Financial Crimes Investigation Units: The Front Line in the War on Financial Crimes

The 8th Annual Terrorism Financing and Money Laundering Forum aims to bring together banks and law enforcement to fight financial crime.

The 8th Annual Terrorism Financing and Money Laundering Forum aims to bring together banks and law enforcement to fight financial crime.

Recent estimates of global money laundering, cited by such groups as the Council on Foreign Relations, can stagger one’s imagination. One figure in the council’s report was a UN study estimating that global funds available for laundering was about 2.7 percent of global gross domestic product (GDP), equating to $1.6 trillion as of 2009. That amount is about one-third larger than the total contribution of finance and insurance to the GDP of the US ($1.2 trillion), as reported by the Bureau of Economic Analysis.

The front line of the war against global financial crimes includes members of financial intelligence units (FIUs) in banks and other financial institutions, as well as national law enforcement agencies. During the recent 8th Annual Terrorism Financing and Money Laundering Forum – sponsored by Ally Financial, Bank of America, U.S. Department of Justice, PNC Bank, SAS and Teradata – a group of nearly 400 attendees came together for a day-long discussion on the state of global money laundering and the financing of terror groups.

Dan Soto, Chief Compliance Officer of Ally Financial, welcomed the audience with reminders to “continue to be diligent” and to not “lose sight of the fact that what really matters are the transactions and the customers we see every day.” Soto highlighted the recently published US Senate Permanent Subcommittee on Investigations (PSI) report on money-laundering vulnerabilities. The lengthy report highlighted five issues in which correspondent banking in the U.S. is affected by anti-money laundering (AML) and terrorist financing:

-- Opening US correspondent accounts for high-risk affiliates without conducting due diligence.

-- Facilitating transactions that hinder US efforts to stop terrorists, drug traffickers, rogue jurisdictions and others from using the US financial system.

-- Providing US correspondent services to banks with links to terrorism.

-- Clearing bulk quantities of US dollar traveler’s checks despite signs of suspicious activity.

-- Offering high-risk bearer share corporate accounts.

Best Practices for FCIUs

One of the most noteworthy forum discussions was on current trends and best practices in financial crimes investigation units (FCIUs). Jim Candelmo, Executive Compliance Director and BSA/AML Officer for Ally Financial, explained that technology was “front and center to any meaningful discussion of holistically addressing financial crimes intelligence” and it must be “scalable, versatile was well as usable” to make FCIUs “more of a reality than ever.”

The emerging trend of shell company activity was also examined. Analytics was highlighted as a helpful tool used by FCIUs to detect patterns such as jurisdiction of parties involves in correspondent banking transactions to differentiate between suspicious and legitimate activity. Another trend is the consolidation of functions related to AML, BSA, FCIU, OFAC, etc. as being a best practice. The benefit of consolidation allows a common approach to glean intelligence and patterns from data for a holistic view of all threats.

Bill Ward, Executive Vice President and Chief BSA and Security Officer for Union Bank, sees an uptick in interest from regulatory agencies focused on financial crimes risk management and the continued need for consumer protection from fraud, such as Ponzi schemes. While groups in the past operated in silos, he believes convergence is crucial, so groups combatting fraud, AML, corruption and sanctions can learn more about financial crimes. Ward highlighted the importance of architecture, management, data and governance for FCIU success; he said that Union Bank uses “SAS® Analytics to feed its warehouse.” His concluding recommendation was to invest in a robust analytics team that includes a full-time modeling professional.

The Takeaway

The best indication of a conference’s value is when attendees come back year after year. That was truly the case at this forum, which has steadily grown over eight years to the point of filling the facility. The two best takeaways of the event were experiencing the audience’s passion for the discussion topics and witnessing the close collaboration among the attendees, who representing financial institutions, law enforcement agencies and branches of the federal government. In our present “age of disappointment” that exists for both private and public institutions, it is heartening to see a group of passionate professionals with a strong desire to protect customers and citizens against the ever-expanding threats of terrorism and financial crimes.

David Wallace is Global Financial Services Marketing Manager for SAS