common vulnerabilities dling process. Including the BSA/AML Source and destination information: and exposures team enables all cyber-events to be • IP address and port information with Involved account information: properly reviewed for possible SAR respective date timestamps in UTC filing. Tracking and reviewing cyber • Uniform Resource Locator • Potentially or actually affected cases is important to identify common (URL) addresses account information patterns and emerging trends related to • Known attack vectors • Potentially or actually involved virtual suspicious activities. Understanding key currency accounts (case sensitive) similarities in those cases can be facili- • Command and control nodes As a Bank Secrecy Act/anti-money laun- tated by leveraging case data analytics File information: dering (BSA/AML) officer, venturing and aggregation tools. Providing this • Filenames of files suspected to into the cybersecurity realm is often new enhanced analysis and reporting to law be infected with malware or unfamiliar territory. Although the enforcement can assist them in devel- industry trend is that it is becoming oping their cases and put the key pieces • MD5, SHA-1, or SHA-256 increasingly necessary for BSA/AML of a very complex puzzle together. hash information officers to learn and understand more Throughout the case your FI team • Email content about technology and cyber threats, it is would more than likely be working with essential, given the guidance from Octo- law enforcement, so it is important to Subject user names: ber, to establish regular meetings document at what point in the process • Email addresses related to between the BSA/AML team and the would the bank file a SAR. Would it suspicious activities institution’s information security team. occur at the end of the investigation so
1 “Frequently Asked Questions (FAQs) Regarding the Reporting of Cyber-Events, Cyber-Enabled Crime and Cyber- Related Information through Suspicious Activity Reports (SARs),” FinCEN, October 2016, https://www.fincen.gov/ frequently-asked-questions-faqs-regarding-reporting-cyber-events-cyber-enabled-crime-and-cyber
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that you can ensure that all of the infor- When working through a case, try to The BSA/AML incident response plan mation is gathered and organized? Or gather as much information as possi- should account for the BSA/AML team’s would it possibly be within 60 days of ble from your information security role in addressing and documenting detecting the cyber-event? Also, what team and from customers that may cyber and other high-risk events and would your FI consider to be a have been victims of a cyberattack. It incidents potentially resulting in regula- reportable cyber-event? Would it be only is also advantageous to create a case tory action or monetary penalties. if there is a loss to customers or the FI or collection form for collecting infor- if the cyber-event had a significant cus- In conclusion, it is important for all mation specifically about cyber- tomer impact? Per the FinCEN guid- BSA/AML officers to review FinCEN’s events, in order to guide the informa- ance: “In determining whether a advisory and to work with the institu- tion security team to capture the spe- cyber-event should be reported, a finan- tion’s information security team to cific related information needed to cial institution should consider all avail- develop effective plans for addressing complete the SAR reports. Obtaining able information surrounding the and reporting on potentially adverse as much information as possible cyber-event, including its nature and cyber-events. An effective program the information and systems targeted. enables the bank to effectively assist identifies, gathers and documents as Similarly, to determine monetary law enforcement in developing and much related information as possible amounts involved in the transactions of pursuing their cases and identifying for cyber-events that may occur at your attempted transactions, a financial emerging industry trends. institution should consider in aggregate institution. Finally, sharing this informa- the funds and assets involved in or put Along with the cyber incident response tion with law enforcement, so that it at risk by the cyber-event.” plan, it is also important to create BSA/ may be used to more effectively develop AML and fraud incident response plans their cases and identify industry trends, These are all items that should be dis- for the separate business lines within is partnership at its finest. cussed within the BSA/AML team and information security team to determine the institution. These plans should what your institution’s policy will be complement each other and align going forward. In making those deci- upward to an enterprise-risk event and Joe Soniat, CAMS-FCI, vice president sions it is essential to document what incident response plan that can better and BSA/AML officer, Union Bank and decisions are made and who in the FI is align with the institution’s business Trust, Glen Allen, VA, USA, robert. responsible for what part. continuity plans. [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 45 PRACTICAL SOLUTIONS
THETHE SUCCESSSUCCESS OFOF PUBLIC-PRIVATEPUBLIC-PRIVATE PARTNERSHIPSPARTNERSHIPS
n August 2015, the St. Paul Police Department launched the Criminal Proceeds Unit. The unit is dedicated to the investigation of money earned from criminal activity, be it the sale Iof narcotics, human trafficking, fraud or other felony level crimes. Money is the lifeblood of a criminal organization and criminals are often motivated by easy profit and do not fear incarceration. Valuable pieces of evidence can be found by examining the movement of money obtained from criminal activity. With this new direction, the Criminal Proceeds Unit has significantly impacted the St. Paul Police Department and the community it serves. Every day, investigators work on cases and “follow the money.”
Demand for the services of the Criminal Proceeds Unit has quickly grown beyond nar- The success of partnering with private cotics and human trafficking to include investigations in elder abuse, theft, fraud and and public sector institutions has tax evasion. The tools and techniques developed by the Criminal Proceeds Unit have resulted in a series of successful cases enhanced the St. Paul Police Department’s ability to investigate crime along with and prosecutions of criminals who typi- taking a proactive approach to financial investigations. But our success does not cally might be too hard to catch at the happen alone. Like all organizations, the St. Paul Police Department depends and local level and too elusive for over- benefits from its many partnerships with both the private sector and other govern- worked federal law enforcement agen- ment agencies. Some of our success has come from being task force officers with the cies to catch. The first success was in the U.S. Secret Service, members of the Minnesota Financial Crimes Task Force and serv- investigation of Papa Dmitri’s Pizza. For ing on the Minnesota Suspicious Activity Review (SAR) team. The St. Paul Police many years, law enforcement heard that Department’s Criminal Proceeds Unit works extensively with the local banking com- Papa Dmitri’s was a front business for a munity by conducting training and networking with bank investigators. criminal enterprise run by a longtime St. The Criminal Proceeds Unit is also active with the local ACAMS Greater Twin Cities Paul gang member. By focusing on the (GTC) Chapter. The ACAMS GTC Chapter has greatly accepted the participation of law financial activity of Papa Dmitri’s Pizza, enforcement within their chapter and has even asked a member of the Criminal Pro- investigators were able to arrest the ceeds Unit to serve on their board. This partnership has benefited the ACAMS GTC owners of the pizza shop along with Chapter and the St. Paul Police Department by deepening our working relationship obtaining a conviction of federal weap- and educating one another. Shannon Bennett, GTC chair of the board, stated, “We feel ons charges along with concealing crim- very fortunate to have law enforcement serve as members on the board. We find their inal proceeds through a business. This contributions and insight has been instrumental in our success, which includes pro- was the first time this statute was suc- viding ideas for topics and speakers that truly add value to the mission of the chapter cessfully prosecuted in Ramsey County, to provide education related to financial crime to our community.” St. Paul, Minnesota.
46 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG PRACTICAL SOLUTIONS
Next, the Criminal Proceeds Unit was U.S. government, many Hmong people investigators seized $1.7 million in cash brought in to assist on a large embezzle- believed they were owed their own held in multiple accounts under Xiong’s ment scheme of a local business in St. country and that secret deals and back- name. At trial, Xiong pitched a far- Paul. An employee who worked in the room meetings with intelligence offi- fetched story to the jury about funding payroll unit of a large company in St. cials is how a new country would come insurgencies and fighting the commu- Paul managed to embezzle $450,000 by about. Xiong, “talked the talk” and nists in Southeast Asia, but they did not masking payments to her in the names convinced a population eager to hear a buy it. Xiong was convicted in federal of other employees. To make matters certain message that he was just the court for mail and wire fraud. worse, when confronted, the suspect person to pull it off. tried to convince investigators that her Successes like these are not built over- The Hmong were persecuted for their boyfriend, who she claimed committed night and they are not the work of any allegiance to the U.S. They fled Laos into suicide, wrote a suicide note claiming one person. The success of the St. Paul camps in Thailand and hundreds of responsibility for her crime. Not only Police Department’s Criminal Proceeds was the boyfriend alive and well in west- thousands of Hmong people started to migrate from Southeast Asia to the U.S., Unit depends largely on the partner- ern Wisconsin, but the suspect managed ships established with our banking to use the embezzled funds to purchase Australia and France. Assimilation was tough and many of the older genera- community and local and federal law many expensive assets, such as two new enforcement. The Criminal Proceeds vehicles and a semi-truck. Working with tions longed to return to the hills of Laos Unit actively participates in many private partners and the U.S. Secret Ser- and have their own piece of land. In this ACAMS events, attends the annual con- vice, these assets were recovered, the narrative, Xiong saw an opportunity. ferences and continues to pursue strong suspect went to prison and money from Orchestrated from Minnesota and Cali- the sale of the recovered assets was fornia, through a network of conference working relationships with all our part- returned to the victimized company to call lines and YouTube videos, Xiong ners. Working with ACAMS has provided lessen the total loss. convinced the poor and disenfranchised invaluable tools and networking oppor- that he was in the middle of holding tunities for the unit. In fact, members of Perhaps the biggest case, and certainly high level meetings with the U.S. gov- our team always leave each training ses- the most interesting case the St. Paul ernment and they had “authorized,” a sion with an idea on how better to serve Police Department’s Criminal Proceeds new Hmong country. For a small invest- the citizens of St. Paul and the commu- Unit investigated was the Seng Xiong, ment, Xiong told his eager audience that nity that surrounds us. “Hmong Tebchaws,” affinity fraud their “dreams would become a reality.” scheme. This case was worked with the At local ACAMS events, the Criminal Pro- cooperation of the U.S. Secret Service Xiong enticed “investors” with promises ceeds Unit meets and speaks with bank- and the Federal Bureau of Investigation of 10 acres of land, a five-bedroom ers and other professionals in the finan- (FBI). Tipped off by a private sector finan- house, free education for your children, cial sector to discuss recent human traf- cial partner, St. Paul investigators began free healthcare and good paying govern- ficking cases, narcotics, terrorism and the ment jobs. Depending on your invest- to track the financial activity of the sus- latest trends in fraud. Although still a very ment level of $3,000, $4,000 or $5,000, pect, Seng Xiong. What investigators new unit with much to learn, the Crimi- you would see a yearly return on your quickly learned was that Xiong had not nal Proceeds Unit is poised to help the St. investment based on the revenue the only manipulated people, but was also Paul Police Department accomplish its victimizing a vulnerable population. government collected. As a “founder” of mission of serving the citizens of our city Xiong promised his victims a new coun- the new country, your name would be by tackling those tough to catch crimi- try and financial security. His scheme etched in the halls of time. The scheme was successful as it tapped into many worked as Xiong managed to raise over a nals who exploit the financial system for deeply held dreams by the Hmong com- million dollars from victims in 17 states, their own selfish gain. This cannot be munity of one day having a country of Australia and France. Hmong people, done alone. Members of the Criminal their own. eager to return home to reclaim the Proceeds Unit are eager to continue their lands of their ancestors, lined up to wire participation with ACAMS. Through net- Xiong was a drifter; a man with no him money or went to their local bank to working, partnerships, knowledge shar- means of support other than the lies he make a direct deposit into Xiong’s per- ing and mutual assistance, the St. Paul spewed about his top secret work with sonal checking account. Police Criminal Proceeds Unit, along the U.N. and the White House, which he with its many wonderful partnerships, is said supported the establishment of a When Xiong realized the government building a stronger police department country for the Hmong people. The was onto his scam, he tried to flee the Hmong people are refugees from the country from Los Angeles International and a safer community. northern highlands of Laos. A nomadic Airport. Investigators from the Criminal group who never had their own country, Proceeds Unit, along with the Los Ange- but fought alongside U.S. troops during les FBI and the U.S. Secret Service Daniel Michener, investigator, St. Paul the “Secret War” against communist sol- arrested Xiong as he tried to board an Police, St. Paul, MN, USA, diers in Vietnam. Fiercely loyal to the airline destined for Thailand. In the end, [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 47 PRACTICAL SOLUTIONS
ADVANCING AML PROGRAMS WHILE ADOPTING NEW TECHNOLOGY
s leaders in the anti-money laundering (AML) field, Another example is a concern of infor- every day we are tasked with protecting our customers mation overload. The ability to harness A much more data through software is and our businesses against increasingly frequent and exploding, so the investigator is increas- sophisticated threats from bad actors. ingly seeing more and more data with potential associated complexity. How- ever, this can also lead to “analysis paral- ysis” where the investigator can get As we look ahead, rapidly evolving technology may provide the single greatest oppor- stuck wading through all of the informa- tunity for advancing progressive AML programs in history. Whether augmenting investigative processes with big and fast data, or harnessing the power of machine tion that takes a lot more time and may learning or robot process automation to identify threats, the opportunities can feel not improve the investigation. With the endless—and daunting. pace of software change and the explo- sion of data, the average investigator is For example, traditionally, AML shops have relied on third-party software platforms being inundated with change. that are regularly updated. After the initial launch, training was minimal only on the updated features. Now, that landscape is starting to rapidly change. AML organizations As a result, managers can be left balanc- are either creating their own software systems that are updated much more frequently ing the tension between meeting the or leveraging multiple third-party platforms (all of which update more frequently to practical daily challenges of our industry keep up and demand much more investigator training time). These changes are start- and the need to transform how his/her ing to fundamentally affect how an investigator spends his/her time, shifting it to team works by implementing the latest potentially different skillsets needed to digest the information. While all of this is good, technology—all while keeping employ- it is very disruptive to the average person trying to keep up with the change. ees engaged, happy and productive.
48 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG PRACTICAL SOLUTIONS
Leading the Second, hold planning sessions every three months to map out the next quarter’s work. Overall guidelines and strategy are set by the executive management and transformation the teams then self-determine what they can accomplish and how they will be measured. At the end of the planning cycle, each team member “votes” on a During this time of change, how can scale of one to five, with five being confident that the work can be done. Any managers simultaneously drive organi- votes of three or below are addressed before the planning is considered zations forward without leaving their complete. Allowing team members to have direct input and control over their teams behind? The answer may be to work product leads to increased associate satisfaction and throughput. take a page out of the digital developer’s playbook and adopt more agile and 3. Check-in frequently: A key element of increasing efficiency is in effectively innovative operating principles. managing meetings. The time invested in checking schedules, setting a time, an agenda and preparing materials is a large driver of inefficiency. So, how do you There are six fundamental management avoid this trap? principles that can serve as enablers to meeting these challenges. These core Try using a series of regular, short (generally 15-30 min.) scheduled program team meetings called “stand-ups” or “huddles.” No materials should be prepared. It elements include: should just be a simple check-in as to what was accomplished yesterday, what is 1. Work in short cycles: Have you ever to be completed today and if there are areas where help is required. A similar heard the joke, “How do you eat an meeting series should be held through the head of the department, in order to elephant?” The answer is “one bite at provide an opportunity for leadership to gain transparency into work progression a time,” and that principle holds and directly remove roadblocks that the team may be facing. here. When adopting new 4. Be retrospective: The only way to know how to improve is to regularly review how technology, take small steps. Try you have performed; however, this step is often skipped in favor of the next something new and see how it works. priority. Hosting a regular cadence of reviews reaps great benefits. At the end of If it fails, you have invested very little. each cycle (I recommend at least monthly), review what went well, what did not If it succeeds, improve on it. and vow to improve one or two key things. Try working in two or three-week increments called “sprints.” Teams set very specific goals for this period and fully focus all efforts on executing them. At the end, they demonstrate tangible accomplishments to ensure they are A key element of increasing on the right track. Sprints limit an issue called “feature efficiency is in effectively decay.” In many cases teams are provided holistic project require- managing meetings ments that require months of work. By the time the product is delivered, the customer’s needs often change. Working in short cycles can help avoid this trap. 5. The customer is everything: If you are struggling to align as a team, focus on the 2. Empower your team: First and customer or program value. How do we know we are shipping something that will foremost, give your team input truly make an impact? How do we find out? How does that affect what we over the work they do and fully prioritize? These are fundamental questions to regularly ask. staff them so that they are able to 6. Practice servant leadership: If there is one key to making these principles work, it get their work done with as few is evolving to a servant leadership model. “Servant leadership is a very popular outside needs as possible. For leadership model that was developed by Robert K. Greenleaf in 1970. The short example, if you have software definition is a servant leader serves the people he/she leads, which implies that development teams, each team employees are an end in themselves rather than a means to an organizational should have a developer, a tester, a purpose or bottom line.”1 In this model, leaders prioritize the needs of others first product owner (representing the by empowering individuals to grow and perform at a high-level. It sounds simple, customer) and anyone else directly but this is no small effort. Traditional management techniques can emphasize a required to complete the task. The very different style, so coaching leaders to embrace this new approach can be a goal is to reduce dependency on challenge that should not be underestimated. The following are key elements of any outside resources. servant leadership:
1 Mitch McCrimmon, “Servant Leadership,” Leadersdirect, http://www.leadersdirect.com/servant-leadership
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• Go and see: Most management models are centered around why it did not work, etc.). Next time you are in a the employees going to the leader. In this style, the leader meeting, try the following exercise: Make a mark must get out and visit the teams, regularly walking the every time someone talks about the past, the floors and talking to their teams to understand progress present and the future. You will most likely find the and where there are obstacles that can be cleared. majority of conversations focus on the past, bogging a. Listen: Servant leadership emphasizes “active listening” down on what went wrong and why it happened, with employees. This means leaders must avoid the instead of focusing on future improvements. urge to immediately attempt to problem solve and A skilled servant leader can help move the conversation instead take time to truly understand the challenge. It to the present and then to the future. This allows is important to avoid the “Why” word that can cause the group to break out of a rear-facing focus and defensiveness, and instead ask questions starting with instead identify what could be and how to get there. “When,” “How,” “Who,” etc., to get to the crux of the The table below provides an example of this. obstacle. This an important skill that must be developed. Now obviously, conversations are not quite so quick and stark. b. Focus on the future: There are three “domains” of However, the point is that being a servant leader is a lot like conversations—past, present and future. Most being a coach. Your job is to help the whole team move conversations are in the “past” (e.g., what happened, forward.
Traditional Management Conversation Servant Leader Conversation
Boss: OK, how do we fix the fact that we are Boss: OK, let’s talk a bit about the production four days behind? issues, what are your thoughts?
Person A: It is a huge problem, been building Person A: It is a huge problem, been building for a for a while. while.
Person B: Well, you are right, I kept telling Person B: Well, you are right, I kept telling everyone that this would happen. everyone that this would happen.
Person A: Well, I never heard it from you and Boss: Yep, in the last retrospective, I remember this if you had said something we wouldn’t be in issue was discussed. this situation. What if we can cut back on all meetings for two weeks? This would help production, wouldn’t it?
Boss: Guys, I don’t have time for this, this has Person A: Well, it could, but we will never do this. to get fixed… Meetings take up half our days.
[Conversation spirals] Boss: We do have a ton of meetings. What would have to happen to reduce them?
Person B: We could first focus on what are the “nice to have” meetings versus the “critical” ones and then….
[Conversation moves to specific steps that can be taken]
Final notes Working smarter by keeping your customer in mind, working in shorter cycles and building an empowered team can reap benefits to meet the consistently high demands of an ever-evolving industry. As you start this journey, remember these are universal techniques that can be applied in every type of group such as investigations, transaction monitoring, processes and development or support of software. As threats continue to grow, leveraging these techniques can improve your overall ability to execute your mission.
Brad Dolbec, CAMS, senior director of AML, Capital One, Richmond, VA, USA, [email protected]
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17_SWS_02657_ACAMS_Ad_Localisation_and_Resizing_ANZ.indd 1 13/04/2017 1:44 PM COMPLIANCE
THE IMPORTANCE OF HAVING A SOLID COMPLIANCE CULTURE
“It’s now possible for a drug dealer to serve time in a forfeiture-financed prison after being arrested by agents driving a forfeiture-provided automobile while working in a forfeiture-funded sting operation.” —Attorney General Richard Thornburgh, 19891
hen dealing with predicate offenses, it is When looking for a confiscation or forfeiture order, only a sound and forceful Customer Iden- W difficult for a financial institution to think about tification Program (CIP) built within the appro- priate anti-money laundering (AML) and internal collaborating with the several law enforcement controls will guarantee the identification of all agencies (local and international) immersed in relevant beneficial owners spotted with a com- pelling know your customer (KYC) program. this process without having a strong culture of The prior examples support the importance of compliance in place that directly or indirectly ensures building, maintaining and promoting a culture of compliance that not only satisfies regulatory an efficient methodology that clearly identifies the requirements, but also assists law enforcement ultimate beneficial owners of the entity whose assets agencies when trying to prosecute and punish all who use the financial system for the purposes of are trying to be confiscated. laundering illicit funds.
52 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG COMPLIANCE
Defining compliance program is, if the entity’s core values do regulatory examinations and investiga- not transpire in the minds of every AML tions and 2) Increasing the ability of within the AML spectrum compliance process stakeholder, it will financial institutions, law enforcement be hard to optimally attain the desired According to Martin T. Biegelman, man- and the intelligence community to iden- final purpose of the program. aging director of regulatory, forensics tify the assets and accounts of terrorist and compliance for Deloitte, “Compli- For instance, if a new client onboarding’s organizations, corrupt actors, money ance means following the law and more. analyst (despite having a strong set of launderers, drug kingpins, proliferators It’s making sure organizations adhere to CIP and KYC procedures or not), does of weapons of mass destruction and all applicable legal requirements. It is a not apply strong ethics and integrity other national security threats, which detailed and complex process.”2 Now, let principles toward further strengthening strengthens compliance with sanctions us convey this basic concept into AML the financial institution’s corporate com- programs designed to undercut financ- 4 context where financial institutions pliance, firmly believing that it is the only ing and support for such persons.” have to deal with more and more strin- way to strongly combat any possible gent regulations and aggressive domes- money laundering attempts, then an Effective communication tic and international law enforcement accurate identification of beneficial Effective communication is another requirements. Compliance would be the owners will be nearly impossible. process aimed at assuring that all the critical element to consider when trying Bank Secrecy Act (BSA) and Office of Law enforcement agencies will rely to foment a vigorous culture of compli- Foreign Assets Control (OFAC) report- strongly on due diligence and enhanced ance. For example, values need to be ing, filing and record keeping require- due diligence practices when inquiring communicated in a convincing fashion ments are met accordingly. for “obscure” ownerships, especially for from the top. the ones that involve complex business Current AML compliance programs must structures. Also, due to the regulatory nature of the be able to include practical ways (e.g., AML sector, communication systems, designing a robust BSA and terrorist As a matter of fact, during the last G20 protocols and processes need to work in financing risk-based process and proce- summit carried out on July 2016 in an extremely synchronized manner, dures around Section 314(a) of the USA Hangzhou, China, the Financial Action always avoiding procedural and/or sys- PATRIOT Act) to aid law enforcement Task Force highlighted the urgency to tematical communication breaches. bodies to discover proceeds from crime, implement major improvements in including terrorist financing. The only some countries where the beneficial Understanding and acknowledging the way to efficiently do this is by creating owner problem was assessed.3 different AML laws and regulations are and fostering a culture of compliance the first priority. Entities functioning A clear example of how imperative it is that not only relies on its three conven- under the BSA, USA PATRIOT Act and to know the true identity of the financial tional catalysts (training, internal con- OFAC must implement, adjust, manage institution’s customers along the CIP trol and internal audit), but also on an and monitor their communication process, is, without a doubt, the final appropriate and adequate set of core channels and frameworks in order to rule issued by the Financial Crimes values (where ethics play a factual and void any possibility of falling into a Enforcement Network, which pertains critical role), effective communication “willful blindness” situation that might to straightforward customer due dili- channels, sound governance and proac- be created by communication-related tive leadership. gence requirements aimed to identify gaps or breaches. In fact, neither the and verify the identity of beneficial entity itself, nor its employees, should Core values owners of legal entity customers subject be able to evade a criminal accusation to certain exclusions and exemptions. or civil indictment by alleging that they A financial institution’s core values The rule highlights, among other did not know certain AML statutes were should be founded on bulletproof ethics aspects, the importance of : “1) Enhanc- being infringed.5 and principles that intrinsically assure ing the availability to law enforcement, all the processes considered in its AML as well as to the federal functional regu- A great scenario to describe the impor- compliance program are carried out by lators and self-regulatory organizations tance of having an effective communi- managers and employees that vehe- (SROs), of beneficial ownership infor- cation system in place is when dealing mently believe that what they are doing mation about legal entity customers with 314(a) requests. A 314(a) request is is best for their organization and for obtained by U.S. financial institutions, a powerful mechanism used by different society in general. No matter how com- which assists law enforcement in finan- law enforcement agencies in order to plex, well-structured and inclusive this cial investigations and a variety of identify bank and other financial
1 Sarah Stillmam, “Taken,” The New Yorker, August 12, 2013, http://www.newyorker.com/magazine/2013/08/12/taken 2 Martin T. Biegelman, Building a World-Class Compliance Program: Best Practices and Strategies for Success, published by Wiley, Hoboken, New Jersey, p. 2. 3 “FATF Report to the G20: Beneficial Ownership,” FATF, September 2015, http://www.fatf-gafi.org/media/fatf/documents/reports/G20-Beneficial-Ownership-Sept-2016.pdf 4 “Customer Due Diligence Requirements for Financial Institutions,” FinCEN, July 11, 2016, https://www.federalregister.gov/documents/2016/05/11/2016-10567/customer-due-diligence-requirements-for-financial-institutions 5 Martin T. Biegelman, Building a World-Class Compliance Program: Best Practices and Strategies for Success, published by Wiley, Hoboken, New Jersey, p. 2.
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Leaders can set the tone at the top for the institution accounts that might be asso- structure is crucial, as well as the ciated to the targets of a particular involvement of both the board and of compliance process investigation.6 course management. Due to its complexity, this process Proactive leadership demands from financial institutions, a competitive, efficacious and highly Undoubtedly, the best persons to restricted communication network, struc- encourage employees to embrace a cul- ture and procedures that soundly and ture of compliance are the chief execu- timely address law enforcement require- tive officers, directors, CCRs and CCOs. AML compliance-related deficiencies ments in order to guarantee the feasibility They are required to lead by example closely associated to organizational cul- and integrity of the investigation. and by communicating the organiza- ture matters) to build a culture of compli- tion’s core values with passion and ance founded on a genuine and strong assertiveness. Leaders at a financial leadership of engagement, robust com- Sound governance institution are the ones chosen to munication methodologies, forceful core The term governance is defined by Rich- answer the call of action. In addition, values, as well as proactive governance. In ard M. Steinberg (in his book Governance, leaders can set the tone at the top for the fact, FinCEN states that having a strong Risk Management and Compliance: It compliance process. culture of compliance will help to identify significant relationships, trends and pat- Can’t Happen to Us—Avoiding Corporate Positive and authentic leaders know terns. For example, BSA reports unveil the Disaster While Driving Success), as “the how to inspire others along the organi- relationships between illicit actors and allocation of power among the board, zation in order to comply with relevant their financing networks, empowering management and shareholders.” Stein- policies, laws, regulations and with the law enforcement to identify the primary berg adds that nowadays the concept different inquiries and investigation behavior of concern and to utilize forfei- goes beyond the firm’s board of directors’ mandates that come from law enforce- ture and sanctions to disrupt their capac- scope and incorporates stakeholders that ment agencies across the globe. ity to operate and finance their unlawful are identified all the way down from behavior. BSA reports also reveal trends senior levels to the management ranks. Conclusion and patterns on criminal, terrorist and other evolving threats that enable law With Steinberg’s point in mind, it is crit- Preventive, detective and corrective enforcement to optimize their scarce ical to highlight the significance of the AML measures are attributes of a trend resources by remaining focused on key AML risk management committees, that indicate financial institutions and information and data sometimes pro- usually led by independent directors, gatekeepers are expected to exercise a vided by financial institutions. chief compliance officers (CCOs) and police-like function from the regulators chief risk officers (CROs), among other and law enforcement agencies. The pri- Thus, the transparency, effectiveness key AML stakeholders. vatization of law enforcement is a reality and timeliness used by financial institu- and today in many jurisdictions law tions to manage, report and respond to These committees are meant to recog- enforcement is asking the private sector AML and terrorist financing-related nize and detect all of the AML risks a for more participation. For instance, a matters brought by law enforcement financial institution could be facing. European Parliament and Council agencies, are the greatest elements in One of the key functions of an AML risk Directive now enforces an obligation on delivering the most significant informa- management committee is to assess the accountants to report irregularities.7 tion available to law enforcement and AML risks and elaborate a plan in order others protecting the U.S. and consti- Also, according to FinCEN, inadequa- tutes a unique tool that is useful when to manage and monitor these risks. This cies have been identified in recent AML strategy may include de-risking, adjust- pursuing and confiscating the proceeds enforcement actions, which confirms of crime. ing operations to lessen risks, etc. that the culture of an organization is 8 When facing potential suspicious activ- decisive to its compliance. ity report filings and/or 314(a) and It is important to note that the U.S. finan- Jaime A. Verástegui, CAMS-Audit, 314(b) requirements and inquiries cial intelligence unit highlights how criti- CFE, AML QA manager, Santander issued by law enforcement agencies, a cal it will be for banks and financial Private Banking, Miami, FL, USA, solid and preemptive governance institutions affected by trends (i.e., those [email protected]
6 FinCEN’s regulations under Section 314(a) enable federal, state, local, and foreign (European Union) law enforcement agencies, through FinCEN, to reach out to more than 39,000 points of contact at more than 16,000 financial institutions to locate accounts and transactions of persons that may be involved in terrorism or money laundering (https://www.fincen.gov/sites/default/files/shared/314afactsheet.pdf). 7 Guy Stessens, Money Laundering: A New International Law Enforcement Model, Cambridge University Press, p. 179. 8 “Advisory to U.S. Financial Institutions on Promoting a Culture of Compliance,” FinCEN, August 11, 2014, https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2014-a007
54 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG Internal Audit, Risk, Business & Technology Consulting
UNLOCK YOUR GUIDE TO AML
Given the increasing regulatory scrutiny related to AML issues and complex challenges, financial services companies are realising the importance of implementing and maintaining a robust AML program.
Protiviti’s guide to US Anti-Money Laundering Requirements begins by summarising the basic principles of money laundering and terrorist financing. The guide also delves into many of the practical considerations of maintaining effective AML/CFT Compliance Programs, such as Risk Assessments, Know Your Customer, and Transaction Monitoring and Investigations, including the selection and use of enabling technology.
Get the guide at Protiviti.com/AML
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© 2017 Protiviti Inc. An Equal Opportunity Employer M/F/Disability/Veterans.ACAMS TODAY PRO-0517 | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 55 COMPLIANCE
THE BLOCKTRAIN has left the station
one are the days when a mysteri- laundering risks and solutions. This is technology has roused, and signals the ous internet-based currency particularly true as cryptocurrency valu- staying power of this technology. As G called bitcoin was seen simply as ations have soared as much as 300 per- AML professional Peter Warrack noted a tool used by criminals to purchase illicit cent in recent months, attracting the in the Toronto event, “The Blocktrain goods and launder money. Today, Bitcoin attention of investors (and possibly crim- has left the station and it’s time to get is recognized as a promising innovation inals) worldwide. This article highlights onboard.” and its underlying technology (block- two events organized by ACAMS chapters The network of blockchain experts chain) has inspired the design of a multi- in February, which introduced AML pro- assembled at these events was like a tude of new blockchains that work in fessionals to the world of blockchain with nuanced ways to accomplish a multitude microcosm of the industry. It highlighted a purpose of fostering a culture of learn- how businesses, law enforcement, com- of tasks. Successful blockchain-related ing and collaboration. businesses are blooming across the globe pliance professionals and governments and financial institutions, law enforce- The Chicago and Toronto ACAMS chap- are working toward the same goal: using ment and governments have taken ters hosted an event in their downtown blockchain technology to innovate while notice. The new discussion is not about cores, where they highlighted the uni- still safeguarding society. whether blockchains are here to stay, the verse of blockchain applications and discussion is about the many ways block- their accompanying compliance issues Learning about blockchain chains can be leveraged to create revolu- and solutions. The events’ participants technology tionary new applications and replace were an eclectic group that included antiquated systems. The most prevalent financial institutions, government offi- In both cities, the audience received blockchain application to date remains cials, central bankers, Fintech startups, ‘Blockchain 101’ lessons that summa- the transfer of value through cryptocur- public-private alliances, and compli- rized how the technology works and the rencies, and it is imperative that anti- ance and analysis companies. The wide various benefits offered. Generally, money laundering (AML) professionals range of professionals who are involved blockchains are a type of distributed understand, and keep up-to-date with in this space highlights the breadth, ledger that serves as an incorruptible this technology and the related money sophistication and interest this record of transfers of ownership.
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Perhaps the best way to introduce an blockchains necessitates much more provides a relatively cheap alternative to audience to blockchain technology is by time and research than a single article legacy systems such as wires. The ser- showing them a live example of how can accommodate. vice is fast (sometimes instant) and transactions work and this is exactly offers bank-to-bank transfers, cash-pick what Jonathan Solomon, co-founder Blockchain-based up and even door-to-door cash delivery. In addition, it allows money to be sent to and CEO of Digital Mint and Joe Ciccolo, business unbanked areas in the world where few founder of BitAML, did in Chicago. By While the best-known blockchain-re- options are available, despite the dire presenting the process of transferring need for financial assistance. cryptocurrencies through exchanges, it lated businesses are exchanges, entre- preneurs have found many other uses is easier to introduce concepts like for blockchains. Businesses can provide Cryptocurrency wallet ownership and how wallets are notary-like services, such as time stamp- transaction monitoring generated. Generally, cryptocurrency ing documents1 or track diamonds from exchanges create wallets for clients free the mine to the consumer and beyond.2 and compliance of charge. Providing wallets is compara- For example, Joseph Weinberg, CEO of This Canadian-based MSB uses block- ble to providing email addresses. A the Canadian-based money services chain infrastructures to move value person can have multiple email business (MSB), Paycase, explained how across borders, using banks and part- his company makes use of blockchain addresses, email addresses are always ners in the beneficiaries’ jurisdiction to technology in order to send remittances unique, and anyone who knows the get money to its final destination. This internationally. login information can use them. How- business model is different from crypto- ever, describing the multiple differences The company offers clients a computer currency exchanges, which are the most and subtleties of the various popular and mobile-based platform that popular value transfer mechanism for
1 https://bitproof.io/ 2 Luke Parker, “Ten Companies Using the Blockchain for Non-Financial Innovation,” Brave NewCoin, December 20, 2015, https://bravenewcoin.com/news/ten-companies-using-the-blockchain-for-non-financial-innovation/
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cryptocurrencies. The main difference and easily. Such software gives exchanges between the two is that cryptocurrency some of the tools necessary to conduct exchanges provide clients with crypto- AML investigations. It also gives currency wallets. People can use these exchanges the ability to present data wallets to exchange fiat currency into from an independent source that verifies cryptocurrency and use said cryptocur- their client’s activity. Such reports can be rency to speculate on cryptocurrency useful in growing or improving relation- value, transfer wealth and purchase ships with financial institutions, regula- goods and services worldwide. Retailers tors and law enforcement. who accept cryptocurrencies, usually bitcoin, range from small shops to In addition, new blockchains have Amazon.com. emerged such as ZeroCash, which allow users to transact through payments that legal in various jurisdictions, human Wallets can provide a certain amount of reveal neither the origin, destination, or trafficking (coercing a person through anonymity for the wallet owners, and amount of the payment. Because such threats and violence to perform sexual this was once amongst the greatest hur- cryptocurrencies do not provide a acts for money) is not, and the illicit dles exchanges had to get over: how to public history of transfers, new hurdles profits generated through this crime are mitigate criminal use of cryptocurren- dealing with lack of transparency have often laundered. In recent years, major cies. Ciccolo and Solomon explained emerged. That said, the volume of Zcash credit card companies have stopped that what was once seen as a hurdle has transferred every day is a fraction of bet- supporting payments to such platforms, turned out to be a gift to AML investiga- ter-known cryptocurrencies, such as bit- and since then, bitcoin has become the tors. Although it is true that the owners coin (~$11.4 million daily vs ~$1 billion primary method for sending payments of cryptocurrency wallets are not pub- daily).4 The low volume suggests there to such companies. licly known, many blockchains offer a are much fewer Zcash users, in compar- complete public record of all transac- ison to other cryptocurrencies. The high Law enforcement and entities that are tions that have ever occurred and this volume of Bitcoin users suggests that expected to report instances of money information can be leveraged for inves- users are willing to give up a certain laundering associated with human traf- tigative purposes. In the Chicago event, amount of privacy for the ease of use. ficking should become acquainted with several free tools were used to trace bit- the different ways Bitcoin is used to pur- coin transfers including blockchain.info. Compliance solutions by companies like chase ads on adult classified ad plat- com, a free online wallet and a block- Chainalysis are necessary for sustain- forms. While most Bitcoin exchanges chain explorer service. Free tools that able growth of cryptocurrencies, as they have KYC regimes that human traffick- share massive amounts of information allow responsible companies to combat ers would want to avoid, there are pay- gave Ciccolo a good reason to call block- the use of cryptocurrencies for nefarious ment methods available to avoid KYC chains “314(b) on steroids.”3 activities. Such companies are looking programs. Possibly the most discreet to create future solutions to blockchain way of accomplishing this is through As exchanges have evolved, so have com- risks and are already helping to combat Bitcoin ATMs. These machines exchange panies that provide know your customer existing crimes. One such crime that has cash for bitcoin and charge a substantial (KYC) enhanced due diligence and trans- been linked to the use of bitcoin is fee (on average 8.4 percent).5 A client action monitoring services. One such human trafficking. company is Chainalysis—their CRO, Jon- deposits cash into these machines and athan Levin, joined the Toronto event. Combating human receives a wallet number with the Levin explained how the Bitcoin block- amount of bitcoins equal to their chain can be leveraged to risk score and trafficking deposit minus a fee. There are also web- 6 track wallet activity within this publicly sites that will convert payment from Warrack, from the Bank of Montreal, broadcasted blockchain. Chainalysis has one source (e.g., credit card) to credits, presented in Toronto on the connection created algorithms that detect and track for the purposes of buying online adult between bitcoin and human trafficking. activity through scenario-based moni- classified ads. These websites essentially toring and alerts, which can trigger on a Some online classified ad platforms work as brokers that convert fiat cur- multitude of predetermined suspicious have garnered a seemingly endless rency into bitcoins. Finally, even gift and unusual schema. The software is stream of adverse media, and govern- cards can be used to purchase these visually intuitive and provides the end ment and social pressure due to their credits through the use of websites that user with the ability to find connections reputation as facilitators of the online provide these online conversion and track transactional history quickly sex trade. While prostitution may be services.7
3 Section 314(b) of the USA PATRIOT Act provides financial institutions with the ability to share information with one another. 4 Referenced from coinmarketcap.com on April 10, 2016, https://coinmarketcap.com/ 5 https://coinatmradar.com/blog/tag/fees-2/ 6 https://buybpcredits.com/do-i-need-bitcoins/ 7 https://paxful.com/backpage
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Successful law enforcement investiga- the synthesis needed to help to ensure world’s second largest blockchain by tions involving cryptocurrencies are safe growth and adoption of blockchain market cap, to create a system where the often aided by services from private technologies through awareness of reg- central bank can create virtual currency, companies that track and rate crypto- ulatory necessities and a constructive loan it to banks and destroy it. There is currency activity. Many companies offer relationship management with law no immediate plan to adopt such a plat- these services and there are public-pri- enforcement. form, but the government’s interest in vate partnerships that help players in the technology should serve to remind the blockchain industry connect with Government interest the reader that the technology is likely law enforcement worldwide. here to stay. A blockchain’s accurate accounting and Public-private tracking abilities can be used for a pleth- ora of different tasks. Government inter- The way forward partnerships est for blockchains shows just how many The blockchain industry has quickly different uses this technology can have. Alan Cohn, from the Blockchain Alliance matured since the creation of the first At the Chicago event, Jennifer O’Rourke, (a forum for industry, law enforcement blockchain in 2009. Entrepreneurs have from the Innovation & Technology at the and regulatory agencies for the combat- largely replaced the rebels who once Illinois Department of Commerce, and ing of criminal activity on the block- touted the need for a completely dereg- Ciccolo discussed the “Illinois chain), gave an overview of the goals ulated currency that functioned outside approach” to blockchain. This approach and services that this group provides. the purview of government, law enforce- is one that leverages private and public Cohn explained that the inspiration for ment and regulators. Compliance is now relationships to examine how to the Blockchain Alliance stemmed from recognized as a fact of life by most suc- advance possible blockchain-related the lessons learned in the early days of cessful companies and AML regulations applications without curtailing growth the internet, when criminals exploited are an important part of this recogni- with premature legislation. In fact, the the technology for heinous crimes like tion. The presenters and organizers of Illinois Department of commerce has child pornography. Given the novelty of the Chicago and Toronto events propa- begun researching to see if blockchain the internet in its early days, law gate the need for open dialogue on could be used in the future to house gov- enforcement reached out to the industry blockchain and cryptocurrency in order ernment records. for training and guidance. This time to bridge the gap between the industry, around, the industry has reached out to As governments further explore block- law enforcement and regulators. Edu- law enforcement proactively to promote chain solutions, financial institutions cating AML professionals and law responsible uses of the new technology. may also begin to review potential cli- enforcement of the various risks and ents differently. At the Chicago event, solutions that exist in this space helps to The Blockchain Alliance brings together Michael Busch of Burling Bank dis- ensure that innovation does not come at some of the most lauded players in the cussed his institution’s yearlong research blockchain ecosystem to serve as a the expense of public safety. Communi- of the Bitcoin industry, which continues resource for law enforcement and regu- cating trends and indicators of crimes to this day. Such research includes latory agencies. It offers education, tech- and risks associated with blockchain studying the different types of busi- nical assistance and informational technology and cryptocurrency trans- nesses that use blockchains and or sessions about the uses of blockchain fers helps to enhance reporting stan- cryptocurrencies in their operations. technology. It has garnered support dards and criminal investigations and As time passes and greater knowledge is from industry players including miners, increase public safety. It is important acquired, banking blockchain compa- exchanges, analysis companies and that AML professionals continue learn- nies may become less dichotomous many others who participate in this ing about this technology. if careful reviews of business models open forum to help combat criminal are completed in order to recognize activity. The alliance also counts law companies that offer less money laun- enforcement and government agencies, Leonardo Real, CAMS, manager—AML, dering risk. such as the U.S. Department of Justice, Bank of Montreal, Toronto, Ontario, the U.S. Department of Homeland Secu- In the Toronto event, central banker Canada, [email protected] rity Investigations, the U.S. Federal James Chapman from the Bank of Bureau of Investigation, the U.S. Secret Canada displayed the platform the cen- Advisor: Joseph Mari, CAMS, senior Service and many other parallel interna- tral bank created to simulate central manager for major investigations, Bank tional organizations as partners.8 The bank loans to banks. The central bank of Montreal, Toronto, Ontario, Canada, group serves as an excellent example of used the Ethereum blockchain, the [email protected]
8 Luke Parker, “Controversy Arises as New Blockchain Alliance Engages with U.S. Law Enforcement,” Brave NewCoin, October 24, 2015, https://bravenewcoin.com/news/controversy-arises-as-new-blockchain-alliance-engages-with-us-law-enforcement/
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 59 CHAPTERS CultivatingCultivating ComraderyComradery WorldwideWorldwide
The ACAMS Chapter Development Program aims to focus the association’s international efforts in anti-money laundering education and training at a local level. Chapters foster FindFind aa locallocal ACAMSACAMS chapterchapter nearnear youyou oror startstart oneone today!today! professional relationships and provide local forums for discussion around region-specifi c issues. www.acams.org/chapterswww.acams.org/chapters || [email protected]@acams.org *Chapters launching soon CHAPTERS CultivatingCultivating ComraderyComradery WorldwideWorldwide
The ACAMS Chapter Development Program aims to focus the association’s international efforts in anti-money laundering education and training at a local level. Chapters foster FindFind aa locallocal ACAMSACAMS chapterchapter nearnear youyou oror startstart oneone today!today! professional relationships and provide local forums for discussion around region-specifi c issues. www.acams.org/chapterswww.acams.org/chapters || [email protected]@acams.org *Chapters launching soon COMPLIANCE
ARTIFICIAL INTELLIGENCE: The implications of false positives and negatives
oes overthinking artificial intelligence result in self-inflicted suspicious activity reports (SARs)? DFinancial institutions not only pride themselves but are obliged to document when consumer activity goes astray. SAR authors who have an overreliance on the results of anti-money laundering (AML) detection/risk assessment software dutifully draft the then required-per-policy SARs. These reports then spur a chain reaction of events that impact not only the customer, but the financial institution and law enforcement alike. But what are the ramifications when financial institutions become victims of their own policies that are based on default artificial intelligence rather than due diligence? What are the possible implications of a misinterpretation of otherwise legitimate customer transactional activity?
False positives be subject to termination. Multiple SARs SAR in the first place. An anxious teller could attract the interest of law enforce- will agree to answer the questions and Frequently, automated transaction mon- ment. This ripple effect would likely then, and only then, the investigators will itoring systems will alert AML investiga- trigger law enforcement to generate a learn that the circumstances behind this tors when a customer conducts cash subpoena for records and documents. “activity” was actually created by the withdrawals in a pattern indicative of From there, time will pass and when the bank and not the customer. possible structuring. This pattern often records are produced, a bill will be The financial institutions had a posted consists of the customer(s) conducting attached with an expectation of swift “cash back” limit below the CTR level. cash withdrawals on the same, consecu- payment. Investigators will then invest The customer needed more cash than tive or closely consecutive days at either time—to the detriment of other cases on could, or would be, provided by the the same or multiple branches. At face their desk—to craft a spreadsheet reflec- branch. The lack of funds at the first value, this pattern would appear to be tive of the suspicious transactional branch was the stimulus for subsequent suspicious and potentially unlawful. data as well as produce a line of question- visits to other branch locations and cash A SAR would be filed on this customer, as ing for witnesses and suspects alike. A withdrawals. This revelation affirms there is an appearance of high-risk secondary officer will then be requested there was no intent to commit the sus- behavior. But what does this first SAR to backup and respond (now without pected structuring captured by the mean? Clearly, this customer will become delay) to the first branch location with monitoring software. It was just an subject to frequent review. Each review the lead investigator. Officers will inter- attempt to obtain the necessary funds as will scrutinize the customer’s transac- view a teller as to any knowledge about expeditiously as possible. The customer tional activity. Should this seemingly sus- the customer or if they recall any details was not engaging in criminal conduct, picious transactional behavior occur with regard to the suspicious transac- but without initial examination exe- again, the customer relationship could tional activity that was the basis for the cuted by the AML investigators, the
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customer became falsely labelled as a recognized he/she was duped and had risk and subject to undue scrutiny by the courage to report this (in hindsight) not only the financial institution scam, did law enforcement initiate con- but now law enforcement. An initial Dependence on tact with the financial institution to query by the AML section would have report the criminal activity. Only then de-risked this customer saving both the algorithms of did law enforcement from various states time and money—two commodities and the financial institution work in that are precious to law enforcement artificial intelligence conjunction to dismantle the criminal and financial institutions. organization and attempt to make the without verification victims whole. While bulk cash withdrawals in and of can come at a cost themselves may seem unusual, there are The second example is a personal account assigned to an East Coast cus- still legitimate businesses and profes- tomer. The account was receiving nomi- sions that are frequently subject to this nal amount wire transfers reflecting the scrutiny, but never afforded exculpatory subject matter as “family support.” In considerations. Worse, know your cus- False negatives addition, out-of-state cash deposits tomer (KYC) documentation may not were also transacted into this account. capture this information as it is often As frustrating as it may be to have At face value, this would appear to be associated with a secondary occupation. exhausted law enforcement and finan- overly generous efforts to support a For example, private ATM operators are cial resources on an investigation that loved one. Again, there was no loss to could have been resolved at the onset of often subject to short notice on if, and the financial institution and no SAR filed detection, worse is the unexposed “false when, bulk currency will be needed for on the customer or the account. Had a negative.” The seemingly low-risk pro- SAR been filed, AML investigators and their machine(s). Withdrawals have file, which poses little to no exposure for law enforcement alike would have been observed from both business and the financial institution, possesses high- quickly discovered the account from personal accounts on same, consecu- risk indicators of criminal activity. where the “family support” wires origi- tive, and/or closely consecutive days at nated was partially funded by yet Many compliance and risk assessment the same or multiple branch locations another victim who was hoodwinked in monitoring systems are equipped to in order to satisfy the funds necessary a real estate scam. Had either of these mitigate risk on behalf of the financial for their side business. Although there accounts been identified as suspi- institution, but some fail to identify the are AML considerations with private cious at the emergence of the wires and accounts and/or customers engaging in owner-operated ATM businesses, the out-of-state cash deposits, there would unusual, but not necessarily suspicious, majority still remain a legitimate busi- have been a chance that all the funds activity that would trigger a SAR filing. ness venture. could have been traced and seized pur- The first example is a business account suant to court orders. Instead, law Private ticket services and agencies for a used car dealership. This typical enforcement, with the assistance of often work on short notice as to when account profile is not immune to cash AML investigators, were only able to the tickets for the “hottest shows” or deposits. In fact, U.S. currency for used trace and retrieve a percentage of funds. popular sporting events become avail- vehicles is a common business practice. able. These business owners are in need However, when a West Coast used car Conclusion of immediate currency and have been dealership is receiving multiple cash found to take extensive, but ultimately deposits into their business account False positives and negatives can and legal, measures to achieve the necessary from outside the geographic location it have gone unnoticed by detection pro- funds for the ticket purchases that may would take the scrutiny of an experi- grams. Dependence on the algorithms make or break this now proper version enced AML investigator to recognize it is of artificial intelligence without verifica- of “ticket scalping” business ventures. unlikely that customers were buying tion can come at a cost. From failure to used vehicles, only to then pay shipping de-risk a customer to discounting suspi- Updated or even supplementary KYC fees (or drive cross country) for said cious accounts that pose no loss to the customer contact, in addition to com- vehicles. It would be logical to infer the financial institution, there is room for munication with the particular same, or at least similar, vehicle would negligence but also opportunity for ref- branch(es) regarding the date(s) of the be for sale within the geographic foot- ormation. To error is technology but to suspicious transactional activity would print of the out-of-state customers. mitigate risk is divine. have correctly categorized the above Monitoring programs can and have described customers. These preemptive overlooked this very profile, as there was measures would likely increase the no loss to the financial institution. How- Stacey Ivie, M.Ed., task force officer, probability of preserving a banking rela- ever, there were numerous financial Washington Baltimore HIDTA, Northern tionship with the accountholder(s) and losses to the victims of various false pre- Virginia Financial Initiative (NVFI), eliminating a false positive(s). tenses. It was not until one victim finally Annandale, VA, USA, [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 63 COMPLIANCE IslamiC terrorism from a risk perspective
overnments, through their financial threats. However, it should be noted that inherent and residual mitigation measures will include specific finan- intelligence and law enforcement cial disruption mechanisms. agencies, assess and prepare for G The greatest immediate threat to the U.S. and our allies comes terrorist activity based on the level of the risk from jihadist terrorism or Islamist extremism. Islamism is a radical political ideology. It is extremely important to note that or physical threat that terrorism presents. Islamism is separate from Islam as a religion. Islam is not the To address the risk or the threat, you problem. Jihadist extremists who twist Islam and misinterpret it to fit their radical ideology present the problem. Core groups, have to understand the risk or the threat. most notably the Islamic State and al-Qaeda, their affiliate Understanding the threat of terrorism can groups and grassroots jihadists who are influenced by these groups pose the threat. Groups like the Islamic State and lead to detection, intervention, disruption al-Qaeda have been extremely adept at exploiting the internet and prevention. Truly understanding for propaganda, fundraising, and most notably, recruitment. Disenfranchised and easily radicalized individuals, who requires accurate and continuous risk become foreign terrorist fighters and homegrown violent assessment. No one is more cognizant of extremists, have evolved into the most acute threat to the U.S. and its allies. the risk assessment process than financial On April 18, 2017, in a speech at George Washington University, institutions. The cornerstone of every Center for Cyber and Homeland Security, Department of Homeland Security Secretary, John Kelly, discussed the threat anti-money laundering (AML) compliance of terrorism. Secretary Kelly made the following comments: program is the risk assessment. “The threat to our nation and our American way of life has not been diminished. In fact, the threat has metastasized and decentralized, and the risk is as threatening today as it was that September morning almost 16 years ago. As I speak these An AML risk assessment is designed to identify inherent risks. words the FBI has open investigations in all 50 states…But the Once inherent risks are identified, you develop controls or con- dangers don’t just come from overseas. Over the past few years, trol environments that will mitigate risk. The next step in the we’ve seen an unprecedented spike in homegrown terrorism. process is to identify the inevitable residual risk. Once residual In the past 12 months alone, there have been 36 homegrown risks are identified, you again determine the level of controls terrorist cases in 18 states. These are the cases we know about— necessary to continue to mitigate the risk. In assessing the homegrown terrorism is notoriously difficult to predict and threat of terrorism from an AML perspective, you must first control. And what’s feeding this homegrown violence? Most assess the overall threat of terrorism and then drill down and experts agree a major contributor is the internet.”1 assess the terrorist financing risk. Terrorist financing should be Secretary Kelly’s remarks underscore the fact that over the past considered a component of terrorism, and therefore, should be several years, the terrorist threat environment facing the U.S. assessed in conjunction with the broader terrorism risk and and its allies has evolved into something more dangerous and mitigation strategies. complicated than ever before. It points to the threat evolution of homegrown violent extremists. In order to disrupt, diminish Specific inherent and residual terrorist risk factors are not and ultimately prevent the threat of homegrown violent financial institution risk factors. As a component of terror- extremism, we must fight the threat of terrorism through sus- ism, terrorist financing risk factors should be considered tainable tactical and strategic strategies. Sustainable tactical after assessing the specific terrorist risk factors by drilling and strategic strategies require establishment of meaningful below the broader terrorist risk factors to identify the public-public and public-private partnerships.
1 “Home and Away: DHS and the Threats to America, Remarks Delivered by Secretary Kelly at George Washington University Center for Cyber and Homeland Security,” U.S. Department of Homeland Security, April 18, 2017, https://www.dhs.gov/news/2017/04/18/home-and-away-dhs-and-threats-america
64 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG COMPLIANCE IslamiC terrorism from a risk perspective
We must establish and maintain tactical • Public and private sector propaganda and strategic Islamic counterterrorism measures to thwart terrorist attacks. strategies using social media strategies begins with assessing and Tactical measures include: and internet communications understanding terrorist risk factors to dispel and counter the starting with inherent risk factors. Tacti- • Public sector intergovernmental appeal of radicalization cal strategies will be more tangible, offensive and defensive activities to • Public and private sector strategies while strategic strategies will be more include military action, diplomatic to prevent radicalization, promote intangible. engagement, intelligence operations, intervention and reintegration law enforcement investigations There are a variety of inherent risk fac- The foundation for developing mean- and sanctioning actions tors that merit consideration. Five fun- ingful and sustainable tactical and stra- damental inherent risk factors include: • Public and private sector capacity tegic strategies is to understand the risk building initiatives to assist at-risk factors. You understand risk factors 1. Sectarianism: Sectarianism goes countries build good governance through risk assessment and analysis. back thousands of years. It goes back systems and to fight corruption From an AML perspective, you identify to the death of the Prophet Muhammad in the year 632. It is • Public and private sector financial the inherent risk factors, risk mitigation of the inherent risk factors, residual risk rooted in the divide between Sunni disruption activity through Muslims and Shiite Muslims about disrupting the funding flows to and factors and risk mitigation of the resid- ual risk factors. For Islamic terrorism the who was the rightful successor to from terrorist organizations. This Muhammad. Through the years, the is where financial institutions, and inherent risk factors include: sectarian- ism, ideology, lack of governance, cor- sectarian divide between Sunnis and more broadly the financial services Shiites has grown and has led to ruption and convergence. The residual industry, play a significant role significant fighting, chaos and risk factors include adaptability, capac- instability in the Arab world. We must establish and maintain strate- ity and reach. gic measures to counter the extremist 2. Ideology: Islamist ideology is an Inherent and residual risk factors for radicalization that fuels its hatred and extreme radical interpretation of Islamic terrorism do not contain direct violence and undergirds its strategy and Islam that has been adopted by financial threats. The financial threats global appeal. Strategic measures Islamic terrorist groups to justify are indirect. This is one of the reasons include: their violent tactics and political why terrorist financing is a component quest to establish a caliphate. • Public and private sector community of terrorism. From an AML perspective, outreach and vigilance to this is also one of the primary consider- 3. Lack of governance: The lack of identify and interdict individuals ations as to why terrorist financing is so governance in many countries is at risk for radicalization difficult to identify. Developing tactical caused by factors to include the
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 65 COMPLIANCE
Sunni and Shia divide and corruption. The lack of governance creates crisis and and Syria—and the ongoing recruit- chaos, which serve as an incubator for the growth of terrorist groups and ment of homegrown violent extremists, transnational criminal organizations. the Islamic State will encourage them Convenient, online, mixed-format training for compliance teams of all sizes to commit terrorist acts in their home 4. Corruption: Corruption contributes to a lack of governance and a loss of trust. ranging from early to intermediate career levels. When the public does not trust the government there is a lack of governance, countries. Thus, it is critically import- which fosters sectarianism and enables the growth of terrorism and transnational ant that strategic counterterrorism ini- criminal activity. tiatives intensify to identify, interdict and disrupt the radicalization process. 5. Convergence: The convergence of terrorist groups and transnational criminal organizations has proven to be extremely profitable for both. By forming hybrid The ultimate goal of counterterrorism terrorist and criminal organizations, these groups have been empowered and initiatives is to eliminate the threat of have developed lucrative funding streams, especially in countries with poor terrorism. Unfortunately, that will Transaction Monitoring governance. never happen. With respect to Islamic terrorism, especially with the serious Each of the five inherent risk factors build on each other to enhance the risk of Islamic sectarian divide between Sunnis and terrorism. The tactical mitigation strategies to address the inherent risk factors should Shiites, it is extremely unlikely that we first be focused to operationally contain the physical threat of terrorism. It should can eliminate the inherent and resid- then lead to disruption, and ultimately, to prevention, in tandem with strategic ual risk factors. However, we can work Trade-Based Money Laundering strategies. toward detection, intervention, disrup- There should be two prongs to the tactical mitigation strategy. The first requires public tion and prevention. To accomplish sector interagency collaboration to continue to contain and disrupt the threat of ter- this, we must understand the enemy, rorism through military, diplomatic, intelligence, law enforcement and sanctions their perspective and the risks they operational counterterrorism measures. The second prong requires public and pri- pose. As part of this process, we must vate sector collaboration to disrupt and prevent the flow of funds to and from terrorist identify and understand the flow of Cyber-Enabled Crime organizations, operations and operatives. This is where financial institutions play a funds to and from terrorist organiza- pivotal role. tions. This should emphasize the Strategic mitigation strategies should also be two pronged. Both prongs require public importance of financial intelligence and private sector partnerships. The first prong should involve public and private and the risk assessment process. sector collaboration to counter the propaganda used by terrorists on social media and Understanding the terrorist threat Sanctions Compliance through internet communications for recruitment. The second prong should involve should lead to the development and diverse community outreach to identify at-risk individuals and to interdict those who implementation of effective tactical fall prey to jihadist recruitment. This requires vigilance, intervention and ultimately and strategic containment and disrup- the reintegration of at-risk individuals back into the community. tion strategies. These initial strategies There are two primary Islamic terrorist residual risk factors, which are: are mostly reactive strategies that can be built upon. This is the juncture KYC CDD 1. Adaptability: All terrorists, including Islamic terrorists, have demonstrated the where public-public and public-pri- ability to be adaptive. As the public and private sector assess risk, terrorists assess vate partnerships play a meaningful counterterrorism tactics and adapt their operations to avoid detection and role. This is where collaboration leads disruption. They also seek to continuously identify systemic vulnerabilities they to the development of more proactive can exploit in order to sustain the threat they pose. strategies that leverage the capabilities Counter-Terrorist Financing (CTF) 2. Capacity and reach: Islamic terrorist groups evolve or devolve as their capacity and capacity of public and private and reach change. For example, the Islamic State evolved into an organization partners. This will allow us to evolve with a supposed caliphate, which provided barbaric governance. As the caliphate from reactive containment and disrup- collapses, the Islamic State will devolve from a structured organization to an tive strategies to reactive and proactive insurgency. Their capacity to govern will cease but their ability to wreak havoc will disruptive and preventive strategies. continue to some extent. Through homegrown violent extremists and other We may never be able to eliminate the AML Foundations mechanisms, they will strive to establish greater reach by causing attacks in the threat of terrorism, but we can disrupt U.S. and allied nations. and prevent terrorist attacks from To address the residual risk, both the tactical and strategic mitigation strategies occurring. It is a daunting task that should continue to follow their two-pronged approaches. Terrorists will be more begins with understanding risk. adaptive to tactical counterterrorism initiatives. Therefore, from a tactical counter- terrorism perspective the response should be more vigilant and flexible to adjust to the adaptations of the terrorists. As Islamic terrorist groups, most notably the Dennis M. Lormel, CAMS, internation- Participants who successfully complete ACAMS Certificate courses receive: Islamic State, see their physical presence in Iraq and Syria diminish, they are more ally recognized CTF expert, president & • A certificate of completion proving their commitment to protecting their institutions likely to push outward on the internet to intensify recruitment of homegrown vio- CEO, DML Associates LLC, Lansdowne, lent extremists. Between foreign fighters returning to their homelands—from Iraq VA, USA, [email protected] against money laundering, terrorist financing and other financial crimes.
• Four CAMS credit hours to keep them on track towards CAMS certification or CAMS recertification.
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 66 Earn your training certificate: acams.org/certificates Convenient, online, mixed-format training for compliance teams of all sizes ranging from early to intermediate career levels.
Transaction Monitoring
Trade-Based Money Laundering
Cyber-Enabled Crime
Sanctions Compliance
KYC CDD
Counter-Terrorist Financing (CTF)
AML Foundations
Participants who successfully complete ACAMS Certificate courses receive: • A certificate of completion proving their commitment to protecting their institutions against money laundering, terrorist financing and other financial crimes.
• Four CAMS credit hours to keep them on track towards CAMS certification or CAMS recertification.
Earn your training certificate: acams.org/certificates COMPLIANCE
THE ROAD TO MONEY LAUNDERING CENTRICITY
mong federal crime fighters, money laundering has become a big deal. Both the Federal Bureau of Investigation and the Drug Enforcement Administration have A made combating money laundering one of their top priorities. Factor in the work of the Internal Revenue Service Criminal Investigation (IRS-CI) and the Department of Homeland Security and it is clear that the federal government is deploying a battalion of financial soldiers to hit criminals where they are most exposed: their money trails.
Within arsenal U.S. criminal statutes, the crime of federal money stands out as a rather potent weapon. These laws imposed long prison terms and the authority to seize assets derived from illicit proceeds—something criminals particularly distain. Using the money laundering offense also brings down the enablers—the professional money launderers who work in the shadows to keep the criminals off law enforcement’s radar. Without those skilled in moving, concealing and cleaning ill-gotten gains, the potential for criminal organization growth is stunted.
Adding the predicate offense of money laundering in a major drug case is gamesmanship. There is no better way to link a crime boss to underlings and paint the enormity of the criminal enterprise than leading a jury down the path of a criminal’s money trail. This is where jurors usually have their “ah hah moment.” The money laundering evidence is like nails to a chalkboard to defense attorneys.
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It is not just drug money professionals already honed their skills by hiding profits for certain wealthy taxpayers who did not Based on the U.S. Treasury Department’s 2015 national money launder- want to pay their fair share of income taxes. ing risk assessment, the total illicit funds generated in the U.S. annually is estimated at $300 billion. That is a lot of bad money that needs to be A well-oiled machine washed, so that criminals can enjoy the fruits of their felonious acts with- By the 1960s, professional money launderers had out such expenditures biting them in the rear extremity. perfected a series of money laundering best prac- What may be a surprise to the lay person is that for every dollar earned by tices to keep their criminal enterprises humming a drug dealer, three dollars are earned by fraudsters. Fraud has become along. And through this copious money laundering the reigning king of illicit income attracting a host of unsavory criminal criminal organizations got bigger and worse. Cou- groups. And just like drug cartels, domestic and transnational fraud riers were used to deposit currency from illegal enterprises have an insatiable need for money laundering services. This drugs, prostitution, racketeering, sports wagering is why the FBI’s Money Laundering Unit focuses on third-party facilita- and loan sharking in shell company bank accounts. tors, such as attorneys, accountants and brokers. The FBI reminds the The illicit proceeds were then transferred to other public that money laundering not only fuels organized crime, but it also dummy companies until they were sufficiently lay- facilitates significant tax evasion. ered in complexity. The ill-gotten profits eventually made their way to Swiss bank accounts. The dominant platoon in the fight against money laundering, in particu- lar with fraud, continues to be IRS-CI who has honed the art of sculptur- Once the illicit proceeds were pocketed away in Switzerland, the money trails were out of reach of ing complex money laundering cases on a variety of criminals. IRS-CI U.S. law enforcement. The funds were eventually agents cut their teeth on tax evasion cases where dollars on and off the repatriated back by disguising transactions as books are traced beyond a reasonable doubt and where transactions are loans or other innocuous payments. Some enter- not left to chance. prising gangsters just bypassed the domestic banks As law enforcement has become more proselytized to the virtues of and had their couriers fly directly to Switzerland or money laundering investigations to address a wide array of criminal just took a quick jaunt to the Bahamas where activity, their reliance has grown on suspicious activity reports (SARs) Swiss-affiliated banks welcomed them warmly. filed by financial institutions, a regulatory requirement under the Bank Secrecy Act. That has emboldened regulators to levy fines in the billions The first major assault to financial institutions that have been willfully derelict in their duty to In response to increasing reports of people bring- maintain an adequate anti-money laundering program that detects, ing bags of currency of “doubtful origin” into banks reports and prevents money laundering. Western Union is the latest to and citizens using the bank secrecy laws of other pay a hefty penalty of $586 million for willful blindness of “clear evidence” countries to conceal illegal activities, in 1970, of widespread money laundering associated with elder abuse fraud. former President Richard Nixon signed into law the BSA. Banks now had to file a currency transaction The early days report (CTR) to report transactions of $10,000 or more in a single day. BSA also required anyone The story starts back in the late 1920s when law enforcement was stymied traveling in or out of the country to declare cur- in their efforts to bring down the leaders of large-scale organized crime. rency (domestic or foreign) of $10,000 or more. And The conviction of Al Capone, the world famous kingpin gangster, opened to pull the noose a little tighter, BSA required tax- the government’s eyes to using tax evasion to defeat criminally elite gang- payers to declare the ownership in foreign bank sters. President Herbert Hoover was so impressed with the outcome that accounts. The primary purpose for BSA was to give he ordered the Intelligence Unit (now IRS-CI) to go after all the other the IRS the upper hand in tracking the money trail. public enemy number ones throughout the country. President Franklin D. Roosevelt gave similar marching orders and was so pleased with the With the onset of BSA, banks had the uncomfortable results he sent the head of the Intelligence Unit, Elmer Irey, a personal task of asking their valued customers for identifica- thank you letter praising their “incorruptibility” and “A-1” efficiency. tion and inquiring whether the transaction was on behalf of another. This was often met with the fol- Learning from the existential mistakes of other kingpins, the smarter lowing response among a certain ilk of secretive crime bosses began hiring attorneys and certified public accountants to depositors, “None of your business.” Not wanting to devise schemes to hide profits and assets from the pesky IRS agents who turn away valued customers, several banks pur- were opening audits on gangsters in droves. These money laundering posely fell asleep at the compliance wheel. At this
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The problem with tax evasion cases is that they time, BSA did not impose biting civil or did not yield long prison clean or transfer dirty money, it could criminal penalties and to some in the land him a very long stay in a spartan banking industry, willful blindness fit sentences and they took room at a federal correctional facility. their model of acceptable risky behavior. a significant amount of Several large-scale operations were As the government became more time to put together instituted targeting the money launder- focused on the expanding drug trade, ing tentacles of the cartels in an effort to former President Gerald Ford, ordered hit the organizations where it really hurt. that a tax enforcement program be initi- U.S. Customs led a multi-year operation ated for high-level drug trafficking. In called “C-Chase” where their star under- By the 1980s, America saw the rise of his message to Congress, Ford pointed cover agent infiltrated Escobar’s money even bigger and worse criminal enter- out the obvious reason why legislators laundering machine and became one of prises ruled by ruthless international should support the endeavor of unleash- their chief money launderers. The dra- kingpins such as Carlos Escobar whose ing more tax cops, “We know that many matic take down of Operation C-Chase henchmen caused the murder rates in reads like a Hollywood screenplay where of the biggest drug leaders do not pay Miami to skyrocket. The Columbia Car- income taxes on enormous profits.” an elaborate wedding was staged as a tels and their chain of American distrib- ruse to lure all the criminals in one Ford’s tax evasion battle plan bore out of utors were generating not bags but place. Operation C-Chase brought down frustration with coy drug dealers who palettes of cash. Escobar found a very senior executives of BCCI, and ulti- oversaw the distribution of narcotics. friendly bank, Bank of Credit and Com- mately led to the downfall of the once The beauty of tax evasion cases is that merce International (BCCI), that was mighty bank. The story was too enticing they did not focus on the movement of more than willing to help the drug for Hollywood to pass up so they made it contraband but rather unexplained dealer who Forbes labeled one of the into a movie called, The Infiltrator, star- wealth—a much harder evidentiary trail richest men in the world. ring Bryan Cranston from the hit TV to cover up. The problem with tax eva- Taking advantage of the heat the Feds show, Breaking Bad. sion cases is that they did not yield long where putting on banks, the enterprise Operation Dinero was the brainchild of prison sentences and they took a signif- General Manuel Noriega offered a safer the DEA and IRS who had the ingenious icant amount of time to put together. alternative to the U.S. banking system idea to set up their own dirty bank to But to the liking of drug task forces, IRS where there was no such thing as a CTR. attract money launderers seeking mor- auditors were able to make a 50 percent Panama—where U.S. dollars are recog- ally deprived financial institutions. Their jeopardy income tax seizure of a crook’s nized as legal tender—soon became a odious smelling bank attracted more cash if the suspect claimed he had no money laundering hub where private money laundering flies than an idea how the cash got there and who jets from Florida landed like clockwork unkempt horse stable. The operation owned it. packed with currency. yielded 88 coordinated arrests world- wide, $52 million in seizures and more Drug dealers and In 1984, U.S. Customs agents searched a suspected Learjet headed to Panama importantly, a treasure trove of intelli- those annoying CTRs and found $5.4 million in undeclared gence on the interworking’s of the cartel money laundering apparatuses. Rumor American marijuana and heroin dealers cash. They also found the chief money has it there is a movie in the works on realized their the best course of action to launderer for the Cali Cartel, Ramon this case too. deal with BSA was to befriend witting Milian Rodriguez, responsible for laun- banks who were more focused on profits dering up to $350 million from 1979 to Trying to stay off the radar than compliance, a fact not lost to IRS- 1983. After his conviction, Rodriguez CI. Great American Bank of Dade told U.S. officials that the cartels paid When it came to their toys, drug dealers County Florida was caught failing to file Noriega $10 million a month in were just bypassing banks and buying CTRs on $96 million in currency trans- exchange for unfettered access to their cars, boats and jewelry with cash. In actions relating to drug proceeds. First banks plus the identity of DEA agents Miami, it was hard to find a deal on a National Bank of Boston failed to report working in Panama. luxury car because drug dealers had no $1.2 billion in currency transactions problem paying sticker price. In much of which was $20 bills stuffed in The criminalization response, Congress mandated car, boat bags and placed on planes destined for of money laundering and jewelry dealers to report cash sales over $10,000 to the IRS on Form 8300. Switzerland. And then there was former To address the growing money launder- President Reagan’s Money Laundering city councilman George Thompson III— ing problem, former President Ronald Control Act also made it a crime to file a the chairman of the board of the Ridglea Reagan signed into law the Money false CTR or 8300. State Bank who was sent to prison for Laundering Control Act in 1986. The law three years for knowingly assisting a made money laundering a federal crime The owners of AMS Auto Sales—tucked drug dealer to avoid CTRs. It did not with significant prison time and provi- away in a neighborhood where most help Thompson’s defense that this drug sions to seize assets if derived through were on welfare struggling to make ends dealer was supplying narcotics to illicit proceeds. Now, if a drug dealer meet—had a robust business selling Thompson’s mistress. tried to avoid a CTR or tried to hide, Ferraris, Mercedes and Rolls-Royces
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until the Highway Patrol tipped off the sudden there was a money laundering demand to get drug currency south of the IRS. The ensuing undercover investiga- border and converted into pesos. In response, the government required all money ser- tion revealed that AMS almost exclu- vices businesses, such as wire remitters and check cashiers, to fall under the provi- sively sold to drug dealers who sions of the BSA. Check-cashing businesses need a lot of currency so cartels found purchased the high-end vehicles with businesses willing, for a fee, to trade the endorsed checks they got from customers for cash or drugs and then resold the cars to dirty cash. The criminals would then benignly deposit the checks into bank accounts clean their proceeds. The owners went avoiding CTRs. down for failure to file Form 8300 and the IRS seized the entire dealership. In 2001, when former President George Bush signed into law the USA PATRIOT Act, it There were other dealerships like AMS extended the role of banks to detect, report and prevent money laundering. In festooned across the country and many response, banks established financial investigative units to conduct due diligence were taken down through undercover inquiries and real time transaction monitoring. In the subsequent decade, casinos, operations where agents posed as obvi- mutual funds, securities brokers, insurance companies and operators of credit card ous drug dealers. As one IRS senior systems were all mandated to comply with the anti-money laundering provisions of manager quitted, “It was like shooting the USA PATRIOT Act. As a result, financial institutions became sort of mini investiga- fish in a barrel.” tive arms of the federal government. The ever-resourceful criminals figured out that by spreading currency transac- Money laundering—Greatest hits tions among numerous individuals with Since the enactment of the money laundering laws, the Hall of Fame of indictments smaller deposit amounts (a technique include: Noriega the despotic Panamanian dictator; the Orejuela brothers, the more known as smurfing) made it harder for successful successors of Escobar; the head of the Tijuana Cartel; and one of the most law enforcement to piece together the infamous gangster warlords of our time, El Chapo. organization’s money trails. IRS and Customs agents engaged in robust out- Over the past three decades, the money laundering laws have played a critical role reaches to banks encouraging them to bringing down massive Ponzi schemes, embezzlements, mortgage fraud, political cor- report structuring activity, such as ruption and human trafficking. One of the many honorable mentions goes to General smurfing. To their credit, many banks Electric who in 1992 pleaded to money laundering in connection with a massive volunteered significant leads but there defense contractor fraud. One could argue that money laundering statutes have been were some not imbued with the sense of more effective in debilitating criminal groups than the provisions of the Racketeer doing the right thing. In 1996, Congress Influenced and Corrupt Organizations Act, which was enacted the same year Richard mandated that banks file SARs to report Nixon enacted the BSA. suspicious activity indicative of struc- The takedown of Liberty Reserve, a virtual currency exchange house that laundered $6 turing, money laundering and tax eva- billion of illicit proceeds reveals the extent of where money launderers are beginning sion. The SARs proved to be highly to coalesce in the digital age. Former Chief of IRS-CI, Richard Weber, told reporters useful in identifying money laundering that “If Al Capone was alive today, this is how he would launder his money.” schemes. As the new Conclusion millennium approach The money laundering laws penned into action by Ronald Reagan were mirrored around the world by governments attempting to combat entrenched criminal activ- The Columbia Cartels eventually ity and corruption. Imitation is the highest form of flattery. In breaking down the decided the best course of action was to walls of financial subterfuge, money laundering violations became the Sherman tank just wholesale the cocaine and use the in the fight against entrenched criminal organizations. However, this criminality Mexican cartels to handle the distribu- destructive vehicle relies on a sturdy undercarriage—an undercarriage made up of tion of the white powder into the U.S. numerous financial institutions deploying AML programs to detect, report and pre- and related retail operations. All of a vent money laundering. As any seasoned federal money laundering investigator will tell you, the vast majority of money laundering cases resulted from information gleaned from CTRs and SARs. As the government lauds the value of money laundering prosecutions we should never lose sight that a good portion of the success is attributable to the dedicated work In 1996, Congress of numerous AML professionals ensuring the quality of BSA information. As with mandated that many battles of consequence, in the war against money laundering there are a lot of banks file SARs to unsung heroes. report suspicious activity indicative of Paul Camacho, CAMS, vice president of AML compliance, Station Casinos LLC, Las structuring, money Vegas, NV, USA, [email protected] laundering and tax evasion ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 71 INTERVIEW
Joann Alicea: The fight against human trafficking/ smuggling continues
CAMS Today caught up with Joann Alicea, CFCI, senior Acompliance officer at JPMorgan Chase, to discuss the horrific offenses of human trafficking (HT) and human AT: You worked extensively to smuggling (HS), and how the public and private sectors can gather a lot of knowledge on this work together to effect positive change and help shape the horrific crime. What was your next step and how did you plan to put future of suspicious activity reporting. your knowledge to use? JA: Well, my first step was getting recog- Alicea has over 10 years of regulatory compliance fraud/anti-money laundering and nized in the industry. I received an invi- risk experience in monitoring bank accounts, prepaid cards, and merchant and card- tation from a law enforcement HT holder credit card transactions. She has received commendations for excellent inves- detective to join a LinkedIn Human Traf- tigative work from the U.S. Secret Service and Homeland Security Investigations (HSI) ficking Investigators Group. It was my for assisting in domestic and international fraud/money laundering cases. exposure to this group that led me to learn how the addition of a checkbox on In addition, Alicea has written two ACAMS Today articles on HT and she is a public the SAR form might prove beneficial to speaker on fighting the crime of HT at both the Visa and MasterCard payment level both SAR reporters and law enforce- and on victim money laundering scams. For the past six years, Alicea has held a very ment. In addition, in 2011 I authored an public lobbying campaign to encourage the Financial Crimes Enforcement Network article in ACAMS Today titled “$5.00 to (FinCEN) to consider an update to the SAR form to include a checkbox for HT/HS. Ruin the Life of Children and Women: Internet Ad Sites Used to Launder Money ACAMS Today: Could you give our readers a brief glimpse into your in Promoting Prostitution/Human Traf- background? ficking.” I worked tirelessly to find suit- able outlets to share the knowledge I had Joann Alicea: I became a financial crimes investigator shortly after the 9/11 gathered about HT. It was during the attacks. Prior to this, I was a credit card fraud analyst. The 9/11 attacks highlighted the writing of my 2011 ACAMS Today article importance of information sharing between financial institutions and law enforce- that I decided that I not only wanted to ment. Very quickly my role within the financial institution transformed from being educate the public about HT, but I fraud specific to being more holistically focused on the identification and reporting of wanted to effect real change. financial crimes and terrorist financing. The Office of Foreign Assets Control screen- ing and SAR filing responsibilities were now part of my daily job responsibilities— AT: Is this when you started the before 9/11 neither had been my responsibility. campaign for the checkbox on the SAR form for HT/HS? AT: When did your passion for the prevention of HT begin? JA: Absolutely. At this point in my JA: My interest started while performing a routine investigation in 2010. I became career, I had a firm understanding of the power of the SAR in helping law enforce- aware of the use of prepaid cards on sites like Craigslist and Backpage.com for all sorts ment to fight financial crimes, including of criminal offenses, including, but not limited to, prostitution and HT. The fact that HT and HS. Remember, it wasn’t until financial transactions for prostitution and HT were being transacted through banking FinCEN released Guidance A0081 in products fascinated me. I began to watch news documentaries on HT such as CNN’s 2014 that specific verbiage was required Selling the Girl Next Door. I sought out and watched HT education movies. In addition, in the SAR narrative, so that accurate I attended anti-HT conferences around the country. It was at these conferences where tracking of HT and HS reports could I met actual survivors of HT, which fueled my passion on the subject. I began to read occur. If the specific verbiage isn’t extensively on the topic. ACAMS Today was a fantastic source of information in 2010 added, accurate tracking of reported and continues to be a powerful source of up-to-date, reliable information on all sorts cases becomes near impossible. The of trafficking, including forced labor, sex trafficking and indentured servitude. “simple” addition of a checkbox for HT/
1 “Guidance on Recognizing Activity that May Be Associated with Human Smuggling and Human Trafficking—Financial Red Flags,” FinCEN, September 11, 2014, https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2014-a008
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HS will support more accurate report- “The current suspicious activity catego- AT: So, where do you turn when ing. In addition, I think it sends a clear ries, which include fraud, money laun- FinCEN declines your request message that the U.S. law enforcement dering, and terrorist activity, are sensible for the checkbox? It seems as community is committed to investigat- and important, but we write today to if FinCEN’s denial would be ing and prosecuting HT/HS with the request that the SAR also include human a deal-breaker. same intensity it does fraud, money laundering and terrorist financing. The trafficking. As the agency’s September JA: I was not discouraged. I kept my influence of the SAR checkbox for HT/ 2014 guidance notes, financial institu- campaign on track. I met Congressman HS is solid affirmation throughout the tions have a critical role to play in iden- Trey Gowdy (SC) and talked to him financial services industry that we must tifying and reporting transactions that about updating the SAR for HT. In addi- train compliance investigators and may be related to human trafficking and tion, I continued to reach out to White- branch associates to understand the red human smuggling. Given the financial house.gov. I took every opportunity flag indicators for HT/HS. aspect of this crime, it is logical and crit- presented to speak with government officials about updating the SAR form. I ical to add this category. The addition even presented the idea to former RNC AT: Was the campaign to have a will help to identify human traffickers checkbox added to the SAR for HT/ Chairman Reince Priebus during the and save victims as well as aid in the col- HS an easy undertaking? Republican National Presidential debate. lection of much needed statistics of this JA: Initially I thought it would be easy. I widespread crime.” I continued the campaign in social media was quickly proven wrong. I came to with industry colleagues and the anti-HT understand that updating the SAR to I thought that when Congressman Poe’s community. I also started a Twitter cam- include a checkbox for HT/HS would be letter went to FinCEN, the update would paign to members of Congress, President a long battle and not a short scuffle. I soon follow. The Congressman’s letter Trump and staff. Honestly, I have been presented at industry conferences and a resulted in no immediate response from laser-focused for the past six years on my mission for the SAR to include a check- human rights’ Anti-HT Conference to FinCEN. It was only after my continued box for HT/HS. No stone was left raise awareness on updating the SAR for requests for the Congressman’s office to an HT checkbox. A major break in the unturned. follow up with FinCEN that FinCEN pro- campaign came when I received an opportunity to write for the 23rd Edition vided various reasons why the SAR form AT: Has your campaign been of the SAR Activity Review Trends, Tips would not be updated. successful? and Issues. The publication of the article I understand the value of accurate report- The final result is not yet in; how- was energizing because it cemented that JA: ing of the horrific crimes of HT and HS; ever, I am happy to report that on Febru- notion that the financial services indus- ary 2, 2017, FinCEN released proposed try could drive public policy change. The thus, I was not deterred by this setback. revisions to the SAR form,2 which does article raised an enormous amount of While I was working with Congressman industry awareness to my campaign. include the addition of a checkbox for Poe’s office, I was simultaneously email- HT/HS. ing the President through White- AT: What would you describe as house.gov. In June 2015, a deputy at the turning point in the campaign AT: Thank you for sharing your for the SAR checkbox for HT/HS? FinCEN sent an email thanking me, on story. Any closing thoughts? behalf of the White House, for my work JA: I am looking forward to the day the JA: At an Anti-HT event, I had a few in fighting HT. He invited me to join a minutes to speak with Congressman “new” SAR form with the HT/HS check- conference call with two FinCEN depu- box is finalized and released. However, Ted Poe (TX) about my efforts to fight ties and their subject-matter expert on HT—specifically with the update to the the release of the revised SAR form is not HT. For 45 minutes we discussed updat- SAR. Thankfully, Congressman Poe the end game. Our work as financial understood my message and encour- ing the SAR to include the checkbox for crime investigators in fighting HT con- aged me to continue my efforts. His HT/HS. They explained the barriers— tinues. We must work together with our office put me in touch with his senior high cost for the change and no direct partners in law enforcement to raise legislative representative in Washing- request from law enforcement for the awareness of HT and HS with the goal to ton, D.C. It took about two years for update. At the end of the call, both sides eradicate this horrific crime and rescue the victims. The revised form is not the Congressman Poe to agree to author a had a better understanding of the other letter to FinCEN requesting the SAR to end of the campaign. It is merely the side. The discussion did not have the beginning of a new one. be updated to add a checkbox for HT/ result I was hoping for; however, the HS. In 2015, Congressman Poe’s office cause had gained a lot of notice in the sent a letter signed by Congressman Poe and Congresswoman Carolyn B. Malo- highest reaches of our government. This Interviewed by: Amy Wotapka, CAMS, ney (NY) to FinCEN requesting that the was the turning point in the campaign— BSA officer, First American Bank, SAR be updated for HT. An excerpt of the cause was gaining recognition and Vernon Hills, IL, USA, the letter states: being taken seriously. [email protected]
2 Federal Register, February 2, 2017, https://www.fincen.gov/sites/default/files/federal_register_notices/2017-02-08/BSAR_2017-02235.pdf
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EFFECTIVELY AUDITING THE FOUR PILLARS OF THE SCREENING PROCESS
o combat money laundering and terrorist activities, Review of internal and financial regulatory authorities are becoming stricter external data feeds on the implementation of a robust anti-money T The concept of GIGO (garbage in, gar- laundering/counter-terrorist financing (AML/CTF) program bage out) can be applied to any software across financial institutions. The number of penalties and package deployed as part of a screening solution. Its efficiency is governed by the fines levied by regulatory authorities have been growing quality of data entering into the system. in the past few years. Thus, it is imperative that financial We can classify the data used in a screen- institutions have a robust AML/CTF program in place and that ing solution in two parts: they periodically test their program since it is a regulatory • The list of sanctions, politically requirement of Section 352 of the USA PATRIOT Act. This exposed persons (PEPs), special interest persons (SIP) and relatives article covers the key sensitive areas where an effective audit of close associates (RCA), which are focuses to ensure a strong compliance environment. updated and published on a regular basis by organizations like the Office of Foreign Assets Control. These lists The Financial Action Task Force’s (FATF) importance. Many software companies are used as a reference point and AML/CTF methodology recommenda- are coming forward to leverage the matched against customer data. tions state that “financial institutions demand of the industry, providing cus- should be required to maintain an ade- tomized software packages to perform • The customer/entity data of the quately resourced and independent audit watch-list filtering, which is the heart of organization has to be screened function to test compliance (including any AML program. The basic function- against these lists to ensure that sample testing) with procedures.” ality of these packages revolves around the financial institution follows the their data matching technologies, prescribed approach toward them. This recommendation highlights the which they accomplish through fuzzy For example, the financial institution importance of performing regular logic algorithms. Regular tuning of must not entertain sanctions in any audits in the compliance area for an these packages is required to reduce the way as they are linked to terrorist organization. It has been observed that number of false positives. In addition, though many organizations and big activities and high degree crimes. proper documentation and data archi- financial institutions are continuously Similarly, PEPs must be subjected val procedures have to be adopted for improving and investing in their com- to enhanced due diligence. look-back purposes. pliance program, there are still some If the data feeds contain data quality deficiencies and gray areas. As technol- The key sensitive areas that should be issues (e.g., the names are mentioned in ogy is at the core of any compliance covered in the audit of a compliance single letters, or there are missing fields), program today, their calibration—as per program to ensure its robustness and then it would directly affect the efficiency the organizational need—is of utmost efficiency, are listed next. of the screening process. This would
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create a large number of false positives, negatively impacted. Similarly, they what course of action is employed in which would lead to a waste in both time should not be too lenient where it could case of a confirmed sanctions match? and resources in the investigation. lead to criminals escaping. When should a suspicious activity report be filed? Periodic auditing of the internal config- Review of screening urations and the alert generation pro- solution cess of the screening solution is required Review of governance and to check its effectiveness. The hits that oversight arrangement The second pillar of the screening pro- are getting generated should be ana- cess is the screening solution deployed lyzed whether they are in line with the Ensure that all relevant stakeholders are by an organization. This is the area screening requirements. well updated and that lines of commu- where the actual screening occurs and nication to all stakeholders is clear by the potential risks are notified. The data To accomplish this, the screening review reviewing the responsibility assignment coming from both ends are matched to process should be reviewed in terms of (RACI) matrix. The change management check the potential sanctions, PEPs, SIP historical alerts and predefined codes. process should be well defined and and RCA. It has its own fuzzy logic algo- The evaluation should also include the should fully identify, assess and docu- rithms to match the data and if that review of its threshold tuning—whether ment the impact of the changes. The match goes beyond a certain threshold that is being periodically orchestrated review should include meetings with then it generates an alert. So, different commensurate with this dynamic representatives from first, second and data fields have different weights in con- environment. third lines of defense including, AML tributing to an alert. As the whole mech- The quality of documentation around Key Control Function (KCF), IT services anism of this solution revolves around the periodic updates and around poten- and group security, business compli- the name matching technology, its effi- tial issues is critical. One cannot dispar- ance oversight, business transformation ciency is also governed by the accuracy age the importance of documentation in and retail strategy to ensure a detailed with which it is performed. So, what the compliance world. It is one of the RACI matrix and to clearly define the adds to its complexity? The data related most important parameters over which roles and responsibilities within the to people, organizations and countries an institution’s sincerity toward its pro- screening framework. are coming from different parts of the gram is gauged. It not only smooths the The independent reviewer involved in world and hence from different cultures, audit process, but it also plays a great the audit process should perform the in different languages and different role in tracking the performance of the comparative analysis in the key areas nomenclatures. This in itself makes the entire compliance system. mentioned above, among peers, with matching process a bit challenging. similar distribution lines and products Hence, these inefficiencies in the The list management of the screening that face equivalent threats. Auditing screening solution can result in false solution should be thoroughly re- must be in compliance with the legal positives and false negatives. viewed to ensure that it is consistent with the documented policies (e.g., if and regulatory requirements that apply False positives are alerts that are gener- the policy around PEPs says, “former to customer screening. ated from matches that are not genuine. PEPs should be considered live PEPs,” Even though these customers were then it should also be reflected in their Conclusion falsely matched and they do not actually list configurations). fall into any of the risk categories and are Achieving ideality in this complex and clean, the alerts were still generated. An effective screening system cannot be evolving compliance environment may This causes a waste in money, time and accomplished without a meticulous not be possible, we must still strive resources. The whole calibration of the alert handling management system with toward perfection by ensuring that our screening program is focused on reduc- well-defined procedures. The process— compliance system is commensurate ing this number. especially the rationales behind disre- with this ever-changing environment. garding alerts—should be well The best way to accomplish this is to False negatives are the opposite of false evidenced and documented. have a well-organized periodic audit- positives and could be even more dan- ing system in place. Many financial gerous. It is like a criminal escaping the Review of relevant policies organizations procrastinate on this security process. The false positives not front and avoid investing in self-orga- only lead to a waste in resources, but they and procedures nized third-party auditing, but they could have a critical impact in terms of The policies and procedures deployed need to understand that a stitch in legal, reputational and financial losses. by a financial institution have to be time could save nine. The screening process requires regular reviewed against regulatory policies. tuning to maintain the trade-off This should be conducted by using the between the two. The screening should assessment tools and by interviewing Abhinav Kaushik, CAMS, AML consul- not be too strict where false positives are and following-up with relevant person- tant, Infosys, Swindon, U.K., abhinav_ generated and genuine customers are nel. Questions that could be asked are [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 75 CAREER GUIDANCE
From law enforcement to AML and fraud compliance
Editorial credit: Andriy Blokhin/Shutterstock.com hroughout my career, I have been blessed to be associated with many outstanding and dedicated professionals. My post-college work experience in the public and private sectors T has now spanned the better part of 45 years. I served in the U.S. government for 31 years before moving into the business world, where I have been employed for the last 14 years. I had the honor of starting my career as a revenue agent in the Internal Revenue Service. My ambition since the age of 12 was to become a special agent in the Federal Bureau of Investigation (FBI). That opportunity came to fruition, and I had the distinct privilege of serving in law enforcement with the FBI for 28 years. It was a fabulous experience that I will always treasure.
Where did the years go? How did they go consultant in the anti-money launder- professionals possess extensive experi- by so fast? I can vividly remember the ing (AML) world, is every bit as satisfying ence and situational maturity, the pre- day I was sworn in as a new agent. I was as my law enforcement career was, but vailing thought of administrators is that a very excited 24-year-old with a fresh from a different perspective. I still expe- law enforcement is a younger person’s haircut, a new beige colored suit and rience a sense of accomplishment that I profession. In my case, I always thought new cordovan dress shoes. When that find quite rewarding. It is important to I would retire from the FBI at the man- day came, the furthest thing from my be able to place accomplishment in datory retirement age. To my surprise, I mind was the thought of retiring from context. What I accomplished in law retired five years before my mandatory the FBI. After all, my entire career was in enforcement and what I accomplish as retirement age. front of me on that day. That day, and 28 an AML consultant are inherently differ- I was recruited by a “headhunter” repre- years, seemingly passed in a heartbeat. ent yet similarly meaningful in provid- senting a Fortune 200 company to start a As my law enforcement career came and ing self-satisfaction. centralized anti-fraud program in accor- went, it was a great ride, with incredible As with many life experiences, my post- dance with the Sarbanes-Oxley (SOX) memories and great stories. law enforcement career started as a anti-corporate accounting fraud legisla- With my law enforcement bias, could work in progress that left me unfulfilled tion. After some agonizing consider- there possibly be life after the FBI? I and second guessing my decision to ation, I accepted the position. Although cherish the fact that the answer is a leave the FBI when I did. Retirement I was well compensated and company resounding “Yes!” What I have come to from law enforcement was inevitable. personnel were great to deal with, I was appreciate is that my career today, as a Even though older law enforcement out of place and lacked a sense of
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mission or purpose. For a global holding sharing my experiences to help inform institutions? Once I encourage the company, I was the only former law career development decisions by my potential law enforcement retiree to enforcement executive. That was a real younger peers. Based on my personal consider the diverse employment possi- culture shock for me. More importantly, experience, transitioning from law bilities, I immediately advise them to the company honestly believed they did enforcement to AML and fraud compli- join ACAMS, if they are not already a not have a fraud problem and only ance is much easier than transitioning member. I also recommend they obtain wanted to implement provisions SOX into other career paths. The reasoning their CAMS certification. mandated as necessary and no more. I for this is centered on select core values, was not comfortable with that type of coupled with investigative experience. Invariably, I will provide a potential law tone. I lasted 11 months before resign- enforcement retiree with guidance about The most notable core values are sense ing. During that timeframe, I was miser- their qualifications and how to distin- of family and dedication. In the FBI, and able and did a lot of soul-searching. guish themselves to standout when in most law enforcement agencies, there opportunities arise. I believe you have to Part of my problem was missing the FBI is a tremendous sense of family and gain visibility in the industry. Visibility is and feeling regret about leaving when I camaraderie. As I embarked on my FBI built upon your reputation and through did. Another part of the problem was career, my closest friends became my networking. Many individuals coming that I missed working financial-related FBI peers. We truly bonded as a family. out of law enforcement have distin- crimes with a money laundering nexus. Very strikingly, as my AML career has guished themselves in various ways as One of the highlights of my career at the evolved, my closest friends are in the investigators. Those investigative skills Bureau was working financial crimes AML community. I consider them family are extremely valuable. Coupling those and money laundering in close partner- just as I did with my FBI brothers and skills with the CAMS certification will ships with the financial services indus- sisters. When I was in the FBI, I did not serve to enhance one’s reputation. Like- try, especially with bank investigators. I think anyone was more dedicated and wise, in my experience, many outstand- quickly realized that I did not adequately committed to their mission than the FBI ing investigators possess excellent think through retirement from the FBI. and more broadly, law enforcement. liaison skills. Those liaison skills are More importantly, where could I experi- What makes the AML and fraud compli- ence a sense of meaningful accomplish- ance profession so desirable is that AML essential ingredients for networking. I ment and satisfaction again? In my case, professionals share the same sense of encourage current law enforcement that sense of accomplishment and satis- dedication and commitment. The differ- members to get involved with networks faction comes from providing consult- ence between the two is context. The of retired law enforcement personnel. I ing services, including training, to the main similarities between the two are also encourage them to become active financial services industry regarding passion and intensity. members of ACAMS through participa- financial crimes, money laundering and tion in ACAMS chapters and events. From the time I was a young FBI agent in terrorist financing. ACAMS participation greatly enhances New York, I have consistently witnessed networking opportunities. The purpose for sharing my personal a steady migration of former law experience is to encourage current law enforcement personnel into the AML It is hard to believe that 45 years have enforcement colleagues nearing retire- and fraud compliance profession. The come and gone in my professional ment age not to make the same mistake I investigative skillsets of law enforce- career. These 45 years have provided me and many others made by not being pre- ment officers serve them well in the with a wealth of experience and have pared and not thinking through where AML and fraud compliance space. In given me maturity and stability. I look we would find meaningful satisfaction in addition, there is incredible diversity forward to sharing my experience with our post-law enforcement lives. There is and opportunity in the AML and fraud anyone who can benefit from it. One of an old saying that one of my early FBI compliance field. Opportunities abound the things I am heartened by is the true supervisors frequently repeated: “Do as I with financial institutions, consulting quality in terms of integrity and compe- say and not as I do.” I have reinterpreted firms, vendors and as sole proprietors. tence of those individuals transitioning that statement through the years. During Factor in the magnitude of the industry from law enforcement and starting new training and mentoring I use the anal- and range of institutional sizes from careers in AML and fraud compliance. I ogy, “If I knew then what I know now, I very small to extremely large. I am an hope they experience the same sense of would have been dangerous” (better optimist and I believe a niche can be accomplishment I continue to enjoy. stated, I would have been more success- found for all of us. Likewise, I hope they establish the last- ful and satisfied). When I mentor members of law enforce- ing friendships that I have been blessed Law enforcement experience affords ment considering career opportunities to develop in the AML community. post-diverse career opportunities in in AML and fraud compliance, I encour- many fields. One field in particular that age them to take a broad look at the possesses diverse opportunities is AML industry and contemplate where their Dennis M. Lormel, CAMS, internation- and fraud compliance. One of the things niche should be. Is it working directly ally recognized CTF expert, president & I am proudest of throughout my entire for a financial institution or as a consul- CEO, DML Associates LLC, Lansdowne, career has been serving as a mentor and tant providing services to financial VA, USA, [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 77 CAREER GUIDANCE
Interviewing tips for non-IT financial crimes professionals
78 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG CAREER GUIDANCE
ou have created a stellar resume by using the tips provided in the article titled “Resume Tips for the AML Professional”1 and you have followed that up with Ya proactive marketing strategy as recommended in the article “Marketing 101: How an AML Professional can Increase Marketability.”2 Your dedicated efforts have resulted in an interview for a non-IT related financial crimes professional role. Assuming that you have the job locked up solely because the company called you is likely the most damaging mistake you can make while job hunting. Careful preparation, from the time you get the call for the interview through the time you exit the interview, is what will set you apart from other candidates.
Upon receiving a call for an interview, your resume, be honest! Do not manager. The interview is certainly your first step is to re-familiarize your- oversell your qualifications or the right time to display knowledge, self with the company. You have already you may find yourself in a role for but continuous name-dropping completed some research on the com- which you are unprepared. Speak of software and applications may pany when deciding whether you honestly about your experience get tiresome for the non-subject should apply. Now is the time to take the with various technology and matter expert interviewer, resulting research to the next level: systems, audits and examinations. in a negative impression. • Research the corporate structure, • Find ways to “convey that you want Prepare for common interview ques- locations, asset size and the number the position and would be motivated tions like “Where do you see yourself in of branches (if applicable). to excel in the role long-term. If five years?” In addition, when answering you’re only interviewing for this job • Get a sense of their business model the question “Why are you leaving your because you need the paycheck, and products/services offered. current role?” follow the tips below: that’s going to come through.”4 • Understand what federal and/ Asking about opportunities for • Avoid making negative comments or state examinations the advancement within the organization about current/prior employers. company is subject to. can also lead a recruiter or hiring Negativity breeds negativity. It may • Learn what you can about the manager to think you may be in the leave the interviewer wondering company’s culture from news role short term, so tread lightly here. what you will be saying about his/her articles or by reaching out to peers • Do not assume the interviewer organization when you leave there. on social networking sites. knows your background or your • Give serious consideration when • Determine if the company is accomplishments. Remember that formulating your response. A simple under a consent order (Note: Do oftentimes employers review your internet search will result in pages of not bring the topic up unless the resume for less than a minute. Be links purporting how to best answer interviewer mentions it first). prepared to demonstrate how you standard interview questions. • “Analyze the job description and will be of value to the organization your match with it. Write out their or the team. Have examples of • Practice your responses in front of requirements and how you meet when you took initiative and mirrors, friends or a mentor. Replace those requirements.”3 Your goal made a positive impact in your the word “can” in your responses in the interview is to stand out, current or former roles (Note: be with the word “have.” For example, in a good way, among the other careful not to disclose confidential say “I have led a team of experienced candidates. Hubris/ego needs or proprietary information). suspicious activity monitoring to be in check when speaking • Beware of terminology overload— investigators” in lieu of “I can lead about your qualifications for the especially if the interviewer is from a team of experienced suspicious role. As you did when crafting human resources and is not the hiring activity monitoring investigators.”
1 Amy Wotapka, “Resume Tips for the AML Professional, ACAMS Today, December 2016-February 2017, http://www.acamstoday.org/resume-tips-for-the-aml-professional/ 2 Amy Wotapka, “Marketing 101: How an AML Professional can Increase Marketability,” ACAMS Today, March-May 2017, http://www.acamstoday.org/marketing-101-how-an-aml-professional-can-increase-marketability/ 3 Susan P. Joyce, “The 10 Deadly Job Interview Mistakes (and How to Avoid Them),” Job-Hunt, https://www.job-hunt.org/job_interviews/avoid-interview-mistakes.shtml 4 Pamela Skillings, “Recruiters Reveal: Top 10 Reasons You Didn’t Get the Job,” Big Interview, April 28, 2016, https://biginterview.com/blog/2016/04/job-interview-feedback.html
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• “Canned” responses will not win points with an interviewer, so ensure your • Display solid interpersonal skills. Use responses are genuine. In addition, if you take too long during the interview humor appropriately. Giggles may to formulate a response, it may appear as if you are being untruthful. display nervousness. Be an “active • Golden rule when interviewing: above all else, be honest. listener.” “Active listening involves listening with all senses. As well as Prepare for uncommon interview questions like: giving full attention to the speaker, it is important that the ‘active • Can you give me the names of four people whose listener’ is also ‘seen’ to be listening— careers you have fundamentally improved?5 otherwise the speaker may conclude • How do you handle criticism? that what they are talking about is • What is your management style or what management uninteresting to the listener.”9 style do you work best under? • Turn off your cell phone. Do not • Do you prefer being a sole contributor or working on a team? set it to vibrate—turn it off! You want your full concentration to The most difficult interview question to answer is concerning salary expectations. be on the interviewer and the “Before you consider answering the question, it is important to know the going rate questions. In addition, you want the for jobs in your field and in your job market (location). These can be found on web- interviewer’s full attention on you sites like payscale.com, glassdoor.com and salary.com.”6 and not the annoying vibrations Bankrate.com7 cost of living comparison will provide valuable information on cost emanating from your phone. differences for living expenses between two cities if relocation is being considered. • Highlight industry certifications Also, be aware of the term “all in” meaning the figure you are quoting includes like CAMS, CAMS-FCI and CAMS- bonuses. Be very specific about relocation expense expectations or other costs you Audit. Regulators appreciate when may want the organization to incur such as supporting your CAMS membership an institution makes the effort (annual dues and recertification credit needs). to develop a well-qualified staff. Walking into the job with one or Even though the day of the interview has arrived and you have been preparing for this more industry certifications is opportunity to showcase your qualification for weeks, there is still more prep work to a positive differentiator for an be done: applicant. Likewise, if you have • Ensure that your appearance conveys exactly what you intend. Clothes experience in interviewing suspects, should not be wrinkled. Use cologne or perfume sparingly. Do not chew testifying in court, law enforcement gum; however, a breath mint before walking in might be advisable. or any other sought-after skill; Comb your hair and check for stray hair(s) on your clothes. find at least one opportunity to • If the interview is by Skype, FaceTime or otherwise not in person, ensure mention it in the interview. that there is little to no background noise to interfere with conversations. • Illustrate your commitment to the If using Skype, etc., ensure that you select a location that has a suitable industry and the role by mentioning background (lying on your bed for the call is not acceptable). industry events that you have • Check a mirror before the interview. Ladies, if wearing makeup, ensure it is attended, arranged, presented at, well-applied with no streaks. Men should check zippers. Both women and men etc. If you are on the board of a should ensure that there is no food lingering in teeth. You want the interviewer local ACAMS chapter or you are an completely focused on you and not a spot on your shirt or spinach in your teeth. active participant in an ACAMS task force, be certain to highlight how • Arrival time matters. Never be late to an interview. Being too early is also the activity will benefit the company dangerous. Strive to arrive no more than 10 to 15 minutes prior to the interview with which you are interviewing. start time. Ensure you allow time for traffic backups or other unforeseen delays. • Find ways to work into the During the interview: conversation that you are • Walk in with confidence. Have a strong handshake and a big smile. “fungible” by focusing on Your body language must convey confidence. “Good posture, transferrable skills. Experience in smiling when appropriate, making eye contact and leaning forward people management and project are all positive ways to express your interest in the job.”8 management are skills that can
5 Betsy Mikel, “How You Answer This Interview Question Reveals Your True Character,” Inc., January 4, 2017, http://www.inc.com/betsy-mikel/1-interview-question-that-cuts-through-the-bs-to-reveal-someones-true-character.html 6 Pamela Skillings, “How to Answer: What Are Your Salary Expectations?,” Big Interview, October 25, 2015, https://biginterview.com/blog/2015/10/salary-expectations.html 7 Cost of Living Calculator, Bankrate, http://www.bankrate.com/calculators/savings/moving-cost-of-living-calculator.aspx 8 Pamela Skillings, “Recruiters Reveal: Top 10 Reasons You Didn’t Get the Job,” Big Interview, April 28, 2016, https://biginterview.com/blog/2016/04/job-interview-feedback.html 9 “Active Listening,” Skills You Need, http://www.skillsyouneed.com/ips/active-listening.html
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be used in many different types of roles within the organization. When an applicant can participate in many parts of the organization’s AML program, it is a win for the company. Clearly demonstrate that you are able and willing to assist with not only the role applied for, but also other areas of the program. Close out the interview with the same level of confidence you walked in with. Your goal in closing out the interview is to get a good sense of where you stand in the hiring The more process. • Questions like the following10 will help you gauge how the interview went: effort you put ♦ “Based on my background and the skills and experience we discussed, how well do I fit the profile of the candidate for which you’re looking?” or in before the ♦ “Given what we’ve just discussed during this interview, do interview, the you have any concerns about my fit for this position?” • “Ask what the next steps in their hiring process are if no one volunteers the information.”11 This question will demonstrate to the interviewer more likely your desire to move forward with the application process. you are to be • Remember to thank the interviewer for his/her time and the opportunity to discuss how you will be an asset to the company. successful Finally, after the interview follow up with the interviewer. Via email (not phone) thank the interviewer, again, for his/her time. Keep the email short and to the point. Demon- during the strate your interest but not desperation.12 Be on the lookout for signs from the interviewer that you are no longer being consid- interview ered for the role:13,14 • A clear timetable for next steps was not provided. • It was stated during the interview that you are overqualified. • The interviewer politely notified you that they are still looking at other candidates. • The interviewer provides helpful but unsolicited advice regarding your resume, career or interviewing skills. • The interviewer wishes you luck on your job search as you are walking out the door. • The job was reposted after your interview. • They have not responded to your follow-up email.
While a job interview can be nerve-wracking, it does not have to be. To reduce the stress that often accompanies an interview appointment—create a plan to succeed. Mastering a job interview takes preparation and practice. The more effort you put in before the interview, the more likely you are to be successful during the interview. Remember, preparation is the key to a successful interview experience.
Amy Wotapka, CAMS, BSA officer, First American Bank, Vernon Hills, IL, USA, [email protected]
10 Lisa Quast, “Job Seekers: How to Close an Interview with Class,” Forbes, March 17, 2014, http://www.forbes.com/sites/lisaquast/2014/03/17/job-seekers-how-to-close-an-interview-with-class/#5c4db86e6907 11 Susan P. Joyce, “The 10 Deadly Job Interview Mistakes (and How to Avoid Them),” Job-Hunt, https://www.job-hunt.org/Job_interviews/avoid-interview-mistakes.shtml 12 Yolanda Owens, “3 Rules for Following Up With a Recruiter,” The Muse, https://www.themuse.com/advice/3-rules-for-following-up-with-a-recruiter 13 John Egan, “13 Telltale Signs that You Didn’t Get the Job,” Huffington Post, April 28, 2014, http://www.huffingtonpost.com/john-egan/13-telltale-signs-that-yo_b_5199895.html 14 Raven Ishak, “9 Signs You’re Probably Not Getting the Job,” Bustle, August 19, 2016, https://www.bustle.com/articles/178366-9-signs-youre-probably-not-getting-the-job
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 81 AML AROUND THE WORLD
WHITE-COLLAR CRIME: The carousel of VAT abuse
alue-added tax (VAT) is one of the most critical sources of national revenue by Vthe majority of European state authorities, particularly in the Central and Eastern European (CEE) region. It is basically a consumption tax calculated on the value added to goods and services. It is levied on almost all commercial activities inclusive of the manufacturing and distribution of goods and the provision of services that are purchased and sold across the European Union (EU). Therefore, in order to create the environment for fair trade competition, products/services exported outside of the EU are VAT-free, whereas imported ones are subject to taxation.1
Considering the VAT’s significance to the accordance with the European Com- Hungary, 8.3 billion euros in Romania, fiscal well-being of states, declining to mission’s findings from 2013, VAT eva- 12 billion euros in Poland and 2.2 billion pay it may contribute to considerable sion affects approximately 18 percent of euros in Slovenia.6 deficiency in the delivery of public ser- the total VAT base across the Union.4 vices and thwart fair market practices, Europol estimates that 40 to 60 billion VAT charges within the EU because it generates higher tax obliga- euro of the yearly VAT revenue losses tions on honest taxpayers.2 This obser- of EU states result from actions of Overall, VAT avoidance could take place vation is consistent with the 2010 organized crime groups and that 2 per- in any transnational trade flow. Individ- findings presented by Richard Murphy, a cent of those groups are behind ual importers are subject to customs chartered accountant and a political 80 percent of the missing trader duties and VAT on imports at the destina- economist, who carried out a research intracommunity fraud.5 The 2016 report tion border. Therefore, in instances project at the request of Tax Justice Net- on tax matters presented by PWC estab- where tariffs are not due (e.g., in the pres- work. He analyzed data from the World lished that the VAT gap (i.e., the differ- ence of a free trade agreement between Bank, CIA World Factbook, Heritage ence between the VAT, which should be states or where there is a customs union Foundation and the World Health Orga- collected and the actual tax revenues) between states, such as the EU) those nization. He estimated that the financial oscillated between 19.1 percent in the engaged in importing goods/services are enticed to misrepresent their trade num- revenue losses worldwide, generated as Czech Republic to just under 40 percent bers so as not to pay VAT dues. a direct consequence of tax abuses, in Romania. Considerable VAT gaps equaled to approximately $3.1 trillion were also identified in Hungary (20.8 Indeed, the EU as a single market con- and represented 98 percent of global percent), Slovakia (28.3 percent) and stitutes a unique inducement for tax GDP.3 Unequivocally, VAT fraud has par- Poland (29.2 percent). The report esti- fraudsters due to the ease with which amount consequences on the proper mated the unremitted VAT in 2014 and products and services are transferred functioning not only of the global econ- 2015 amounted to 3.1 billion euros in across its borders. The current transi- omy, but also of the EU Single Market. In Czech Republic, 2.6 billion euros in tional VAT regime encompasses the
1 European Commission, “What is VAT?,” accessed February 28, 2017, http://ec.europa.eu/taxation_customs/business/vat/what-is-vat_en 2 Katerina Gradeva, “VAT Fraud in Intra-EU Trade,” August 7, 2014, http://www.etsg.org/ETSG2014/Papers/378.pdf 3 F. Schneider, Konrad Raczkowski, and Bogdan Mróz, “Shadow economy and tax evasion in the EU,” 2015, 18 Journal of Money Laundering Control 34, 41. 4 Katerina Gradeva, “VAT Fraud in Intra-EU Trade,” August 7, 2014, http://www.etsg.org/ETSG2014/Papers/378.pdf 5 European Court of Auditors, “Tackling intra-Community VAT fraud: More action needed,” 2015, Special Report http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf 6 Ulrika Lomas, “Central, Eastern European VAT Gap At EUR28bn,” Tax-News, June 27, 2016, http://www.tax-news.com/news/Central_Eastern_European_VAT_Gap_At_EUR28bn____71557.html
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destination principle for taxation purposes, and it is applicable to trade flows different VAT rates, false claims for across the member states. In essence, all trade conducted within the EU borders is credit based on overstated VAT paid on exempt from VAT obligations, as the importing party obtains products and services inputs and imported products which VAT-free from the exporting counterparty. Subsequently, the VAT is charged when are not brought into tax.”9 goods are sold to customers, and the tax is then submitted to the national tax authorities. According to Katerina Gradeva, “the transitional regime breaks the VAT One of the most prominent chain at a very vulnerable stage; all intra-EU trade flows are transported VAT-free, cases of the VAT which leaves potential for massive VAT fraud.”7 exploitation within the EU The ins and outs of VAT fraud schemes Operation VERTIGO began on March 3, Tax authorities across the EU and the CEE region in particular exhibit gross inapti- 2015, and it is one of the most prominent tude in employing effective strategies to prevent and fight VAT-related abuses. Since cases of VAT fraud across the member the EU guarantees the free movement of goods, capital, services and people, it states. It literally traversed the EU and was investigated by authorities from the becomes exceptionally challenging to control intra-community trade, especially in Czech Republic, Germany, the Nether- relation to the following commodities: cell phones, integrated circuits (predomi- lands, and Poland, with Spain, the U.K., nantly micro-processors and chips), natural gas and electric power certificates, Belgium, Cyprus, Denmark, Ireland, telecommunications services, raw metals or semi-processed elements of metals, Luxembourg, Gibraltar, Ukraine, Euro- 8 game controls, laptops, tablets, and cereals and industrial crops. The selection of just and Europol also involved. VAT eva- these particular goods is not random, as they serve well in the perpetration of one sion and illegal VAT non-reimburse- of the most ubiquitously employed VAT fraud schemes, the VAT carousel fraud, also ments equalled more than 100 million known as missing trader intra-community VAT fraud. Through carousel fraud, per- euros in Germany, approximately 30 mil- petrators engage in the importation of goods where they do not merely underreport lion euros in the Netherlands, and 10 the adequate value of the imports, but the involved business vanishes into thin air million euros in the Czech Republic and without remitting any VAT to the national tax administration (hence, the missing Poland respectively. In short, the investi- trader) once the sales are concluded. In addition, VAT fraud could be conducted gation started when Dutch and German through various other conduits, such as, according to Gradeva, the “underreported officials noted a high volume of VAT sales (‘off the books’ sales), no firm registration to the tax authorities (‘ghost’ firms), returns from a number of businesses misclassification of products in the case when a firm sells several goods taxed at that engaged in carousel fraud practices.
7 Katerina Gradeva, “VAT Fraud in Intra-EU Trade,” August 7, 2014, http://www.etsg.org/ETSG2014/Papers/378.pdf 8 F. Schneider, Konrad Raczkowski, and Bogdan Mróz, “Shadow economy and tax evasion in the EU,” 2015, 18 Journal of Money Laundering Control 34, 41. 9 Katerina Gradeva, “VAT Fraud in Intra-EU Trade,” August 7, 2014, http://www.etsg.org/ETSG2014/Papers/378.pdf
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The joint investigation team managed to establish that certain goods and commodities sectors: “mobile phones, integrated cir- were in theory forwarded to the targeted country for alleged onward consumption, but cuit devices, gas and electricity, telecoms instead they were sold via numerous business establishments within the targeted services, game consoles, tablet PCs and country and subsequently shipped, resulting in an illegal reimbursement from tax laptops, cereals and industrial crops, and authorities. The fraudsters utilized alternative banking platforms worldwide to, as raw and semi-finished metals.”14 The stated by Europol, “facilitate crime-related money transfers and associated money directive facilitated the application of the laundering,” oscillating around several hundred million euros.10 reverse charge principle for a maximum of two years until the end of 2018.15 The way forward at the pan-European and the state level Alongside the reverse charge mecha- nism, in 2012, the EU proposed the within the CEE region implementation of a quick reaction With the benefit of hindsight, these examples demonstrate the general understanding mechanism (QRM) that essentially facili- among public officials and the law enforcement community that organized criminal tates an instantaneous response to a networks are far from ceasing their illegal activities, particularly when it comes to VAT potential carousel fraud or any exorbi- abuses. Back in 2007, BDO Stoy Hayward, an accounting firm, observed that “Sadly, tant VAT fraud. The affected member crime does often pay at the moment if you are a fraudster, which explains why large state has emergency powers that it could frauds are on the increase.” Although there was a clampdown on such activities, the apply to immediately address VAT extor- skepticism about halting “this avalanche of huge frauds against the taxpayer” tions, provided the EU Commission has remains.11 Indeed, it seems that criminals may virtually use any commodity to engage been notified 30 days in advance. With in VAT fraud schemes, thus depriving state authorities of millions of euros. Therefore, the employment of the QRM, there will one of the most pressing and simultaneously the most challenging issues for the EU be an expedited process in place to as a whole and its individual members is the matter of tightening the VAT tax systems enforce a reverse charge to particular and introducing effective countermeasures to discourage potential criminals from provisions of goods and services for a engaging in VAT-related extortions. limited time period until December 31, 2018.16,17 EU’s efforts in combating VAT fraud These legislative efforts were further sup- The EU’s policy agenda has focused on the member states’ tax regimes for a couple of ported by the establishment of Eurofisc years. The general challenge is “a relative lack of convergence” across states, and that in 2010, which was to act as a decentral- each country is following its own agenda to tackle tax policies, particularly VAT.12 The ized cooperation network for VAT. None- EU addressed the issue of tax-related crimes already in 2006 with the implementation theless, it turned out to be a very obscure of Council Directive 2006/112 EC on a common system of VAT. This document essen- and ineffective system of information tially restrained, to a certain extent, VAT extortion for scrap metal. It was subsequently exchange.18 As evidenced by the latest amended in 2010 with the Council Directive 2010/23/EU and the Council Directive international VAT fraud scandals, the EU 2013/43/EU. That latest piece of EU legislation focused on tax matters by transferring has a long way to go to deliver an effective the obligation to settle VAT from the supplier (as typically mandated under the EU law) strategy for combating VAT extortion. to the end customer for whom the given service was performed or a commodity deliv- Though, in fairness, it has to be acknowl- ered. This changed VAT into a reverse charge mechanism, as it reversed the liability for edged that the EU does recognize the the payment of VAT.13 The objective behind this measure is to significantly reduce, if not necessity to reduce the tax gap (to at least eliminate, carousel schemes altogether. According to the directive’s provisions, individ- by half by 2020), tax fraud, and tax eva- ual states will be at liberty to enforce the new directive temporarily within the following sion (Fiscalis 2020 program).19
10 Europol, “Major Europe-Wide VAT Fraud Network Busted with the Support of Europol and Eurojust,” March 3, 2015, https://www.europol.europa.eu/newsroom/news/major-europe-wide-vat-fraud-network-busted-support-of-europol-and-eurojust 11 Andrew Taylor, “Carousel fraud defies new law,” Financial Times, August 13, 2007, http://www.ft.com/cms/s/0/78e02a0c-4935-11dc-b326-0000779fd2ac.html?ft_site=falcon&desktop=true 12 Mazars, “Mazars Central Eastern European Tax Guide 2016,” http://www.taxlink.lv/f/Mazars%20CEE%20Tax%20Guide_2016_web_small.pdf 13 F. Schneider, Konrad Raczkowski, and Bogdan Mróz, “Shadow economy and tax evasion in the EU,” 2015, 18 Journal of Money Laundering Control 34, 41. 14 Michael Hennigan, “European Union continuing to struggle in fight to reduce VAT fraud,” Finfacts, September 3, 2013, http://www.finfacts.ie/irishfinancenews/article_1026481.shtml 15 F. Schneider, Konrad Raczkowski, and Bogdan Mróz, “Shadow economy and tax evasion in the EU,” 2015, 18 Journal of Money Laundering Control 34, 41. 16 European Commission, “VAT: Commission proposes new instrument for speedy response to fraud,” July 31, 2012, http://europa.eu/rapid/press-release_IP-12-868_en.htm 17 Michael Hennigan, “European Union continuing to struggle in fight to reduce VAT fraud,” Finfacts, September 3, 2013 http://www.finfacts.ie/irishfinancenews/article_1026481.shtml 18 F. Schneider, Konrad Raczkowski, and Bogdan Mróz, “Shadow economy and tax evasion in the EU,” 2015, 18 Journal of Money Laundering Control 34, 41. 19 Ibid.
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However, tax evasion is not a national or • Online cash registers and electronic information on invoices issued even European domain, but it is a trans- reporting systems—Ukraine and obtained by the VAT-registered national concern that is being address- embraced the electronic VAT taxpayer with details such as ed by a multitude of international orga- administration system, whereas the number of the invoice, VAT nizations. These include the OECD, the issuing of VAT invoices has amount, VAT base and tax point. If which adopted an action plan for com- an amount cap. To obtain VAT the information submitted by the bating tax base erosion and profit shift- reimbursement, a taxpayer is obliged vendor and the purchaser differ, to get a VAT-invoice in electronic ing in 2014 with guidance on transfer then authorities are instantaneously format, which is recorded with the pricing documentation and coun- notified (the Czech Republic)26 20 Unified Register of VAT invoices, try-by-country reporting. from the seller/supplier. Then, the • The split payment mechanism— VAT credit is received under two In short, the state officials name State efforts in combating registers with a chronological order a third party (be it a public body VAT fraud of payment. Bulgaria, Croatia, or a financial institution) to levy Hungary and the Czech Republic instantaneously output VAT. The Unequivocally, the EU and international adopted similar measures purchaser would then settle the initiatives aimed at effectively tackling • Further implementation of the net price with the supplier and the issue of VAT tax abuse are com- reverse charge mechanism for transfer the VAT to that third mendable, though little can be achieved VAT across the CEE region22 party. As a result, the latter is no without individual states employing • Enhancing transfer pricing rules23 longer under the obligation to settle their output tax (Italy)27 comprehensive and effective counter- • Online registration of the measures of their own. In spite of com- international transportation • Lotteries to ensure that all 28 paratively low income tax duties, the of products (Hungary)24 transactions are recorded (Poland) tax-levying efficacy across the CEE • Establishing a database of invoices Conclusion region has been quite inefficient. State issued by taxpayers accessible to authorities have concentrated on reduc- the tax authorities. The proposed Unequivocally, combating effectively ing the “VAT gap—the residual between measure involves the uploading of VAT fraud is a battle that each Member actual VAT revenues and hypothetical invoices into the database in real State, but more importantly the EU, as VAT revenues derived from the gross time. Certain legal and technical a whole needs to fight. The pertinent value added created in the economy.”21 impediments are unavoidable, legislative framework, as well as the such as the issuing of electronic Since there is no unified approach administrative cooperation in intra-com- versus paper form invoices. For the munity trade, reflects well on the EU’s across the member states toward han- system to work, only the electronic efforts to address tax abuses. Neverthe- dling VAT matters, each state is basically invoices should be deemed less, as the data shows, an effective im- at liberty to embrace and implement legitimate, and EU law would have plementation and execution of the virtually any anti-abuse VAT initiatives to be amended accordingly to countermeasures to tackle the VAT they deem adequate within their juris- reflect that change. The matter of exploitation still requires effort and dictional perimeter. Hence, the follow- adequately trained tax resources on commitment on the part of the govern- ing measures have recently been or will the part of the tax authorities and ments, tax authorities as well as the law be enforced in some EU states: prompt and accurate processing of the data are also challenges. The enforcement community. • Electronic cash registers—The database could become a powerful enforcement of the measure has tool in fighting VAT abuses25 been quite appealing to many EU • VAT control statements—The Natalia Stankiewicz, CAMS, states; nonetheless, the primary measure was swiftly embraced by manager, Financial Crime and focus is on tax evasion within the Slovakia and the Czech Republic. Forensic Practice, Deloitte Advisory s.r.o, retail industry rather than cross- In short, these reports would be Prague, Karlín, Czech Republic, jurisdictional VAT fraud schemes submitted every month, with the [email protected]
20 Mazars, “Mazars Central Eastern European Tax Guide 2016,” http://www.taxlink.lv/f/Mazars%20CEE%20Tax%20Guide_2016_web_small.pdf 21 Cbonds, “CEE Insights: CEE has been combating tax evasion mainly in retail sector so far,” April 11, 2016, http://cbonds.com/news/item/823577 22 Ibid. 23 Mazars, “Mazars Central Eastern European Tax Guide 2016,” http://www.taxlink.lv/f/Mazars%20CEE%20Tax%20Guide_2016_web_small.pdf 24 Ibid. 25 TMF Group, “How to Close the VAT Gap: An Analysis of the approaches by EU Member States,” July 2016, http://dutcham.hu/datadir/content/hightlight/have_337_how_to_close_the_vat_gap.pdf 26 Ibid. 27 Mazars, “Mazars Central Eastern European Tax Guide 2016,” http://www.taxlink.lv/f/Mazars%20CEE%20Tax%20Guide_2016_web_small.pdf 28 TMF Group, “How to Close the VAT Gap: An Analysis of the approaches by EU Member States,” July 2016, http://dutcham.hu/datadir/content/hightlight/have_337_how_to_close_the_vat_gap.pdf
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Dr. Ali Muhsin Ismail: CAMS Today had the opportunity to speak with Dr. Ali Muhsin Ismail, governor of the Central Bank of Iraq (CBI), A to discuss how the CBI has been enhancing the Iraqi The Iraqi Financial System financial system. Dr. Ismail has worked for more than three decades in Iraq, Kuwait and Canada in the fields of management, financial analysis and audit after receiving specialty certificates in accounting, business administration and public finance. In the last 10 years, he took over leading positions. He was inspector general of the Ministry of Oil, secretary general of the Council of Ministers for eight years and is currently assigned as governor of the Central Bank of Iraq.
ACAMS Today: What are some of the steps that the CBI adopted to enhance the Iraqi financial system? Dr. Ali Muhsin Ismail: The CBI sustains price stability and provides economic activities with a stable path for growth. In addition, it established an effective mechanism to exchange Iraqi dinar with foreign currencies, via the currency window. Since 2004, the CBI has faced many challenges and has spent a lot of resources, in order to avoid the following bad effects: • Risk challenges due to bank system weaknesses and financial shallowness • Dependency challenges—before issuing CBI law (56) in 2004, most of the bank system belonged to fiscal authority • CBI conducts its monetary policy, in order to re-establish soundness to the banking system AT: How is the CBI addressing money laundering, terrorist financing and sanctions-related issues? AMI: The CBI developed an anti-money laundering and counter-terrorist financing (AML/CTF) national strategy for the next five years and it was released in May. This strategy is cen- tered on the following four quadrants: 1. Awareness quadrant: Launch and promote a national media strategy to raise the level of awareness and knowledge of AML/CTF for citizens, government institutions and business organizations, including financial institutions and banks and other related professions. This strategy will depend on effective marketing tools, such as television ads, radio talk shows, posters and newspaper articles to promote the knowledge and understanding of AML/CTF. 2. Restructuring of AML/CTF quadrant: Rebuilding the AML/ CTF directorate with a strong emphasis on strong leadership and management, employees’ capacity building and talent recruitment program, and implementation of an information technology infrastructure including database, software, hardware and systems, effective and detailed processes and procedures. 3. International coordination and support quadrant: Continue building strong international relationships particularly with the Financial Action Task Force (FATF) and MENAFATF and
86 THE MENA REPORT
Reading someone else’s copy of
corresponding financial intelligence units to share and ? exchange intelligence, information, and to provide the technical support and assistance needed for knowledge Join ACAMS and you can receive transfer and capacity building. 4. The relationship with local government institutions and your own copy every quarter, plus: private organizations quadrant: Define and improve the relationship with related government organizations, such as judiciary, ministries (trade ministry, taxation and customs office) and intelligence law enforcement agencies and the private sector (banks, financial institutions and related businesses) to promote AML/CTF law, regulations, processes and procedures to counter crimes, terrorism and unlawful financial activities.
AT: What training components are or will be required for professionals in AML/CTF and financial crimes related duties at Iraqi financial institutions? AMI: We believe that the required training components for professionals working in Iraqi financial institutions are: • Banks Secrecy Law • Compliance programs (know your customer) • Risk assessment programs (AML/the Office of Foreign Assets Control) • Unparalleled networking with leading • Internal control and monitoring programs professionals in the fi eld. • AML/CTF compliance officer certifications • AML law integrated into risk intelligence • Signifi cant discounts on education and policies and procedures training through conferences, seminars, CBI has started implementing some of these components in workshops and webinars. 2016 and will continue to deliver others in 2017-2020 by part- nering with international professional organizations and exter- • Professional advancement via ACAMS’ nal government departments. worldwide Career Development Center.
AT: Similar to a number of countries in the MENA • Accreditation as a Certifi ed Anti-Money region, does the CBI envision requiring professionals Laundering Specialist (CAMS), the most within financial institutions to hold internationally globally-respected professional credential recognized designations such as the certified anti-money laundering specialist certification? in the industry. AMI: As any regulated industry such as medical or judiciary and law or education, CBI believes that the financial and bank- ing sector should and must employ professionals with the right qualifications, skills and experience. We have already started implementing standards and regulations for AML, compliance and risk management employees in banks and financial insti- tutions. Therefore, before they are accepted to work at CBI, they must demonstrate these prerequisites. In addition, we have For more information and to join contact us by: partnered with some reputed international institutions to con- Phone +1 (866) 459-CAMS Outside U.S.: +1 (305) 373-0020 duct accredited programs and certifications to ensure that all of our professionals have these credentials. Fax: +1 (305) 373-7788 Email: [email protected]
Interviewed by: Jose Victor Lewis, CAMS, head of Africa and the Online: ACAMS.org ACAMSToday.org Middle East, ACAMS, Miami, FL, USA, [email protected]
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 87 THE MENA REPORT
BEYOND DEDICATION: AML PROFESSIONALS IN YEMEN
ith each new batch of CAMS candidates that complete vice president, Abd-Rabbu Mansour the live CAMS training program in Arabic led by ACAMS’ Hadi, was appointed as his transitional successor and later ran unopposed in a W training partner, Value for Training and Consultancy general election to win the presidency (VTC), Khaled Alqubati, the company’s general manager looks outright. Unfortunately, Hadi’s time in forward to receiving the CAMS results. As each of the first five office was mired by political infighting, a sluggish economy and corruption. In candidates from VTC’s most recent group sat down this past 2014, as Hadi’s hold on power waned, a March at the testing center to take the CAMS exam, it marked the band of militia fighters known as the culmination of many hours of studying and preparation all while Houthis, from the northern province of Saada, aligned with former President balancing work-related duties and personal responsibilities. In Saleh and began to expand its foothold many ways, the experience for this group of CAMS candidates in the country through a combination of mirrored that of thousands of anti-money laundering/counter- political negotiations and military con- quests. By September 2014, the Houthis terrorist financing (AML/CTF) and financial crimes professionals entered Sana’a and in January 2015 who preceded them, but with one stark and brutal contrast: This placed Hadi and his ministers under group was sitting in a testing center in Sana’a, a city under siege in house arrest. The next month, Hadi escaped to Aden and backed by Saudi the middle of a country—Yemen—being torn apart by civil war. funding and weapons, declared the city Yemen’s temporary capital. When the Seemingly, light years from the daily • Gross Domestic Product in Yemen Houthis marched on Aden, Hadi fled the global news headlines about the civil dropped by 1/3 from 2014 country to Riyadh and the civil war war in Syria, the rise of the Islamic State • Basic commodity prices are 26 entered a new and devastating stage. of Iraq and Syria (ISIS) and the rebuild- percent higher than before the crisis ing of Iraq, the civil war in Yemen is Based on the Saudi premise that the • The cost of living is now 40 percent Houthi movement represented the Zaidi taking place in relative anonymity. higher than pre-crisis levels According to an article published on Shia Muslim minority and that Iran was • 1.25 million civil servants and their March 24, 2017, by the United Nations supplying the rebels with weapons and 6.9 million dependents are without Human Rights Office of the High Com- technical support, Yemen has plum- an income due to unpaid salaries missioner (OHCHR), since March 2015 meted into a proxy war between regional at least 4,773 have been killed and The roots of the civil war in Yemen stem archrivals Iran and Saudi Arabia. In another 8,272 injured by the violence. back to the Arab Spring as part of a wave March 2015, Saudi Arabia and eight Tragically, “the actual death toll is cer- of grass roots youth-led uprisings swept other mostly Sunni Arab states began an tainly considerably higher,” according to across North Africa and the Middle East, air campaign that sought to restore the the OHCHR article. Just a few months dislodging one despot after another Hadi-led government. Since then the air earlier, in January 2017, the U.N. esti- along the way. By 2011, the Arab Spring campaign along with a naval blockade mated that around 12 million people arrived in Yemen and after months of has continued unabated resulting in a street manifestations and anti-govern- were facing famine in Yemen, with 3.3 stalemate between the Saudi-led coali- ment protests, the country’s long-time million people, including 2.1 million tion and the Iranian-backed Houthi President Ali Abdullah Saleh was children, already acutely malnourished. movement. Complicating matters even deposed in November of that year in a further, the power vacuum caused by As of March 2017, UNICEF reports:1 relatively peaceful departure. Saleh’s the civil war in Yemen has served as
1 “Falling Through the Cracks: The Children of Yemen,” UNICEF, March 2017, https://www.unicef.org/ videoaudio/PDFs/Yemen_2_Years_-_children_falling_through_the_cracks_FINAL.pdf
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fertile ground for the rise of terrorist of the Compliance Managers Commit- Yemeni expatriates.” Alsada continued organizations such as al-Qaeda in the tee at the Yemen Banks Association to say, “As a result of increased risks due Arabian Peninsula and ISIS. (YBA). to the war and political crises, the super- visory authorities increased the level of According to Wadie Alsada, head of Stuck in the ongoing crossfire is Yemen’s control and regulatory work on financial civilian population who struggle to Yemen’s financial intelligence unit, “Financial institutions in Yemen con- and non-financial institutions and the maintain a semblance of normalcy tinue to play their normal role despite determined professions, which reflected living in a country under siege. It is with the challenges posed by the political their compliance with AML/CTF proce- this backdrop that Yemen’s AML/CTF crisis in the country.” Among the chal- dures. The banks also sought to tighten and financial crimes prevention profes- lenges, Alsada cites, “Many correspon- their systems to face any potential risks.” sionals from both the public as well as dent banks are reluctant to open Yet despite these actions, Alsada recog- the private sectors admirably go about accounts for Yemeni banks abroad. This nizes how many good customers are their daily duties to protect their respec- is the biggest challenge facing Yemeni complaining about the long time it is taking financial institutions to respond tive financial institutions along with a banks as it limits their ability to trade to their inquiries. This, coupled with the fragile financial system. “Yemen’s finan- internationally. Many international import activities were halted and other lengthy procedures used to fulfill cus- cial system is in a very difficult situation, commercial activities were limited to tomer due diligence and know your cus- with correspondent bank accounts only essential materials and humanitar- tomer principles, is putting great closed, financial transactions tightened ian work, which reduced the depen- pressure on the customer service depart- and liquidity tightened,” summarized dence on the services of international ments within the banks to try to balance Sadam Abuemran, CAMS, compliance correspondent banks, whose work has government regulatory requirements manager at Kuraimi Bank and a member been covered by the transactions of with the retention of valued bank
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customers. All of this, in addition to an war strategy.” Because of this strategy, Alanesi continues, “There has been a drain environment with an economic block- on the balances of Yemeni banks abroad by stopping foreign currency transfers to ade and hardship and the cessation of feed banks’ balances with correspondents. Only through international pressure salaries is what Yemenis must currently and the international human rights organizations, Yemen is allowed to carry out face. one balance transfer, which has put many complexities in place. The balances are WHAT IF From the perspective of private sector then deposited with Saudi banks that refuse to transfer the money except to Saudi AML/CTF and financial crimes preven- exporters to purchase Saudi products. Therefore, “the Yemeni financial sector lacks tion professionals, the civil war and the confidence in the Saudi-led alliance. In addition, the internationally recognized you could take the risk siege in Yemen has greatly weakened the government’s decision in September 2016 to relocate the central bank and replace financial system as the combating par- its governor has left the country without an institution capable of providing basic out of reward? ties seek to neutralize the financial economic stabilization.” Yet another element facing the financial system is the system, according to Rasheed Alanesi, liquidity crisis. Alanesi posits, “Yemen is overwhelmingly a cash economy, and in compliance manager and head of the early June 2016 the CBY [Central Bank of Yemen] began anticipating a liquidity Compliance Managers Committee at crisis for the domestic currency—meaning that it foresaw itself having insufficient Yemen Kuwait Bank (YKB). Alanesi physical banknotes to facilitate normal transactions. Due in large part to the finan- recalls how prior to the war in February cial blockade on Yemen that prevented the country’s commercial banks from inter- 2010, Yemen made a high-level political acting with foreign institutions, traders and wealthy Yemenis had grown Our comprehensive solutions can help commitment to work with the Financial increasingly reluctant to let the banks hold their money. As a result, large sums of Action Task Force (FATF) and the Middle domestic banknotes were being pulled out of the banking system and held pri- you manage compliance initiatives - from East and North Africa Financial Action vately, or circulated on the country’s black market. The CBY was not able to print Task Force (MENAFATF) to address its strategy through execution. new banknotes because the internationally recognized government was denying strategic AML/CTF deficiencies and the central bank access to the printers, which are located in Russia.”3 improve its AML/CTF regime. By June 2014, “FATF determined that Yemen had Therefore, Yemeni AML/CTF and financial crimes prevention professionals face some substantially addressed its action plan at truly unique challenges. There is a “proliferation of armed groups [and] the absence of At Navigant, we help turn a technical level, including by ade- [a] political system in the country” along with “difficulties in identifying illegitimate quately criminalizing money laundering sources of funds as a result of corruption, bribery, sales of weapons and abduction,” what if into what is. and terrorist financing; establishing sums up Abuemran. Meanwhile, Alanesi adds, “because of the siege and the reduction procedures to identify and freeze terror- of correspondent banks in the world due to the high volume [of] risks, de-risking has ist assets; improving its customer due become prevalent and the transformation of financial transactions into [the] informal diligence and suspicious transaction financial system has weakened the AML spirit. This coupled with the inability of reporting requirements; issuing guid- Yemeni government specialists to participate in the regional meetings of combating ance; developing the monitoring and supervisory capacity of the financial money laundering and the financing of terrorism, especially related to the MENAFATF sector supervisory authorities and the and ICRG Working Group, and the inability of Yemeni AML professionals to partici- financial intelligence unit; and estab- pate in international conferences and seminars as a result of the closure of Sana’a lishing a fully operational and effectively International Airport, has greatly limited and weakened further rehabilitation and functioning FIU.”2 training,” according to Alanesi. While the FATF determined that Yemen It was precisely in this most challenging of environments that the five candidates completed its action plan in 2014, all trained by VTC sat down at the testing center in Sana’a to take the CAMS examina- subsequent onsite visits to assess tion. While the exam is no doubt rigorous and demanding, compared to the envi- whether the process of implementing ronment the candidates faced outside the testing center, it was not overwhelming the required reforms and actions have nor daunting for this group. When the last of the candidates clicked the mouse to been halted by the war. submit his exam for final tabulation, the word “pass” appeared on the screen and Currently, according to Alanesi, “The the last candidate happily joined his fellow newly-minted CAMS graduates. military alliance led by Saudi Arabia uses the financial system as a means of blackmail and pressure on Yemenis and Jose Victor Lewis, CAMS, head of Africa and the Middle East, ACAMS, Miami, FL, USA, the government in Sana’a as part of the [email protected]
2 “Improving Global AML/CFT Compliance: Ongoing Process,” FATF, February 24, 2017, http://www.fatf- gafi.org/countries/a-c/afghanistan/documents/fatf-compliance-february-2017.html 3 Mansour Rageh, Amal Nasser and Farea Al-Muslimi, “Yemen Without a Functioning Central Bank: The Loss of Consulting I Outsourcing I Advisory Basic Economic Stabilization and Accelerating Famine,” Sana’a Center for Strategic Studies, September 8, 2016, http://sanaacenter.org/publications/item/55-yemen-without-a-functioning-central-bank.html navigant.com/FinancialServices
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COMMUNITY BANKING CORNER
ommunity Banking Corner is a new ACAMS Today section that will provide useful tips for Bank Secrecy Act/anti-money laundering (BSA/AML) profes- Csionals in community banks to help them in their day-to-day jobs. The Com- munity Banking Corner will focus on all aspects of BSA/AML from de-risking and its effects on smaller banks to efficiencies that can help BSA/AML professionals in com- munity banks. We plan to cover many topics in the ACAMS Today magazine and on ACAMSToday.org. So, if you are a community banker with topic ideas you would like to have discussed, please send them to [email protected]. Community bankers and working with law enforcement In this inaugural article, on behalf of community bankers everywhere, I want to send a special thank you to the entire law enforcement community for all their hard work and sacrifice to help make the world a safer place. As a community banker, it is important to make connections with the law enforce- ment community. From local to federal law enforcement it is essential to be able to reach out to those individuals. Whether it is asking “what if” questions, running sce- narios by them or having law enforcement come to the bank to give training, it is an important part of being in a BSA/AML community bank. In some cases, the communication with law enforcement can lead to better docu- mentation for bankers and better intelligence for law enforcement. It is important to remember as bankers to play within the banking rules while helping law enforcement catch the bad guys. Making those connections and keeping the communication constant helps both law enforcement and bankers work together to fight financial crimes.
Robert J. Soniat (Joe), CAMS-FCI, BSA officer, Union Bank and Trust, Glen Allen, VA, USA, [email protected]
92 ACAMS TODAY | | ACAMS.ORG | ACAMSTODAY.ORG MEET THE ACAMS STAFF
KIERAN BEER, CAMS: Telling the important story
CAMS Today spoke with Kieran Beer, CAMS, editor-in- AT: Could you tell us about the first story you reported on chief and editorial director of ACAMS moneylaundering. or your most memorable story? A com, about financial journalism, what challenges finan- cial crime prevention professionals will face in 2017 and one of KB: Reporters love to talk about how they got that story and I’m his favorite quotes. no different. As a college editor I got one of my reporters to do a story on discrimination on campus that created change. (The Beer joined Fortent in May 2006 to launch a new compliance reporter, incidentally, has gone on to be a pretty well-known jour- news and legal research, Fortent Inform. With Fortent’s subse- nalist and documentary filmmaker.) And, when I was just starting quent purchase of Alert Global Media in January 2007, Beer out, I did a series on the state of county jails in Michigan for a became editor-in-chief and editorial director of ACAMS mon- newspaper with a circulation of 25,000 that became the basis of eylaundering.com, which incorporated Inform, Money Laun- an argument for better state funding for jails that actually hap- dering Alert and moneylaundering.com. pened. There are too many financial stories to recall, but also Prior to joining what has become ACAMS, Beer was executive early on I learned a lot from a very gossipy story I did for Institu- editor of Bloomberg Wealth Manager, a trade magazine for finan- tional Investor that got picked up by “Page Six” and became a cial advisers and family offices. He also served as a staff writer New York magazine feature. The lesson was that neither the “good for Bloomberg Markets Magazine. guys” nor the “bad guys” walk away unscathed from a scandal. Beer has been a financial journalist for more than 25 years, begin- AT: Financial crime prevention professionals face a ning his career at Institutional Investor, where he worked as a myriad of challenges, what would you say is the major reporter and editor in the newsletter division and was a contrib- challenge they will face in the latter part of 2017? utor to Institutional Investor magazine. He served as editor-in- chief of The Bond Buyer, founding editor of Thomson Municipal KB: They will have to add new skills to those they already have. News/The Bond Buyer Wire and as the editor of the American We’ve reported on the increased demand for data analysis skills Banker. within AML departments and also about how AML professionals are going to need to work with IT and fraud to fight cybercrime. Beer writes a column and periodically reports on money launder- In the U.S., institutions will need to get ready for FinCEN’s CDD ing and bank compliance. He has served as a panelist and mod- requirements and in Europe an ever tougher anti-crime and erator at industry conferences and appeared on CNN, CNBC, terror regime from the EU. And, with Fintech on the rise through- WCBS and spoken on NPR and Bloomberg radio (WBBR). out the globe, money can move faster and cheaper and in ways that will present new challenges for compliance professionals to ACAMS Today: What does a typical workday entail track. for you and what do you enjoy most about your job? AT: In addition to ACAMS moneylaundering.com and now Kieran Beer: My days vary. Sometimes they entail old-fash- ACAMS Today, which ACAMS product or training would ioned editing or reporting, particularly when our managing you say is one of your favorites? editor, Colby Adams, is out or tied up. Other days may involve prepping for something I’m writing or delivering at a conference. KB: ACAMS conferences are the best attended in the field and To move beyond theory, I block out time to talk with lots of com- they’re exciting places to be to learn new things and to connect to pliance professionals. And, I have a number of management the ACAMS community. duties. Plus, as a content guy, I am invited to kibbutz on confer- ences and other areas within the company. AT: Could you share one of your favorite quotes? What I enjoy about the job is that I have to learn new things every KB: I’ve thought about what Dreiser says about being a reporter day, including complex structures for moving illicit funds, how or what E.B. White says about how amazing it is to have a friend politically exposed persons are buying up London, New York or who is also a good writer, but I’ll go with Mary Ann Evans, aka Vancouver real estate and how geopolitical issues are shaping the George Eliot’s last lines in Middlemarch: latest sanctions from OFAC. “But the effect of her being on those around her was incalculably diffusive: for the growing good of the world is partly dependent on AT: What drew you to a career in financial journalism? unhistoric acts; and that things are not so ill with you and me as KB: I started out wanting to cover politics—maybe have a column they might have been is half owing to the number who lived faith- and be a talking head. But I am dedicated to living in New York and fully a hidden life, and rest in unvisited tombs.” there were just so many opportunities in financial journalism. I came to see that financial journalism was as much about telling important stories that involved how people behave and what is at Interviewed by: Karla Monterrosa-Yancey, CAMS, editor-in-chief, stake in our society as political journalism. ACAMS, Miami, FL, USA, [email protected] 93 GRADUATES
ADVANCED CERTIFICATION GRADUATES
Aruba Japan Maria Croes, CAMS-FCI Toru Sakamuro, CAMS-Audit Barbados Keisuke Suzuki, CAMS-Audit Masanori Yoshimura, CAMS-Audit Louis Parris, CAMS-Audit New Zealand Canada Robert Milnes, CAMS-Audit Jochen Best, CAMS-FCI Dwayne King, CAMS-FCI Singapore China Rui Jie Terence Ho, CAMS-FCI Xiaojie Li, CAMS-Audit Taiwan Yanni Mou, CAMS-Audit Joyce Hsu, CAMS-FCI Wen Shi, CAMS-Audit United Arab Emirates Qian Sun, CAMS-Audit Zengkai Yue, CAMS-Audit Samcy Philip, CAMS-FCI Hong Kong United States Daisy Chan, CAMS-Audit Pamela Connell, CAMS-FCI Al Demeter, CAMS-FCI Lindsay Dastrup, CAMS-FCI Sarika Dhumal, CAMS-FCI Karianne Golemme, CAMS-FCI Ka Lai Keane Leung, CAMS-Audit Jeannell Graham, CAMS-Audit Oonagh Mckinley-Hutchinson, CAMS-FCI Jessica Hughes, CAMS-FCI Kenneth Pemberton, CAMS-FCI Jacob Johnston, CAMS-Audit Judith Klock, CAMS-FCI India Danielle Kuroski, CAMS-Audit Farokh Adarian, CAMS-Audit Sonia Leon, CAMS-Audit Muthukrishnan Balakumar, CAMS-FCI Norma Lopez, CAMS-Audit Poornima Gupta, CAMS-FCI Tana Rugel, CAMS-FCI Laaleth Kumar Mohan, CAMS-FCI Kenneth Simmons, CAMS-FCI Rachel Weygand, CAMS-FCI
94 Internal Audit, Risk, Business & Technology Consulting
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CAMS Graduates: FEBRUARY–APRIL
Albania Sarah Haider Ali Grace Rogers Zuwei Ding Eva Milz-Theiss Syed Ameer Ul Hassan Nancy Stevens David Doumani Jerrian Ming Brikena Alliu Yusuf Hubail Junior C. Watts Farzana Esmail Geeta Mohan Antigua and Barbuda Abhilash Keloth David Ferroni Catherine Moloney Botswana Bushra Abdulwahed Mahdi Kathy Galanis Rakesh Nachnani Candace Wilson Husain Naser Catherine K. Moalusi Zeeshan Ghazali Himani Nagrath Argentina Theresa Onyadile Ekaterina G. Tsimmerman Supriya Nair Bangladesh Ernesto Graveran-Alvarez Bheshini Navaratnam Ezequiel Landesman Brazil Alison Ng Pulok Debnath Evan W. Green Enrique Parisi Bruce Norgren Mahamudul Hasan Michelle L. F. de S. Perfeito Fahd Gulzar Carolina Pontoriero Alex Obridko Md. Mahmud Hasan Renato Machado Ishita Guptan Federico Trucco Aneesh Paranjape Mohammad Zabed Hossen Artur Morgado Geoff Hermanson María Laura Vercellini Iryna Pisetska Md. Amirul Islam Silvia Rodrigues Jeffry Chih Po Huang Lucía Viola Ana Paula Tomé Chagri Poyraz Israt Jahan Laeeq Ahmad Hussain Frédéric Prat Aruba Hedayet Ullah Khan British Virgin Islands Jenny Jones Nikhil Puri Tania Rafiz Liza Stefania Kalogeridis Srinithi Raghavan Rachied Habibe Judy Anne Juano K. M. Lutfor Rahman Tina Kaminski Stacey Reddick Mayra Janga-Kock Dirk Walters Muhammad Ashifur Rahman Daniel R. Kavanagh Ivy Richmond Australia ABM Ibrahim Sarwar Canada Kimberly Kelly Jennifer Riordan Farhana Sumiyea Agnes Kvedraite Tasha Ruscio Conor Hayes Gaspare Abate Andrew Lanaway Sumita Sanyal Jin Huang Jenette Albanese Barbados Roderick (Rory) Langran John Saul Bi-Huei Jin Somasundaram Ambalavanar Julie Johannsen Martyn Del Castilho Shelley Lavallee Chris Scheitterlein Reginald Appings Chaitali Senmajumder Taehee Kim Lesah Denny-Brathwaite Stone Lee Jessica Bach Jayashree Seshadri Su Peng (Zoe) Lim Kelvine Jordan-Rowe Daniel Lickers-Earle Koushikan Bakirathan Gurpreet Sidhu Zhanxiang Pan Derek Lloyd Ren Liu Toni Balaam Krystell Simancas Ravin Seneviratne Christine Sampson Josephine Lofsky Eve Belhumeur Jean-Francois Sonson Katharina Shamai Tamesha Watkins Tuuwala Lok Borys Buyniak Ashley Stephen Amanda Lutchmansingh Ross Vergopoulos Kristin Campbell Alan Tou Belgium Roland Ly I Heng Wu Michael Campbell Shahidul Waheed Mariana Lupascu Paula Madulid Thomas Caverly Ruwani Wijesooriya Bahamas Michele Najar Minakshi Maheshwari Brandi Chan Tiantian Zou Londena Bethel Eleonora Rossi Kathini Cho Riddhi Mautbar Juliette Zwarych April Turner Marijn van Paassen Alessand Chou Don McCrea Audrey Villance Cary Chow Robert McDonald Cayman Islands Bahrain Hope McKnight Bermuda Caterina Cuglietta Javiera P. Aguayo Courbis Hamad Hussain Al Qattan Elisabeth Danon Jeanette McPhee Tracia Barrett-Ong Ebrahim Arafat Heather Kitson Kevin de Bruyckere Nora Mendoza España Doreen Brown Afaf Ghazwan Aisha Mellish Komal Dhillon David Meunier Tom Parker
96 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG GRADUATES
Channel Islands Xiaofang Ruan Katerina Stephanou Simone Heinemann Ming Kei Hau Li Shen Patrizia Horn Pak Ling Ho Lliam O’Toole Lirong Sun Dominican Republic Andreas Kroeber Catharina Hong Hollie Rowe-Roberts Qiao Qing Sun María Teresa Sesto Feliz Benjamin Kroening Wing Tung Hong China Jun Tan Michael Leifeld Shifan Hu Jialiang Tang Ecuador Kerstin Otto Maggie Mei Kwan Hung Hang Cheong Ao Ieong Liang Tian Edwin Rene Aguilar Garnica Waldemar Rollheiser Siu Hong Kan Yuan Chai Sok I Tou Marceli Rubak Hoi Yi Olivia Kwan Weng Fai Chang Weng Kei Un Egypt Matthias Stute Ngai Man Kwan Chanwei Chen Jueyan Wang Abdallah M. M. Abdel Kareem Victoria Tessier Shuk Ching Kwan Cynthia Yan Chen Lu (Celeste) Wang Aline Aslanian Dimitri Trymbach Siu Hei Kwan Guorong Chen Miao Wang Dominik Unterein Benny Kwok Liping Chen Amro Mohamed Mounir Taha Midi Wang Linh Vo Ruijian Chen Sherif Sabry Youssef Hosny Choi Har Kwok Ming Wang Birgit Zahm Shuangshuang Chen Wing Yee Kwok Peng Wang El Salvador Yuwen Chen Chun Kui Kwong Qian Wang Ghana Weng Kei Chiu Inmer Antonio Avalos Baños Emily Wai Yee Kwong Shuyu Wang Naphtali Fordjour Szu Chia Chou Oswaldo A. B. Hernández Fontane Lai Wen Wang Xiaoyun Chu German W. Buendía Bonilla Myra Lai Yan Wang Grenada Rong Dai Lourdes M. C. Santamaría Edward Lam Wei Wei Sarah Dan Shao Jose Fernando Castillo Elias Aesia Worme Hoi Ting (Louise) Lam Xingtong Wu Xiaofei Dong Liliana L. Del Cid Iglesias Yau Chung Lam Zhixun Xie Guatemala Jing Du Francisco Diaz Barraza Yvonne Ying Tung Lam Xiaowen Xu Juanjuan Duan Ricardo Funes Salazar Vilma I. Marroquin Castillo Cheuk Yu Lau Huifen Yang Phoebe Ewen Gladis del C. H. de Beltran Connie Wing Siu Lau Qi Yang Guyana Xue Fei Juan Jose Hidalgo Amaya Sik Wang Lau Qianhua Yang Sijia Fu Hugo E. Interiano Melgar Karen Chase Yat Fei Lau Sen Yang Iliana E. Molina de Villeda Chun Ming Lee Wenping Fu Hong Kong Le Gao Yi Yang Luis A. Moreno Hernández Eric Lee Biqing Guo Yuchu Yang Mario A. Orellana Martinez Charity Au Flora Nga Lai Lee Rongyou Guo Liang Ye José Selvin Orellana Sanchez Tak Yin Christine Au Peter Tak Kwong Lee Yu Guo Wu Yin Carmen E. Pineda de Sosa Kit Mei Au Yeung Roc Lee Yun Guo Xiaohua Yin Marco D. Platero Paniagua Chun Man Au-Yeung Yik Yan Lee Ran He Qiyuan Ying Dina Patricia Recinos Lemus Nicole Bossieux Chun Fung Leung Rong He Yao Ying Henry Everardo Rivera Padilla Chun Yip Chan Chun Yuen Leung Yaosheng He Yong Yu Jorge A. Rodriguez Aguilar Hoi Cheung (Samuel) Chan Hoi Ni Leung Yixiao He Yuan Elaine Yuan Milton E. Rodríguez Chicas Kwok Wing Chan Wai Ling Leung Litao Hou Weilong Zeng Carmen E. Rojas de Canales Mei Ling Chan Yan Chi Leung Rongxin Hu Biao Zhang Carlos E. Torres Vasquez Parker Chan Chee Kwan Priscilla Li Lu Zhang Po Yu Chan Chi Shing Li Shan Hu France Qingmin Huan Meimei Zhang Spencer Chan Jing Ying Crystal Li Caiqin Huang Xiangyang Zhang Robert-Michaël Ablin Sze Wan Chan Kwok Kiu Li Eric Ze Long Huang Yan Jie Zhang Pedro Almeida Ting Yee Chan Ling Ling (Carol) Li Qi Huang Zhiyan Zhang Wen Sheng Chiang Yau Suen Chan Wai Man Li Yanling Huang Kunping Zhao Julia Colonna d’Istria Cheryl Cheng Wing Yan Li Peiyi Huo Shuaishuai Zhao Sophie Delgery Ka Ki (Ally) Cheng Chih Yi Liu JiaYan Jian Yalan Zhao Jean Francois Garrick Pui Na Cheng Yanzhao Liu Hio Man Leong Shuorong Zheng Julien Huguet Ka Kwan Cheung Man Lung Lo Guangyu Li Xiaoxiong Zheng Johanna Lascar Ka Lok Cheung See Lin Lok Jian Li Jiqiong Zhou Yasmine Oualhadj Lok Heng Cheung On Ki Angela Lun Lan Si Li Wei Zhou Pierre-Etienne Petit Pui Suen Cheung Man Wai Ma Shuang Li Xuecen Zhou Haidi Rizo Shing Pan Cheung Pui Yan Ma Yuanyuan Li Xugang Zhou Rafael Soares Co Rodrigues Wing Hung Cheung Wallace Chak Keung Mak Yupeng Li Yun Zhou Marine Truong Wing Lam (Alyssa) Cheung Dara Man Zhaocong Li Zhuoyun Zhou Morgane Tuleau Sen Ching Li Hung Mok Philip Chiu Bing Gen Morgan Liang Costa Rica Patrick Velay Aleksandar Nedevski LI Liang William Zernik Wilson Chiu Yuen Ki Ng Mei Na Liang Mario Acuña Muñoz Germaine Choi Yuen Ying Ng Gabon Siu Ying Chong Jia Wei Lin Croatia Lo Fan Ngai Sen Lin Ibath Analor Bikogo Shui Tung Chow Ka Po Nicole Pang Yi Lin Jasmina Cakor Kim Ki Choy Steve Pang Li Kun Liu Iva Paden Germany Angie Shuk Ling Chu Chun Man Poon Rebecca Chu Lili Liu Curaçao Aykut Bal Yuet Ki Poon Xiao Liu Martina Busch Carol Chun Wenxin Qian Yangshan Liu Denirah Balentina Sanjukta De King Chung Chung Krishna Rohatgi Lai Yin Bell Chung Wenhao Luo Cyprus Daniel Denz Chun Bon Andrew Shiu Zhi Feng Luo Larissa Dethmers Xin Duan Man Fong Sit Yao Bin Pan Yiannos Ashiotis Jakob Diederich Sisi Fan Kong Wong So Xiayun Peng Niki Charilaou Markus Domeracki Richard Farrar Wai Sum So Miao Qiao Lina Hadjifrangiskou Manuela Drachenberg Ka Wai Teresa Fok Ching Yi Tai Shuai Qiao Loukia Matsia Andrea Gaviria Chi Fong Ai Wei Tam Like Quan Sophia Nikolatos Salvatore Geraci Ki Wing Mabel Fung Herrick Hei Wai Tam Yan Ren Mairita Saulite Holger Hackländer Sijin Guo Lap Hang Chris Tam
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 97 GRADUATES
Adrian Tang Majo Eyyappan Kanjirathingal Yuji Okumura Elie Moussa Jingqi Huang Cheuk Yiu Tang Pardhasaradhi Kasina Kenji Okuya Jad Yared Ying Huang Yick Man Tang Raj Kaushal Teruyasu Omote Nadia Yazbeck Yuhao Huang Eric Tong Sunil C. Kavishwar Chihiro Otsuka Nizar Zahreddine Man I Ian Ho Wai Tong Radhika Krishnan Masayuki Sato Rihaf Zeidan Hio Na Ieong Timothy Tsang Tarun Kumar Kyoko Shibuya Sao Chon Io Wai Ming Tsang Manikandan Maruthu Hiromi Suzuki Lithuania Ka Man Ip Ka Man Tse Reema Marwadi Rie Takeuchi Indre Dudenaite Chi Vai Iu Kai Chi Tsin Deepesh Mittal Hideaki Tanaka Enrika Masalskiené In Peng Iu Hoi Lun Tso Saranath N M Isao Terada Greta Mockaityte Meng Hou Iun Cristina Vara Srikanth Nagolu Sanae Tokita Yang Jiao Koon Kui Wan Nikhil Nanaware Hiroshi Yamazaki Luxembourg Hao In Kam Xin Wang Shikha Negi Sonia Garcia Ruilin Kong Xun Wang Vilas Palanat Jordan Louis Irlande Siomui Kong Anthony Wong Khalid Patharia Maisara Abdullah Lidia Logutova Sio Un Kou Betsy Wong Rajyalakshmi Patti Revan Abu Hamad Nicolas Marinier Cheng Man Ku Chi Wai Wong Jayesh Potdar Nemer Abukaf Patrizia Marozzi Mei Chai Ku Derek Ka Shing Wong Aswini Prabha Omar Al Jamal Ivana Nesic Iam Kuai Chan Hoi Ting Wong Saman P. Prabha Wameedh Alaa Rasool Dominik Rohloff Hio Teng Kuan Jat Yan Jens Wong Devika Rajadhyaksha Mustafa Al-Afashyeh Yin Wang Pek Lin Kuan Ka Lai Wong Rajani Ramakrishnan Mohammad Al-Fuqaha Alicia You Wa Lam Kuan Ka Yan Wong Leena Ranade Khaled Alnimer Qi Ling Kuang Po-hei Wong Shilpa Randive Jude Al-Share Macau Pek Ha Kuok Sze Wai Angel Wong Ranjith Ravikumar Hiba Ali Hashim Altantawi Mio Ian Ao Ieong Si Wan Kuok Tsz Ho Wong Jugal Ruparel Hamza Altork Iu Kong Au Ieong Un Lou Kuok Wai Keung Wong Arun Satish Marwan Amer Salman Fan Bai Mou Cheng Lai Wan Yi Wong Feroz Sayed Rafeeq H. Atiyah Al Nashi Pingping Cai Sok Yi Lai Wing Sze Wong Santhosh Sebastian Shadi Awwaad Chan Wai Chan Pang Lai San Yee Man Wong Urvashi Shandil Mohannad Ghaidan Cheng I Chan Chon Ieng Lam Yi Wai Wong Akineth Sharma Muna Gharaibeh Chi Man Chan Fong Lin Lam Yu Ho Wong Vaibhav Sharma Seif Hashem Chi Meng Chan Ka Cheng Lam Yuki Wong Virendra Sharma Mohammad Hawashin Fong Sio Chan Ka Ian Lam Ka Yan Karen Wu Monika Shrimali Haneen Thaer Ibadi Ka Wai Chan Sin Man Lam Yuen Shan Wu Anubha Sinha Mohammed Tareq Jihad Kin Kuan Chan Wai Ieng Lam Bingke Xu Vaishnavi Sripriya Dana Khater Kuan Hoi Chan Wai Kam Lam Kai Yeow Yap Pooja Srivastav Raja’i Musharbash Man Chan Weng Hong Lam Philip William Frank Yellen Vipin Thadathil Veettil Soltan Nawras Sin I Chan Chak Kuong Lao Chau Ming Ricky Yeung Nandhini Thiruvenkatachari Mazin Abdulrahman Obaid Sio Nga Chan Ienglam Lao Chi Fung Yeung Sunil Thiyyullathil Alaa Obaidat U I Chan Wai Hong Lao Ka Chai Yeung Praveen V S Amjad Shanawani Weng Tat Chan Yue Ming Lau Ngai Kwan Yeung Manoj Warrier Samer B. Yousef Muasher Sin I Chang Kuai Mui Lee Wai Kin Yeung Kam Man Chao Chit In Lei Indonesia Carol Nga Lai Yip Kenya Son Leng Chao Ka Ian Lei Yui Keung Yiu Monica (Mona) Adrijani Janet Kezengwa Ka Ian Cheang Ka Man Lei Li Ming Young Simion Mwita Maroa Nga Kun Cheang Leng Lei Iraq Xiaohui Yu Paul Ngetich Chen Chen Nga Man Lei Yam Ying Yu Anas Mohammed Sadeq Hanjiao Cheng Sio Wa Lei Maggie Yuen Kuwait Hio Tan Cheng Wai San Lei Italy Joanna Dongmei Zhang Abdulkareem Al Shaiji Wenhao Cheng Cheng Leong Giuseppe Scampone Islam Elsaid Balitta Im Seong Cheong Chi Hou Leong Hungary Atique Ur Rehman Ramzan Pek Kei Cheong Chi Ieng Leong Jamaica Tetyana Kausan Hong Hin Chiang Hon Fu Leong Michelle Meek-Davis Latvia Cheong Chin Kam Iok Kit Leong India Ramonia Swaby Linards Anisimovs Chi Wa Choi Iok Teng Leong Sachin Ahuja Andrejs Bosko Sa Lei Choi Japan Ka Ian Leong Abhishek Bali Julija Cukalovska Mei Peng Chong Kam Mui Leong Seema Banerjee Toshihiro Amemiya Aleksandrs Makaricevs Cheng Kong Chou Lei A Leong Supriya Chandnani Yukiyo Ando Baiba Preise Ka Wai Chou Man Hang Leong Rajendra Deodhar Kei Fukuda Viktorija Ratacova Man Chu On Leng Leong Shanthan Gangu Reina Fukushima Andris Rozentals Tak Un Chu Sut Wan Leong Sagar Ghagre Fumiyo Hansell Svetlana Sidorenko Man Chek Fok Un Fei Leong Krishnan Gopalan Risako Hosomi Gatis Trenko Un Kuan Fok Zhifeng Liu Alok Grover Kimihiko Imamura Sin Wun Fong Chi Leong Lo Subhadra Gundala Kazuhiro Kawahara Lebanon Kuan Chan Hao In Peng Lo Rajeev Gupta Takamitsu Kobayashi Lina Ali-Hassan Chi Keong Ho Ka Weng Lo Kiran Hebbar Natsuki Kojima Hanane Samir Allam Chi Wa Ho Lok Ian Loi Jyoti Hegde Yu Komuro Najwa AL-Makari Iok Lin Ho Si Weng Loi Mohammed Ismail Ricky May Nadine Ghosn Eid Sin I Ho Ka Weng Lok Bharati Jadhav Rika Nakaishi Sarah Badih Hariz Siu Mui Ho Vai Man Lok Jensy John Yukihiro Nakamura Charbel Hobeika Ka Hei Hoi Kin Ian Lou Swetha Kadam Kiyotaka Niizuma Hachem Husseini Lok I Hoi Sut Mui Lou Santosh Kale Yuzuru Nishizawa Hassan Ladki Jinchun Hu Jiamin Lu
98 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG GRADUATES
Im Fan Ma Ragunathan Jashvini Kingsley Okoeguale Saint Vincent and Gurpreet Rikhraj Ka Ian Ma Gracelia Jayaseelan Muhammad Oladipo the Grenadines Yu Hui Jesslyn Seah Oi Ming Ma Rulkifli Karpunan Chioma Ossi Kah Lim (Louis) Seah Pedro Harry Ka Man Man Ik Lee Kho Funke Otunla Vivek Seth Lam Man Si Yuen Yin (Joannie) Koh Oluwapelumi Simpson Samoa Puay Khim Sia Kuok Chun Mui Ho Sang Lee Mun Kian Siew Gafatasi Patu Iong Wai Ng Suresh Kumar Letchumanan Norway Doris Soh Ka Meng Ng Tam Huey Li Olivier Audemard d’Alancon Saudi Arabia Chris Stark Kuan U Ng Ming Lee Lim Cai Quan Tai Adis Crnalic Sulaiman Al-Dhuwayhi Lai Hong Ng Khairul Anwar Mohd Hanifah Rubal Talwar Britt Irene Klubben Ibrahim Aljammaz Lai Peng Ng Norzurina Mohd Yusof Esther Li Lin Tan Mohammed Almishari San San Ng Mardiana Morshidi Oman Hui Kiow Tan Talal Almuodraa Sin Ieng Ng Han Hui Adeline Ng Kian Boon Tan Sabu Vasu Saud Almutairi Wai Man Ngan Soleha Omar Mark Khai Shean Tan Saad AlQarni Pui Fan O Tomomi Ota Pakistan Rachel Jui Ying Tan Mohammed A. S. Al-Subait Veng I Pang Isan Pang Rui Zhi Ray Tan Amim-UL-Ahsan Afir Fahad Gormalah Al-Zahrani Ao Ieong Pui San Raihanna Azrina Roslan Shujuan Evelyn Tan Irfan Akram Sanjeev Mishra Chi Leong San Onkar S. Ludher Sarjit Singh Xue Min Tan Saad Zikar Jangda Chi Wang Se Muhamad Azhar Suha Zhong Lun Tan Ali Ahmed Kazi Singapore Ka Ion Seak Kok Wu Tan Choon Yong Teo Saim Mehmood Alejandra Artiguez Ruxi Sha Parameswaran Velusamy Dominic Wei Luo Teo Muhammad Umer Mughal Wayne Au Yong Ka Io Sit Vinitha Vijayan Grace Hui Boon Teo Andrei Bronshtein Sok Peng Sou Wan M. B. Idlan Wan Bakar Muhammad Zain Siddiqui Lily Teo Yan Qin Chan Nan Sun Wong Siow Yee Rachel Teo Peru Grace Jok Wei Cheah Cheok Ian Tai Belinda Shang Yeh Yeoh Cenwei Toh Yueh Tung Chen Kamfan Tai Nadaraju Yoganathan Carlos A. Ludeña Jáuregui Michelle Trinidad Shawn Chin Chi Fai Tam Philippines T. Vijayakumar In Leng Tam Malta Graeme Docherty Victoria Wade Sok Ian Tam Christos Efthymiopoulos Veronica Mae Arce Morgan Fenelon Norhasikin Wahid Wai I Tam Jeric Angelo Badion Ketan Gathani Brian Wong Weng Ian Tam Mauritius Rensie Caraig Sancia Gonsalves Hai Mei Wu Ka Kit Tang Danielle Ramnuth Haidee Daño Vikram Gopalakrishnan Jialong Yap Chi Lek Patricio U Nancy Dimalaluan Sowmya Gopi Lorraine Yeak Choi Fong U Mexico Maria Azalea Echavez David Han Shiqi Zhu Choi Lon U Jonathan R. L. M. de Oca Joanne Michelle Kwan I Vivek Harsh Chekian Un Carlos A. Mendoza Romero Dante Angelo II Ornedo Prithi Iyer Sint Maarten Wai Ian Un Alejandro Nava Leon Sharon Pamplona P. Kalyanasundaram Thomas Riemersma Yu Ee Francis Khng Lai I Vong Gino Gabriel Rivera Moldova Yew Chin Khoo Sok I Vong Rayanne Tindoc-Reynoso Slovakia Oleg Kravchuk Ranjing Wang Oleg Agafonov Jose Mari Tolentino Tamas Svab Xiaotian Wang Sulakshana Krishnamurthy Mongolia Jeffrey Wilford Yu Wang Choi Wai Lai Slovenia Hio Keong Wong Enkhmaa Enkhbat Poland Hamish Langford Tomaz Ogorevc Louie Arch Lantaca Ka Man Wong Wojciech Cegielski Montserrat Hwee Chen Lee South Africa Kai Fong Wong Jakub Florek Rhannon Daley-Williams Lai Har Christina Lee Kuan Lam Wong Andrzej Gierasimiuk Barend Badenhorst Mei Kei Wong Monica Lesmana Alida Botha Morocco Slawomir Jozwiak Chun Seng Kennedy Lim Percy Wong Justyna Kudas Natalie Bowman Sok Cheng Wong Ali Mabrouk Huili Lim Krzysztof Montwill Nazeefa Cassim Wai Peng Wong Jiaqi Lim Colette de Villiers Netherlands Skhumbuzo Mwanza Ka Meng Wu Joselin Lim Elanie de Vries Wei Chien Ooi Mei Kuan Wu Fiyinfoluwa Adeleke Merri Lim Ryan Jude Desai Magdalena Paczuska Ning Zhang Perry Berkum Wei Ri Lim Shaun Els Dominika Pawlowska Zhaohui Zhang Judith Den Hartogh Yun Shiuan Lim Nicki Koller Jan Westphal Wenyan Zhao Kemale Emirbekova Ting Shermaine Lin Christiaan Lubbe Maciej Wodzynski Xiwei Zhong Kevin Kerkhoff Li Chen Loh Rhadika Maharaj Ya Mei Zhou Hans Pijl Małgorzata Wójcik Sheena Lye Mamokhatla Mayinga Thaenarasan M. Selva Rajen Fahui Zhuang Tom van der Woerd Puerto Rico Monique Milligan Marie van W. Meijer de Winter Jose R. Martinez Villalain Alistair Naidoo Malaysia Beini Yang María de Lourdes Jiménez Jessie Melinda Bradley Rae Luis González Hernández Himanshu Naik Fazleen Azita Abd Rahim New Zealand Amit Ramiez Dayal Nur Syafawaty Abd Rahman Diana Ruiz Arvelo Vishal Oberoi Vicki Robinson Phillip O’Leary Angela Hui Yan Oh Nurizwani Ahmad Zamil Qatar Michelle Sewchuran Pushparani Balachandaran Milroy Fernando Abimbolu Olufunwa Dan Wu Heng Chee Chua Sun Kim Andre Henri Nussbaumer Kenny Ong Lwazi Zaca Gurpreet Kaur Gill Vik Liu Chiranjib Parial Firdaus Osman Gladys Goh Ann Marie Olvido Pei Ting Pang South Korea Romania Hasaan Hairudin Simon Webby Pinaz Patankar Sung Ok Min Anda Constantin Roopa Patil Syaidah Hashim Nigeria Yoon Sang Seong Yong-Joon Heo Khar Yue Phoon Lai Yuen Hoh Ayotola Jagun Rwanda Tze Yong Png Spain Chong Wai Hong Regina Ndaguba Arsene Muhire Ruchira Raj Jesús Campos Poveda
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 99 GRADUATES
Helena Cebrián Benito Ho Chia Ying Yvonne Lien Chia Fang Weng Sajith Peiris Maria C. de Antonio Carballo Ching Yi Chiang Ching-Sheng Lin Wen Jin Wroun Annum Rai Cristina Rodríguez Visus Pei Chun Chiang Hsin I Lin Ai Hui Wu Syed Saeed Cheng-Hui Chou Hsin Yi Lin Cheng Ping Wu Ali Seghir Sri Lanka Hung-Chang Chou Hsiu Chou Lin Chih-Hsin Wu Suchit Piyush Shah Nathasha Gajadeera Lo Wei Chou Huan Wen Lin Guan Shiun Wu Ramesh Shaw Gayan Perera Yu Chuan Chu Hui Min Lin Vivienne Wu Peng Shi Wan-Ju Chuang I Chun Lin Wei-Cheng Wu Srividya Sreedhar Sweden Yi Chia Chuang I-Ling Lin Pan Xuan-Yu Sanjeev Srivastava Madeleine Hampson Yang Hsuan Fan Jia-Rou Lin Mingfen Yang Hozefa Suratwala Håkan Hartzell Shih-Wen Feng Jiun Jaan Lin Sheng Hsun Yang Rudolf Tison Christian Wandt Su Wan Feng Jo Wen Lin Yu Shiuan Yang Aqeela Umer Yun Ting Gao Kai Wen Lin Teng Han Yau Sara Wahba Switzerland Hui Ru Gau Kimberly Yu Tzu Lin Chi Min Yeh Jenny J. Choi Hsin Pei Ho Liang Yi Lin Hui Wen Yeh United Kingdom Henry Konsén Tzu Ying Ho Pei-jung Julia Lin Chun-Yi Yen Ali Abiri Oriana Steiner Yan Jun Hong Tony Yu Hung Lin Shau-Ling Yen Idowu Adelaja Claudio Zatta Jen Wei Hsiao Tzu Chao Lin Pei Thu Yo Ibrahim Adetona Cheng Han Hsieh Xin Yan Lin Chang Ruey Yu Hakeem Agaba Taiwan Emy Hsieh Yi Hsiu Lin Li Yueh Yin Kaleem Bajwa Ullah Jen Chun Chai Kun Yu Hsieh Yih-Ming Lin Mike Banka Tsung Shien Chan Lie Yu Hsieh Ying Chih Lin Thailand Brooke Bear Chihchieh Chang Peng Hsiang Hsieh Yu Cheng Lin Shain Ren Chen Stephen Blackburn Chin Ming Chang Wan Chun Hsieh Yu Chuan Lin Li Chun Chien Lucy Callaghan Li Chun Chang Chang Yi Hsu Yu Ju Lin Yi Tsou Liu Josie Carnie Mei Hui Chang Chia Chi Hsu Yuan Chang Lin Vipada Luppayaporn Anastasija Cerniavskaja Sheng-Fa Chang Guang Yu Hsu Dung-Yan Kenny Liou Chayawat Sattabusya Josef Charles Tien Cheng Chang Hui-Tien Hsu Chia Yu Liu Peerapong Sophaariyanant Neeraj Chopra Ya Fen Chang Kai Ting Hsu Huai Te Liu Chi Wei Tsai Helen Crockett Yen Mei Chang Kou-Chih Hsu Louis Che Wei Liu Bruce Duff Trinidad and Tobago Yu Ching Chang Nai-Yi Vicky Hsu Shu Min Liu Emma Dwyer Yu Ling Chang Ruei-Yu Hsu Wei Chen Liu Janelle Bernard Amira Egala Wei Chao Tsuhui Hsu Yi-Chang Liu Sharlene Dabideen Olivia Goldberg Wen-Hsiu Chao Wei-Min Hsu Yun Wen Liu Sabrina Lee-John Lindsey Gordon Yung-Hsi Chao Su Jane Hu Hsiu Huan Lo Karla Simmons Edmund Hughes Chia Hao Chen Cheng Hang Huang Ying-Tsung Lo Raja Hussain Turkey Ching I Chen Chi Kuei Huang Yu Jen Lung Roeland Huyskens Hsiao Chieh Chen Chi Min Huang Hsin Yi Pai Melike Esin Etiler Colin Johnson Hsin Chu Chen Ching Chuan Huang Ti Pang Nazli Ipek Tuzun Tim Jones Hsin Yi Chen Ching I Huang Ling Ya Su Sunil Kalagara Turks and Hsin-Wen Chen Ching-tse Huang Tracy Siou Ya Su Muhammad Kashif Khan Caicos Islands Hui Ju Chen David Huang Vanessa Su Kirshan Lal Hung Jen Chen Kuo-Hua Huang Huang Szuyao Yesicha Robinson Peng Liu Hung-Hui Chen Mei-Tzu Huang Ke Wei Tai Sanhita Majumder Uganda I Hsin Chen Shr Hang Huang Yung Sin Teng Nisha Malik I-Chen Chen Tien Fu Huang Hui Min Tsai Ssennyondo Godwin Dolores Martinez Aguirre Jen Huei Chen Pei Ling Hung Juyu Tsai David Mawdsley Ukraine Jhong Wei Chen Ya Ting Jhang Kang Shui Tsai Alison McCaffrery Josephine Chao Jung Chen Pei Sian Jhu Po-keng Tsai Kostyantyn Mukhlygin Neil McCappin Kuan Jen Chen Ning Yang Kao Shih Hao Tsai Patrick McLean United Arab Emirates Kuo Pao Chen Chen Wei Ku Shu Han Tsai Subha Mohan Ling Chen Chia Hsuan Ku Shueh-Yun Tsai Ghulam Abbas Kaspars Muiznieks Mei Ya Chen Chu Chih Kuo Wu Hsin Tsai Hany M. Shawky Ahmed Candice Mullings-Adeniji Min Chuan Chen Chung Chien Lai Yen Ting Tsai Sohail Akbar Anna Nomerkova Po Hsi Chen Tzu Jung Lai Chen Jung Tsao Charanjeet Singh Bhatia Cian O Larkin Shu Wen Chen Tzu Hsuan Lan Yu An Tsao Po-hsun Chang Oyinlola Ojo Tai Ming Chen Hui Ling Lee Lin-Ping Tu An Shun Cheng Adewole Olufon Tian Fu Chen Jeremy Yen-Ming Lee Cheng Hua Tuan Jaffrie Cherian Alex Osagie Ting Fang Chen Shiuan Rung Lee Ho Yun Chris Wan Lesley Ann D’Souza Idehen Osagie Weiting Chen Su Hui Lee Tsen Wan Wan Michelle Fernandez Deepak Patel Wen Hsin Chen Wei Min Lee Hui Chih Wang Tamer Ghresi Andrew Pennock Wen Man Chen Yuan Ting Lee Kuang-Tse Wang Manish Gupta Melissa Percy Yen Shan Chen Fu Kai Lei Kwo Chin Wang Swati Jhanb Roy Carlo Portelli Yi Chen Chen Ching Ming Leu Michelle Mei-Wen Wang Muhammad Zahoor Khan Rebecca Ramsdale Yi Chun Chen Hsiao Chuan Li Ping-Han Shirley Wang Nadim Kourda Joshua Rawcliffe Yi-Chieh Chen Tzu Yu Li Wan Yi Wang Nikita Lihala Rose Reynolds Ying Fang Chen Chia Chi Liang Yichen Wang Aijaz Hussain Mohammed Sam Riches Yu Ling Chen Chien Chi Liao Yu Hsuan Wang Khalid Nadim Astrid Rouleau Chien Ju Cheng Hsin Yi Liao Yu Ting Wang Pradeep Nair Mina Sawieres Yu Jung Cheng Lung Chi Liao Ling Chun Wen Imran Noor Hiu Yu (Catherine) Shen Yu Yu Cheng Pei Lin Liao Min-Chiao Wen Sabu Pallithazhath Nitin Singhal Yun-Hsuan Cheng Tzu-Yao Liao Chia Chien Weng Moiz Patel Hasham Tahir
100 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG GRADUATES
Garry Ting Tatsiana Bookbinder Christopher Crovatto Sibi George Sandy Jeyaraj Induvant Tomar Arlin Borjas-Moreno Thelma Cudjoe Christopher Gibson Vishal Jhagadiawala Amnon Trebish Kristy Bower Daniel Cunningham Dana Gilbert Adam Jhugdeo Dritan Vakaj Abigail Boyd Diana Cunningham Lorenzo Giulianotti Lilin Jin Sebastiaan van Nooten Brad Boyken Sean Cunningham Kristy Glassen Jacqueline Johnson Naresh Vanniyasingam Alana Boyle Clinton Dalton Jonathan Gold Joni Johnson Vanessa Vaz Gustavo Brandao John Daly Charles Goldstein Bryan Jones Neeraj Verma Kiki Brannan Jordan Dant Carlos Gonzalez Christopher Jones Vincent Viney Steven Breen Thomas Dapp Jeffrey Gonzalez Julie Jones Alfred Waithaka Seth Bridge Iszellyn David Stephen Gonzalez Ravikanth Jonnalagadda Matthew Winters Bradley Brock Tammy Davis Neil Goradia Guy Jopling Haifeng (Kevin) Xie Edward Brooks Tyrone Dawson Arlington Gordon Andrea Joson Genesis Bryan Luke de Araujo Keisha Gordon Tammy Jung United States Amanda Bryant Parisa de Neree T. Babberich Taylor Goss Shaina Jusino Ahmed Abdelnabi Bryan Bulat Jeffrey J. DeChristopher James Gothe Bryan Kane Katrin Abougnima Tara Burch Alexander Deligtisch Kay Goudey Alex Katsaros Percy Abraham Karla Burks Judith Derenzo Jennifer Gray Stavros Katsetos Carmen Abreu Zach Bush Kirsten Derynioski Kyle Grella Brian Katz Mechile Adams Bernard Butler Stephanie DeZarn Amy Grove Harpreet Kaur Ross Adams Evelyn Butler Gina DiGiammarco-Ridge Amanda Grube Claudia Kaushik Valina Addo Michael Butler Galin Dimitrov Srinivas Guduru Meenakshi Kaushik Mustapha Adelekan Nathan Buttleman Rodica Dingess Brad Gushiken Kelly Keen Matthew Adkins Shannon Buzzerio Nancy diSibio Cesar Gutierrez John Kelleher Jonathan Adler Mary Byrd Brandon Dombrowski Misato Hafez Harvey Kelly Veronica Adorni Ingrid Byrne Tracy Donahue Sayoni Haldar Scott Keppel Madhu Sudan Agrawal Xun Cai Jeremiah Dorl Megan Hall Nitesh Khanna Tanvir Ahmad Jason Calvert Marcia Douglas George Hamje Evgeniya Khilji Olayinka Ajakaiye Stephen Cameron Amanda Dowling Kathy Hart John Kim Rajesh Aji Kayla Campbell Philip Dragotta Michael Harvey Lance Kinzle Nicholas Albini Steven Campbell Meghann Duerfahrd Lea Harvin Judy Klare Joseph Alemu Michael Campites Mudit Duggal Cory Hauser Yulia Klimov Daniel Alexander Christine Canute Paxton Dunn Michael Hayden Antonio Knox Sadik Alimov Patrick Cappel Elizabeth Duran-Vargas Lucy Hayrabedian Jacqueline Ko Gregory E. Allen Nicholas Caputo Chris Dylla Molly Heath Cristina Koder Samuel Allen Corey Cardoza Jeanne Eastman Raymond Heinrichs Jenny Kofman Gerald Allora Vincent Carpio Ed Edmister Anna Helle Richelle Koontz William Alverson Nancy Case Bruce Emory Kevin Hellman Prajakti Kotwal David Ambrose Benedict Castro David Epps Edgardo Hernandez Alan Kravit Dean Amer Debra Catarozoli Robert Erdogan Jose Hernandez Roman Kucherak Rosalin Andres Kelly Cervantes Shannon Escalante Judd Hesselroth Samuel Kuehn Melissa Andrus Heather Chakan Elizabeth Eschbach Carolyn Hill Ryan Kuklinski Gina Aquilia Jignesh Chande Michael Estevez Randolph Hobbs Carl Kunz Jeffrey Aquino Kartik Chaudhary Silvy Evans Ashley Hodges Samuel Kusewich Emma Arizpe Anne Chen Eric Facuri Petrarca Erjola Hodo Carrie Kwok Tara Armendariz Da Chen Mark Farmer Kevin Hoffman Jeannie Kwong Paul Aversano Jay Chen Shirley Fiano Nicolas Holch Matthew La Salle Alba Avila Quintana Yi Cheng Lu Justin Fields Seanne Holliday Jeremiah Lahnum Paul Avinger Robert Cherofsky Michael Finkelstein Joanne Holt Andrea LaMothe Tanja Bacic Liying (Lena) Chiang Isaac Fisboin Claire Holtzmuller Patrick Lampart Michael Baer David Cho Mark Fitzgibbon Connie Hooks William Land Mark Baker Nicholas Cho Joshua Fogel Cindy Horton Monique Lang William Bakshi Rita Choudhury Dee Foster Anne Howard Charles Lansdown Shantel Barragan Sreeradha Saha Choudhury Steven Foster Howard Hull Victoria Large Chelsea Bartley Obianuju I. Chukwuanu Shona Frain Daron Hunt Patricia Latella Cassandra Bates John Cino Charles C. Francis Kathleen Hunt Linh Lau Alissa Bell Joseph Clemente Maria Frates Ana Iacovone Charlie Laurence Bethany Benesh Brent Close Jessica Freeland-Ahrens Mike Idol Christopher Layfield Cristian Bennett Elyzabeth Colan Corey Freynik Ellen Iggulden Bao-Kim LE Christopher Benton Bobbie Cole Bert Friedman Stefano Illiano Mary LeBeau Carlos Betancourt Alan Coleman Jessica Frith Saul Infante Fernandez Elise Lebourg Lauren Beyer Jennifer Collins Karl L Fromm Hope Inouye Aspen Lee Aditi Bhardwaj Pascual Rocco Cononico Mayra Fuentes Elvanelga Isenia Ellen Lee Vinish Bhatia Denise Conrad Carlos M. Fuentes Salinas Haruya Ito Hsin Ju Lee Alexander Billak Bradley Coppella Dominick Gaetano Omar Jadan James F. Lee Brad Birkholz Shawna Corder Nicholas Gaffney Adrian Jaimes Ming Bun Lee Josh Blizzard Dana Cordes Peter Galop Jason James Samantha Lee Matthew Bloom Janice Costa Maxim Galperin Carissa Janowiak Stephen Lee Franziska Blunck Sharon Coté Trupti Gandhi Nikki C. Jarrell Tae Yeon Lee Peter Bogomol Tara Cowan Tyson Garbrecht Chad Jeckel Colette Lesperance Aaron Bolder Valerie Craft Vladimir Garcia Susan Jennis Kimberlie Lewin Angela Bond Stephen Cress Rajeev Garg Sandra Jensen Annie Liao Michael Bonnier Andrea Crittle Victoria Garrod Aimee Jess Lee Feng Lin-Cheng
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 101 GRADUATES Why spend 3 days with some of the brightest minds
Deborah Lincoln Nicole Moser Alyssa Procopio Stephanie Sheehan Thomas John Walsh in AML audit or financial crimes investigations? Ronald Link Steven Mowery Antoinette Prokopczyk Abiy Sheferaw Jasman Walson Phillip Liu John Muir XiLing Qian Kelly Sheffield Huatian Wang Yi Liu Gabrielle Murphy Zeeshan Quadar Tim Shepard Nicolas Wart To earn the recognition you deserve for committing to Elle Lockett Ashley Murray Katharina Quintus Thankie Shi Christopher Watkins Nathalie Lonsdale Cassandra Muscat Jacqueline Quintyne Helen Irene Shippee Chandler Wavro Lucia Lopez David Mustar Eric Radue Miroslava Sikurova Edward Wegener protecting and elevating the status of your institution. Florian Lorenz Melanie Myint Fara Rosalind Rajkumari Andrew J. Simone Toni Weirauch Kevin Loria Rana Nahra Jaime Ramirez Robert Sinex Michael Wenner Sandeep Loshali Jayakrishnan Nair Trisha Ramirez Hemlaxmi Singh Kurt Wessel Carrie Luman Michael Nakis Richard Ramon Keshav Manmohan Singh Careisha Whyte Boris Luzhansky Yountae Nam Elvin Ramos Suvarna Singh Annika Wiese Michael Lynn John Napoleon Marisa Rampersad Amanda Slavin Brianys Wiggins Joseph Mader Stasis Nelaimischkies Christopher Ramsey Devin Smith Deborah Wiley Andrew Magas Amy Nelson Kiran Rane Latoya Smith Harley Williams Hina Mahmood Heather Ransom Rao Nemani Patrick Smith Calena Willingham Marlyn Maisonet Angela Ratliff Deyquan Nesbit Tyler Smith Kristin Wilsey Christopher Makowski Shishir Rawat Todd Newall Monica Snider Kassondra Wilson Steve Malerba Rashada Reddick Chi Ngo Jeong So Stephanie Winegarden Andres Mancheno Chantell Redish Aurora Nieves Thomas Sofia Jennifer Winkles Prateek Manek Jeff Reed Natacha Noguera Marron Cherie Soto Ashley Wisdom Petronela Manescu Thomas Rees Jessica Nolan David Specht Randall Wodicka-Cudey Elisia Marcelino Christopher Rehberger Stacy Norton Carmine Spinelli Kelly Wong Blake Marino Venkata Nuthakki Denise Reske Jason Stanley Youn Ju Woo Norman Mark Brittany Nye Keron Reyes Kevin Stefani James Woolnough Jill Markus Robert Obayda Richard Reynolds Jonathan Steffy Rachel Workman Tom Maroney Matthew O’Brien Charles Rho Michelle Stein Heather Wright Liz Marquez Adam O’Connor Denice Richarts Paul Steinmyller Long-Long Wu Brandon Marshall Schylur M. O’Doherty Luz Rios Peter Steltz Meeider Wu Michael Marshall Styve Ogando Jolene Rizk Khushali Stepnowski Yu Fei Wu Nicholas Marsini III Mercedes Olivares Ezequiel Roa Tatjana Stojanova How Bee Xan Nicholas Marsit Patti Oliveira Benjamin Robey Jeron Stonehocker Andriy Yahniuk Janine Martin Robert Olszewski Jessica Robinson Melissa Stover Shintaro Yamabe Joel Martin Ama Osei-Boateng Aivanett Rodriguez Spencer Stowell Earn the most exclusive and distinguished Saathi Yamraj Larissa Martin Jianyu Ou Antonio Rodriguez Ryan Streicher Kristie Yang Louis Martinez Rose Pagan Juan Carlos Rodriguez Peter Strobel designation beyond CAMS that ACAMS offers. Stephanie Martinez Michael Rolsch Michelle Yarrow Mahesh Pai Toneta Sula Hilary Marx Connie Romay Email [email protected] Edgar Paiz Mallory Sun Marianne Yen Shara Mason Chenyuan Rong Steven Pak Yi (Jenny) Sun Alexanne Yi to get started. Jeffrey Mayausky Anthony Rooney Ronald Palais Christopher Susskin Michelle Yong Lance Mayberry Kathryn Rosa Andreea Panfiloiu Justin Svec Alyssa Young Patricia McCallop James Rossiter Cody Pannella Madina Tahiry Tatyana Zabrovskiy Colin McCormick Romita Roy Larry Parham Michelle Tavares Homam Zaini Frank McDonagh Alicia Ruiz Anita Parker Sara Taylor-Chanez Nella Zelensky Thomas McIntosh Sergio Rumayor Jonathan Parks Laura Teasley Youwen Zhang Jared McJunkin Timothy Rusavuk Paulo Parras Bruce Temple Christine Zieminski Melissa McLaughlin Sara Russel Sharon Pasquarelli Anita Thomas Amy Zimmerman Bruce McLean Judith Russell-Dookan Bhavin Patel Patrick Thomas Estefanie Zurita Mark McNulty Jonathan Russolese Tina Patel Lawrence Thompson Tara McSorley Marisa Ruthven Uruguay Vishal Patel Eva Thorpe Eric Medoff Alexandra Sagaro Valerie Patterson Graham Todd Rodrigo Pagliaro Ieritano Kristen Meehan Nancy Salgado Dean Paul Andrew Toensmann Robin Meerkatz Mindy Salvati Vietnam Ashley Penn Joshua Tolbert-Smith Jennifer Melendez Rolls Sam Sonia Pereira Karlo Torres Linh Nguyen Marsha A. M.-Beersingh Laura Sammon Ashley Perezluha Pham Trang Daniel Merrell Sam Samuel Barry Towle Lisa Perfetti Cordia Tucker Amy Mesenbrink Paola Sanchez Yemen Lisa Metzger Georgennia R. Peschke Michael Sandretto Michele Upshaw Sadam Abduh AL-Sofi Nicholas Meyer Monique Peterson Juliet Sardiñas Julie Van Paassen Lee Matthew Minervini James Petraglia Lauren Schick Eldon Vaz Mohammed Hassan Haszliyana Minhad Sarah Petrosh Kristina Schilling Mariela Vazquez Farid Mohammed Mamon AML and Financial Crimes Professionals with ACAMS Advanced Certifications* are recognized Lourdes Miranda Matthew Phillips Cassie Schock Cecilia Velazquez-Chavez Mohammed A. S. Albakelee Clint Philpot Peggy Verning as elite seasoned professionals with superior skills committed to and focused on growing Jonathan Misskerg Dana Schwartz Zambia Pratti Rama Mohan Patricia Piche Svetlana Schwartzman Andrea Vidaurre professionally to benefit their institutions. Karen Moloney Crystal Pinthong Jennifer Scotland-Lyle Michael Villeda Velika Mpundu Anita Piper Jenna Voss David Monderer Lea-Ellan L. Scott Zimbabwe Kelly Montanaro Diane Pisacreta Ryan Scott Angela Wagner *You must be CAMS Certified in order to apply. Damon Monterrubio Christopher Plath Vineet Sehgal Craig Wagner Tichafa Chigaba Jessica Monteux Kevin Polansky Riaz Shaik Charles Waikwa Casper Chimutsa Yericca Morales Jose Porrata Yaniv Sharabi Dennis Walker Nyaradzo Chiwewe Robin Moran Richard Postiglione Mahyar Shariati Guenevere Walker Clara Hwata Miriam Morris Karrie Prehm Puneet Sharma Keith Walker Tongesayi Murape Annette Morrison Christina Prevot Lisa Shea Melissa Walker Kenneth Ngwarai
102 ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG Why spend 3 days with some of the brightest minds in AML audit or financial crimes investigations? To earn the recognition you deserve for committing to protecting and elevating the status of your institution.
Earn the most exclusive and distinguished designation beyond CAMS that ACAMS offers. Email [email protected] to get started.
AML and Financial Crimes Professionals with ACAMS Advanced Certifications* are recognized as elite seasoned professionals with superior skills committed to and focused on growing professionally to benefit their institutions.
*You must be CAMS Certified in order to apply. 2017 ACAMS Recognition Awards
SUBMIT YOUR NOMINATIONS AT:
http://www.acamsconferences.org/vegas/awards/
Submission Deadline is July 28 2017 ACAMS Recognition Awards
SUBMIT YOUR NOMINATIONS AT:
http://www.acamsconferences.org/vegas/awards/
Submission Deadline is July 28
ACAMS TODAY | JUNE–AUGUST 2017 | ACAMS.ORG | ACAMSTODAY.ORG 105