Human trafficking


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SIXTH LAW ENFORCEMENT EDITION

The Magazine for Career-Minded Professionals in the Anti-Money Laundering Field

Human trafficking: Combating this complex crime

Raising awareness about human trafficking

JUNE–AUGUST 2016 VOL. 15  NO. 3 A publication of the Association of Certified Anti-Money Laundering Specialists® (ACAMS®), Miami, FL, USA

www.ACAMS.org www.ACAMSToday.org

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CAMS AUDIT

JUNE–AUGUST 2016

EXECUTIVE VICE PRESIDENT  John J. Byrne, CAMS EDITOR-IN-CHIEF  Karla Monterrosa-Yancey, CAMS

ACAMS Today, an award-winning magazine, is designed to provide accurate and authoritative information concerning international money laundering controls and related subjects. In publishing this work, neither the authors nor the association are engaged in rendering legal or other professional services. The services of a competent professional should be sought if such assistance is required. ACAMS Today is published four times a year for ACAMS members.

|  EDITORIAL AND DESIGN  | EDITORIAL ASSISTANT  Alexa Serrano, CAMS GRAPHIC DESIGN  Victoria Racine

|  EDITORIAL COMMITTEE  | CHAIR  Debbie Hitzeroth, CAMS-FCI

To join, contact: ACAMS Brickell City Tower 80 Southwest 8th Street Suite 2300 Miami, FL 33130 Tel. 1-866-459-CAMS (2267) or 1-305-373-0020 Fax 1-305-373-7788 Email: [email protected] Websites: www.ACAMS.org www.ACAMSToday.org To advertise, contact: Andrea Winter Tel. 1-305-373-0020 ext. 3030 Email: [email protected]

Kevin Anderson, CAMS Brian Arrington, CAMS Edwin (Ed) Beemer, CAMS-FCI Aaron Fox Robert Goldfinger, CAMS Jennifer Hanley-Giersch, CAMS Carolina Rivas, CAMS Eric Sohn, CAMS Joe Soniat, CAMS Amy Wotapka, CAMS Elaine Yancey, CAMS

ACAMS Today © 2016 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.

2016 Regional Gold and Silver Addy Award Winner

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ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

2016 Winner of Gold and Silver Awards

VOL. 15 NO. 3 |  SENIOR STAFF  | CHIEF EXECUTIVE OFFICER  Ted Weissberg, CAMS CHIEF FINANCIAL & CORPORATE DEVELOPMENT OFFICER   Ari House, CAMS GLOBAL DIRECTOR OF CONFERENCES AND TRAINING  Eva Bender, CAMS HEAD OF ASIA  Hue Dang, CAMS-Audit DIRECTOR OF SALES  Geoffrey Fone, CAMS DIRECTOR OF MARKETING  Kourtney McCarty, CAMS HEAD OF EUROPE  Angela Salter CHIEF OPERATING OFFICER  Joseph Yerant

|  SALES AND REGIONAL REPRESENTATIVES  | SENIOR VICE PRESIDENT OF BUSINESS DEVELOPMENT  Geoffrey Chunowitz, CAMS HEAD OF LATIN AMERICA  Sonia Leon, CAMS HEAD OF AFRICA & THE MIDDLE EAST  Jose Victor Lewis

|  ADVISORY BOARD  | CHAIRMAN  Rick A. Small, CAMS Luciano J. Astorga, CAMS Robert Curry, CAMS William J. Fox María de Lourdes Jiménez 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 2016 | ACAMS.ORG | ACAMSTODAY.ORG

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IN THIS ISSUE

Contents 12

22

From the editor. . . . . . . . . . . . . . . . . . 8

Banking law enforcement undercover operations. . . . . . . 22

Member spotlights . . . . . . . . . . . . 10

How undercover operations are an extremely valuable and productive law enforcement tool.

A message from the executive vice president . . . . . 12 Ray Kelly: A distinguished leader and protector. . . . . . . . . . 14 Former NYPD Commissioner discusses his career in the public service, his insight on counterterrorism and leadership.

The jurisprudence of the Right to Financial Privacy Act. . . . . . . . . . . . . . . . . . . . . . . 16

Facing the challenge of sanctions . . . . . . . . . . . . . . . . . . . . . 26 The issue of sanctions is a case in point and one that needs constant attention.

The true walking dead. . . . . . . . 28 The production and transportation of illegal drugs and the effects it has on its consumers.

The dilemma banks and law enforcement face under the RFPA.

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ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

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Privacy matters. . . . . . . . . . . . . . . . . 36 Keeping compliant with various regulations associated with customer privacy.

Peter Warrack and Constable Lepa Jankovic: Raising awareness about human trafficking. . . . . . . . . . . . . . . . . . . . . . . . 42 An interview on the prosecution of human trafficking and the challenges faced.

Dear BSA officer. . . . . . . . . . . . . . . . 48 A letter from a law enforcement officer to the BSA officer on suspicious activity reports.

Meyer Lansky: The Godfather of money laundering. . . . . . . . . . . . 54 A look into the life of Meyer Lansky and his money laundering principles.

IN THIS ISSUE

ON THE COVER:

Human trafficking: Combating this complex crime. . . . . . . . 32 The identification and prosecution of human trafficking.

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Risk versus reward— The Public Savings Bank investigation . . . . . . . . . . . . . . . . . . . . 60 Why Public Savings Bank was the target of a money laundering investigation.

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David Szuchman: Never let your guard down . . . . . . . . . . 70 A discussion on best practices to protect against cybercrime, fraud and identity theft.

Riches in rags. . . . . . . . . . . . . . . . . . . 62

How high do we build the BSA wall?. . . . . . . . . . . . . . . . . . . . 72

In the world of terrorist financing, human trafficking and causecommitted fanatics, lavish lifestyles are not in the lexicon.

The possible impacts on financial institutions and MSBs required to verify U.S. status of immigrants.

Putting slavery out of business . . . . . . . . . . . . . . . . . 64

A tribute to the law enforcement community. . . . . . . . . . . 74

Tools and resources to fight modern slavery.

Appreciating the dedication and sacrifice made by law enforcement.

Congratulations to the 50th ACAMS Chapter— Greater Omaha!. . . . . . . . . . . . . . . . 78 Greater Omaha’s inauguration and their chapter goals for the future.

The latest in Europe. . . . . . . . . . . 80 The 12th Annual AML & Financial Crime Conference in London and a welcome to ACAMS’ new AML director in Europe.



Meet the ACAMS staff. . . . . . . . . . . . . . . 81

CAMS and Advanced Certification graduates. . . . . . . . . . . . . . . . . . 82

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

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FROM THE EDITOR

Does slavery still exist?

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s part of this great association, I have had the opportunity to attend numerous conferences, training sessions, listened to experts and interviewed experts, and had access to intriguing forum dialogues and resources on the topic of financial crime prevention, encompassing many topics such as anti-money laundering, terrorist financing, fraud, sanctions, cybercrime, identity theft, risk assessment, compliance programs, virtual currencies and the list goes on. But the one topic that has always pulled at my heartstrings is the topic of human trafficking (HT). I heard the question: “Does slavery still exist?” at a training session I attended a couple of years ago. “Yes, it does exist,” was the response. For me, hearing the word slavery alongside human trafficking emphasized even more the horrific nature of the crime. This sad and appalling atrocity is extremely prevalent in today’s world and can be found almost everywhere. In the Sixth ACAMS Today Law Enforcement edition, the topic of HT has taken center stage. The headline article: Human trafficking: Combating this complex crime, author Barbara Martinez discusses the wide-spread problem of HT, how to identify HT and prosecute this heinous crime. She also emphasizes that HT exploitation is not limited to those trafficked for commercial sex, but also for labor and that modern-day slav-

ery can be found in almost every community worldwide. Martinez is an expert in the area of HT prevention and I had the privilege of listening to her present on the topic a few months ago. The second headline article—Raising awareness about human trafficking— is an in-depth interview with Peter Warrack, a seasoned veteran of both the financial crime prevention and law enforcement industries, and Constable Lepa Jankovic of the Royal Canadian Mounted Police—both an advocate for HT victims and an investigator of this dreadful crime. The interview takes a comprehensive look at what Canada is doing to bring more awareness to HT, foster collaboration between financial institutions and law enforcement and the challenges faced when fighting and prosecuting HT. This edition also has an HT article in the Aspects of Asia section that discusses what tools and resources are necessary to end modern-day slavery. In addition to interviewing Peter and Lepa, I had the privilege of interviewing Ray Kelly, a former NYPD commissioner, on his meritorious career as a public servant and David Szuchman, bureau chief of the Cybercrime and Identity Theft Bureau for the New York County District Attorney’s office, about cybercrime investigations and how we must never let our guard down.

This edition is filled with many interesting articles that show and applaud the important partnerships formed by financial institutions and law enforcement. As a result of the difference that so many of you make in the fight against financial crime, the ACAMS staff recently established The ACAMS Fight Against Human Trafficking Committee. I am proud to say that I am a member of the committee and that the ACAMS staff has already helped to make a difference by contributing and donating to local organizations that assist victims of HT. I hope you enjoy reading this issue and feel the inspiration to continue contributing to the fight to end modern-day slavery. In the words of Barbara Martinez: “Together, we can rescue victims and eradicate human trafficking.” 

Karla Monterrosa-Yancey, CAMS editor-in-chief

Produced by: ComplianceComm 8

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MEMBER SPOTLIGHTS

Martin A. Cunningham, CAMS Jersey City, NJ, USA

Gregory Dellas, CAMS Nicosia, Cyprus

Charlotte Lowe, CAMS Dallas, TX, USA

Martin A. Cunningham is the director of the Business Intelligence Unit for Deutsche Bank Americas. Prior to joining Deutsche Bank, he worked for Standard Chartered Bank where he founded their Financial Crime Intelligence Unit for the Americas region. In this capacity, he helped establish a number of industry leading programs, including the Anti-Human Trafficking Unit and a joint investigative model with other financial institutions.

Gregory Dellas currently leads the antimoney laundering (AML) risk management team within the International Banking Services Division of the Bank of Cyprus, in Nicosia, and acts as the local compliance officer. His team is responsible for the onboarding of highrisk clients, the evaluation of large and complex transactions, as well as the review and approval of existing highrisk client relationships. In addition, Dellas is responsible for providing advice, guidance and specialized training to management and staff on AML and regulatory compliance matters.

Charlotte Lowe has more than 30 years of financial services experience and over 20 years of experience in developing and managing anti-money laundering (AML) programs. Her Bank Secrecy Act/anti-money laundering (BSA/AML) leadership role spans from community thrifts to midsized commercial banking and global organizations.

Prior to working in the banking sector, Cunningham served as deputy team chief in the counter threat finance branch of the U.S. Special Operations Command (SOCOM). Cunningham also managed SOCOM’s counter-threat finance training program and oversaw the development of curriculum and training partnerships with department of defense elements, law enforcement and academia. Formerly an adjunct professor with the Joint Special Operations University, Cunningham led the development of their counter-threat finance certification program.  Moreover, he has served as a guest lecturer on counter-terrorist financing at various academic institutions, including the Navy War College, the Kennedy Special Warfare Center and School, and the University of South Florida. Cunningham’s background includes a deployment to the Iraq Threat Finance Cell to disrupt al-Qaeda in Iraq’s financial operations, working as a senior counter threat finance analyst for Booz Allen Hamilton and serving as a military intelligence officer for the U.S. Navy.

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In the past, Dellas worked with Coopers & Lybrand in Nicosia and held various senior and managerial positions in Cyprus Popular Bank and the Bank of Cyprus in wealth management, compliance and other areas. He has experience as a private banker and led the setup of private banking units in the U.K. and Romania. He also served as the group money laundering compliance officer and was responsible for the AML function for Cyprus Popular Bank and all its overseas subsidiaries. Moreover, Dellas is CAMS certified, holds a bachelor’s degree in industrial economics from the University of Warwick and an MBA from Lancaster University in the U.K. He is also chair of the ACAMS Cyprus Chapter and one of the founding board members. In addition, he is a member of Transparency International (CY) and AMLP forum (U.K.). Dellas has also participated as a delegate and speaker at various international conferences, webinars and is now a CAMS instructor.

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

Lowe spent a significant portion of her career in training and development positions, project management and operations before taking on senior leadership roles in BSA/AML. With over 15 years of experience managing successful BSA/ AML programs, she actively promotes the development of skills and tools as well as continuing education for BSA/ AML and sanctions program professionals as the key in maintaining compliant BSA/AML programs. In addition, Lowe is CAMS certified and currently serves on the ABA’s advisory board for financial crimes.

MEMBER SPOTLIGHTS

Sean McCrossan, CAMS-FCI Fort Mill, SC, USA

Nassos Paltayian, CAMS Nicosia, Cyprus

Sean McCrossan started his compliance career at Ally Bank where he investigated suspicious activity enterprise wide for Ally Bank’s Financial Crimes Intelligence Unit, conducted quality reviews and was involved in tuning efforts for transaction monitoring, communication with law enforcement, and the requirements and design of Ally’s Fraud and AML Case Management Tool.  He joined Citigroup in 2015 and is currently providing global anti-money laundering (AML) advisory guidance on new payment method products prior to approval and launch.

Nassos Paltayian is the head of compliance at Abacus Limited. He began his career in 2005 with PwC as an auditor in financial services. In 2008, he qualified as a chartered accountant with the Institute of Chartered Accountants in England and Wales and became a member of the Institute of Certified Public Accountants in Cyprus (ICPAC). In 2009, he joined Abacus Limited working in international business services and had a significant role in some major merger and acquisition deals. He also acted as secretary for the Cyprus Stock Exchange and the Securities and Exchange Commission Committee of ICPAC.

McCrossan is CAMS certified and a graduate of the ACAMS Advanced Financial Crimes Investigations course. He presented his white paper on mobile and internet payment systems at the ACAMS 14th Annual AML & Financial Crime Conference and is currently part of the CAMS 6th Edition Examination Task Force. Before starting a career in financial crimes, he worked in physical and corporate security capacities and spent 10 years managing the construction of high-end custom homes.  He is a U.S. Army veteran and a graduate of some of the U.S. Army’s top schools, including the prestigious Ranger School.

Did you know that 200 ACAMS members have received their Advanced Certification?

In 2014, he was transferred to the Compliance Department of Abacus, undertaking the task to update and monitor the compliance system of the firm with anti-money laundering (AML) and counter-terrorist financing (CTF) legislation and directives. His functions also cover international sanctions, training, internal audit, FATCA, CRS and ISO 27001 compliance matters. During 2014, he became an ACAMS member and has been CAMS certified since March 2015. Currently, he is the co-chair of the ACAMS Cyprus Chapter and vice chairman for ICPAC’s Compliance Committee. Paltayian is also leading module 7 (DNFBP) of the National Risk Assessment, a high profile project performed by the Central Bank of Cyprus and the local financial intelligence unit, in coordination with the World Bank. He also participates in the Compliance Committee of the Cyprus Fiduciary Association and actively seeks to increase public awareness regarding AML and CTF matters.

Brian W. Vitale, CAMS-Audit, NCCO Notre Dame, IN, USA Brian Vitale earned his political science degree from North Central College in 1996 and an MBA from the University of Notre Dame in 2014. Following his undergraduate degree, Vitale was recruited by the National Security Division of the Federal Bureau of Investigation where he specialized in counterterrorism and foreign counterintelligence. During his tenure, he was assigned to work the FBI’s most sensitive international terrorism and espionage cases. In addition, Vitale is a decorated military veteran who served his country in Guantanamo Bay, Cuba, in the early 1990s. Subsequent to the FBI, Vitale spent many years in banking and finance where his skills led him to the field of global operational risk management. He has over 23 years of banking, finance and investigative experience—a number of those years dedicated to the anti-money laundering and counter-terrorist financing (AML/CTF) effort. In July 2011, Vitale joined Notre Dame Federal Credit Union and he currently serves as their chief risk and compliance officer. In March 2015, Vitale was instrumental in forming Compliance Advisory Services, LLC, a wholly owned CUSO of Notre Dame Federal Credit Union and now serves as the firm’s president. Moreover, Vitale is a professional member of the Association of Certified AntiMoney Laundering Specialists, having earned his CAMS designation in December 2007 and CAMS-Audit in November 2013. In addition, he is a National Association of Federal Credit Unions Certified Compliance Officer (NCCO) and he speaks nationally on a number of topics including BSA, AML, enterprise risk management, cybersecurity and strategy. 

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

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MESSAGE FROM THE EXECUTIVE VICE PRESIDENT

Recognizing the law enforcement community

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ne of the things I look forward to each year is the ACAMS Today edition that honors the law enforcement community. We are, of course, an international membership association that includes all parts of the anti-money laundering (AML) community. That fact alone is superfluous if we do not recognize all parts of the AML infrastructure and actually do programming, articles and other content to acknowledge the issues essential to law enforcement success. Whether it is having the law enforcement community present at chapter events, seminars, conferences, webinars or authoring articles for ACAMS Today, our membership derives extensive benefit from the private-public partnership that has evolved over time and has been enhanced by ACAMS members. To our law enforcement partners throughout the world, thank you for your service to the community and your coordinated commitment to fight financial crime.

Midyear assessment of the state of AML in 2016 As of this writing, AML professionals are grappling with how to respond to the financial components that make up terrorist activities, human trafficking and all sorts of financial crime. Add to

that, the challenges of sanctions, what the Financial Action Task Force mutual evaluations may bring to certain jurisdictions, the wide array of nontraditional banking organizations that have AML responsibilities (FinTech, gaming, registered investment advisors), and it is clear that ACAMS needs to adapt and ensure that everyone who needs training and content receives it. ACAMS’ commitment to you is that we will provide the necessary information and we ask that you help us stay current and relevant toward this goal.

De-risking, CDD and regulatory expectations are top of mind If you have not had an opportunity to review the ACAMS and Dow Jones 2016 survey that we released at our 21st Annual International AML & Financial Crime Conference in Hollywood, Florida, please take the time to do so. We give you insight into what our members think about AML challenges and data providers, customer due diligence, human trafficking, de-risking and rising regulatory expectations. What is clear to me from the survey and continued conversations with many of you is that our members—while committed to AML goals—are frustrated with their workloads and it may be time to have a

thorough review of all the laws and regulations accompanying AML/sanctions/ financial crime. We have asked you to discuss the issue of revising, modifying or eliminating the laws we live under in the AML world in the past, but I am asking you again. Are we getting it right? Are we looking for the appropriate activities? Who is responsible? Are we listening to each other? Send us your ideas, thoughts and criticisms via the ACAMS discussion forums. As soon as we get critical mass, we will take those ideas as the basis for articles, webinars or conference sessions.

Finally, a plea for accuracy Daniel Patrick Moynihan, former member of the U.S. Senate said, “You are entitled to your opinion. But you are not entitled to your own facts.” Compliance requires specificity, but not perfection. With all of the laws, regulations and policy guidance that the profession must address, we know how complicated everything is. Some that cover or comment on AML do not have that level of detail or perhaps choose to ignore facts as it does not fit within their preconceived narrative or political agenda. So, I have a request of our AML brethren: When you have the opportunity, respond to false narratives, overgeneralizations and unfair attacks on our community. We are in AML because we can make a difference—never lose sight of that important fact. 

John J. Byrne, Esq., CAMS executive vice president

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ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

INTERVIEW

Ray Kelly:

A distinguished leader and protector

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CAMS Today had the opportunity to visit with former New York Police Department (NYPD) Commissioner Ray W. Kelly to discuss his expansive career in public service, his insight on counterterrorism and what he calls the three Cs.

Kelly is currently vice chairman of K2 Intelligence. As a former NYPD Commissioner, Kelly brings decades of experience setting strategy to combat threats faced by nations around the world, by the public and private sector. He provides valuable insight into the design and development of tailored enterprise risk solutions for K2 Intelligence clients around the world. Both internal and external risks affecting the safety of client assets and the reputation and stability of their key stakeholders are addressed. Kelly provides C-suite executives and government municipalities’ top-level guidance on issues such as infrastructure safety, regulatory compliance and government enforcement response. Kelly is a distinguished leader and protector and is New York City’s longestserving police commissioner. Under his leadership, the NYPD has been described as the premier domestic public-safety agency in the United States. Kelly established the first Counterterrorism Bureau of any municipal police department in the country and built the Department’s Intelligence Bureau, creating a global intelligence program with detectives stationed in cities abroad. Kelly joined K2 Intelligence from Cushman & Wakefield where he was president of the firm’s Risk Management Services group. In the private sector he also served as president of Investigative Group International and as chief of security at Bear Stearns. Kelly is a Distinguished Visiting Fellow at the Council on Foreign Relations and an ABC News consultant. 1

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Kelly’s almost 50-year career in public service includes serving as commissioner of the U.S. Customs Service and as Under Secretary of Enforcement at the U.S. Treasury Department. He served as a vice president of Interpol and directed the International Police Force in Haiti, where he was awarded the exceptionally meritorious service commendation from the President of the United States. Kelly is also a retired United States Marine Corps Reserves Colonel with 30 years of service in the United States Marine Corps Reserves, including serving a combat tour in Vietnam. He received 14 citations of merit for outstanding police work during his tenure at the NYPD and was awarded France’s highest decoration, the Legion d’Honneur. Kelly is the author of the best-selling book Vigilance: My Life Serving America and Protecting Its Empire City, Hachette Books Group USA.1 Kelly received his J.D. from St. John’s University School of Law, his LLM from New York University Graduate School of Law, his MPA from the Kennedy School of Government at Harvard University and his BBA from Manhattan College. He is an attorney and a member of the New York State Bar. He has also been awarded honorary degrees from the Catholic University of America, Manhattan College, St. John’s University, the State University of New York, the College of St. Rose, Iona College, Marist College, New York University, Pace University, Quinnipiac University, and St. Thomas Aquinas College.

ACAMS Today: Why did you want to become a police officer?

Ray Kelly: My introduction to policing came as a result of a part-time apprenticeship program in the NYPD for police cadets. Its goal was to bring four-year college graduates into the department and upon completion of the program I became a NYC police officer. The opportunity to make a difference, the excitement and the breadth of experience convinced me that it was the right career choice for me.

AT: How did your experiences in the U.S. Marines and in Vietnam shape your future choices, both professionally and academically? RK: I’ve often said that virtually everything I’ve learned about leadership I learned early on in the USMC. Among other things, the Marine Corps is a great teaching organization that emphasizes its core values and gives you real world opportunities to apply them. The lessons learned in leading fellow Marines in a combat situation are invaluable.

AT: When you were appointed as the NYPD Commissioner for the second time in 2002, under Mayor Bloomberg, you established what you called the three Cs. What were the three Cs and how did they shape your tenure as NYPD Commissioner? RK: The three C’s—which were the rubric of the police department during my administration—were counterterrorism, crime suppression and community relations. Our administration started just three and a half months after the horrendous events of September 11, and we knew that we had to do

Kelly’s book Vigilance: My Life Serving America and Protecting Its Empire City is available for purchase on amazon.com.

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

INTERVIEW

more to better protect NYC. We established our own counterterrorism bureau, reinforced our intelligence gathering and analytical capabilities and brought on board a cadre of worldclass experts to help us in this endeavor. Crime suppression was addressed by applying emerging technologies with the vigor and expertise of NYC police officers. As a result of using operation impact that utilized new police officers who just graduated from the police academy and a gang focused initiative called operation Crew Cut, crime and specifically murders were driven down to record lows.

AT: One of the three Cs you mentioned was community relations. How can other law enforcement departments and financial institutions create successful relationships in their communities? RK: Our third C—community relations—is something that needs to be worked on every day by all members of the department. Because of what we ask police officers to do—sometimes use force (even deadly force), issue traffic citations, arrest individuals, and generally be the bearers of bad news—the potential for tension always exists. NYC is the most diverse city in the world and because of that we engage in a major recruiting effort that brought on board police officers born in 106 countries. This has given the department diversity unmatched in law enforcement and helped us interact with the complexities of New York.

AT: What other methods and tactics did you employ as NYPD Commissioner in the fight against terrorism? RK: One of the many initiatives that helped us in protecting New York from a terrorist attack was to station police officers in foreign countries. Because of the departments’ diversity we were able to assign officers who may have been born in the country in one of the 11 overseas postings. This network has been extremely helpful in providing real-time information as to terrorist activities throughout the world. We brought into the department people with federal government experience who brought unique skillsets to the job. That included former FBI agents, former CIA

personnel, a defense intelligence agency, drug enforcement administration and assistant U.S. attorneys.

AT: In your book Vigilance, you discuss 16 terror plots that were foiled by law enforcement and most of the public had no idea that these terror plots had occurred, which of those plots surprised you the most? RK: The most surprising plot was that involving Faisal Shahzad who drove into Times Square on May 1, 2010, with a car full of explosives and attempted to detonate it. Because he changed the formula that he was given in Pakistan, no explosion took place. However, it wasn’t for a lack of trying. Although we had great pride in knowing about people who may have had intentions of harming Americans, no federal or local agency had known anything about Shahzad until that evening. We were quite lucky that the bomb that he assembled did not detonate and he was arrested attempting to flee the country two days later.

AT: You also served as the U.S. Customs Commissioner for a few years and you were involved in Operation Casablanca, what tactics did you use to bring down one of the biggest drug money laundering cartels? RK: The U.S. Customs Service and other U.S. investigative agencies used very talented undercover agents to bring about significant arrests and convictions in this case. Casablanca showed the extent of money laundering involved in the wholesale drug business and shed light on the complexity of these operations. It was the template used by customs and other agencies to conduct intricate money laundering investigations that followed.

AT: You have spent almost your entire career in various leadership roles, what is the key to being a successful leader? RK: Having empathy for those you lead. One of the elements that’s helpful in this regard is to have the experience of having been in the position of your subordinates. It allows you to make judgements based on the real world impact of your decision making. Law enforcement and the military are areas in which this is particularly important.

AT: You hold degrees from various universities, such as St. John’s University School of Law and Kennedy School of Government at Harvard University, to name a few. What impact has education had on you professional career? RK: Education is the much needed foundation for virtually any career or profession these days. And it is important that one continues to learn throughout their lifetime. It’s said that a body of knowledge can become obsolete within five years. As a result, we must all strive to continue to educate ourselves if we want to be productive members of society.

AT: Recently, police departments are receiving increased scrutiny on how they are handling their jobs, what advice do you have for the public and for police officers on how to deal with this public scrutiny? RK: The proliferation of cellphone cameras means that virtually everything police officers do may now be filmed by the public they serve. Police officers have to be cognizant of this and always strive to act as if all of their actions could appear on video screens throughout the world. In response to this, I think it is now time that police officers themselves be equipped with body-worn cameras. So as to level the playing field as far as addressing videos that may not show an entire sequence of events. It will also increase the level of trust that exists between the public and its police.

AT: What is your current project and what are you doing now professionally? RK: I am now the vice chair of K2 Intelligence, a cutting-edge business investigations and intelligence firm with significant cyber security, construction monitoring and anti-money laundering capabilities. The company was founded by Jules Kroll, an icon in the security business, and his son Jeremy Kroll, its chief executive officer. In this dynamic and changing environment, the company does a great job in addressing the always evolving needs of its clients. 

Interviewed by: Karla Monterrosa-Yancey, CAMS, editor-in-chief, ACAMS, Miami, FL, USA, [email protected]

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

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AML CHALLENGES

The jurisprudence of the Right to Financial Privacy Act

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hen 9/11 hit, the bosses of American law enforcement understood that financial records would be key to unraveling what happened and, more ominously, stopping any follow-up attacks. Assistant Attorney General Michael Chertoff and FBI Director Robert Mueller immediately set up a special FBI unit known as the 9/11 Financial Review Group and placed FBI veteran Dennis Lormel in charge. I was appointed as Lormel’s counterpart at the Department of Justice. Around that time, our bosses came to us with a question: “How long would it take you to reconstruct a minute-by-minute timeline of what the 19 dead hijackers did from the moment they entered the U.S. to the moment they died?” Dennis and I looked at each other. We scratched our heads. “Five or six months?” Dennis replied. We heard acquiescent grunts and we went back to work. All in all, it turns out we were able to accomplish the assigned task not in five or six months, but in a little over three weeks. What accounted for the difference between reality and our rough time estimates? It was a singular factor: our nation’s financial institutions, who almost immediately inundated us with enormous amounts of customer financial information, such as spreadsheets, credit card transactions, ATM photos, refined link analysis (which required special printers for us to generate) and fully finished financial intelligence that could be related to the infamous hijackers. As we know, the financial community was hit personally by the events of 9/11. They bent over backwards to assist us. These actions were not based on a request, a subpoena or a national security letter (NSL). They were simply provided spontaneously by the banks, on the assumption that they had something in their records that we wanted to know. We knew we were leaning forward in our relationship with our banks, but we were at war. We quickly realized that we had to do something to assure that what we were getting would not be second-guessed down the road. We instructed the banks to 12 U.S.C. 3401 et seq. 425 U.S. 435 (1976).

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accompany all of the information they sent us with suspicious activity reports, so we would be kosher in in the eyes of the law. By making this decision, we were putting the banks’ disclosures within the parameters of the Bank Secrecy Act (BSA). We did not know exactly why this was comforting, but somehow it felt right. What law were we worried about, and why were we trying to find a solution? It was the Right to Financial Privacy Act (RFPA),1 a statute enacted at the end of 1978 that generally limits how banks interact with American law enforcement. The RFPA was a response to United States v. Miller,2 a 1976 Supreme Court case that ruled that Americans have no reasonable expectation of privacy in records that their banks keep on them. The RFPA is, by design, a limiting statute, in that it establishes a rule that bank records in the U.S. are sacrosanct. There are a number of exceptions, which delineate the circumstances in which law enforcement can legally access these records from banks.

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As time passed, to my knowledge, neither the FBI nor the banks that helped us were ever sued under the RFPA for their conduct during the heady days after 9/11. Much of the work we did in the 9/11 investigation made its way into the prosecution of Zacarias Moussaoui. When things cooled down, Lormel was promoted to head of the Terrorist Financing Operations Section. Still, when we eventually came up for breath, the following question haunted me: Were we leaning too forward in our relationship with the U.S. financial industry? Were we (through our writings and speeches extolling the value of close counterterrorism bank relationships) going awry of the RFPA? Years later, I turned for the first time to the 1978 statute itself and examined every court opinion arising under it— about 500 or so. This article takes a snapshot of the RFPA in its 38th year, by examining the cases that have arisen and have been resolved under the Act since its incep-

tion. It should be comforting to those who believe that banks have an important role to play in counterterrorism. It seems that—though we might not have known the details well around the time of 9/11—we just might have gotten it right after all.

The RFPA scheme The RFPA is a fairly straightforward statutory regime. It first states that banks may not share customer information with federal law enforcement. It then lists the ways that law enforcement can legally access this information—customer consent, or one of the enumerated types of legal process, which includes subpoenas and NSLs. It also gives bank customers the right to some notice when law enforcement seeks their bank records (again, subject to exceptions), and sets up a procedure where they can challenge the government’s right to them ex ante via motions to quash and protective orders. The RFPA only limits federal law enforcement; it does not apply to state law

enforcement agencies or private actors seeking someone’s bank records. On the other side, the RFPA only protects account information of individual accountholders or small (fewer than five partners) partnerships, and not corporations. If banks violate the RFPA, they can be sued. Same for law enforcement. However, the suppression of bank records in a customer’s criminal trial is not a remedy.

The dilemma for banks Banks might be excused for being somewhat confused. On the one hand, the BSA requires them to affirmatively report suspicions about their customers to the Financial Crimes Enforcement Network (FinCEN), for distribution to law enforcement. If they do not do this sufficiently, they have problems with their regulators. On the other hand, banks are prohibited from sharing customer records with federal law enforcement under the RFPA. If they do, they can be sued. Banks are seemingly right

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in the middle of two conflicting federal mandates. How can these rules be harmonized?

The answer: The BSA trumps the RFPA Here is the short answer: If banks place their disclosures within the confines of the BSA, they are on firm footing. They might get sued, but they have a clear statutory defense. It was enacted in 1992 and called the Annunzio-Wylie Anti-Money Laundering Act, and reads, in part: “Any financial institution that makes a voluntary disclosure of any possible violation of law or regulation to a government agency or makes a disclosure pursuant to this subsection or any other authority, and any director, officer, employee, or agent of such institution who makes, or requires another to make any such disclosure, shall not be liable to any person under any law or regulation of the United States, any constitution, law, or regulation of any State or political subdivision of any State, or under any contract or other legally enforceable agreement (including any arbitration agreement), for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in the disclosure.”3

The RFPA, for its part, contains a similar provision. It reads: “(c) Notification to Government authority of existence of relevant information in records. Nothing in this title shall preclude any financial institution, or any officer, employee, or agent of a financial institution, from notifying a Government authority that such institution, or officer, employee, or agent has information which may be relevant to a possible violation of any statute or regulation. Such information may include only the name or other identifying information concerning any individual, corporation, or account involved in and the nature of any suspected illegal activity. Such information may be disclosed notwithstanding any constitution, law, or regulation of any State or political subdivision thereof to the contrary. Any financial institution, or officer, employee, or agent thereof, making a disclosure of information pursuant to this subsection, shall not be liable to the customer under any law or regulation of the United States or any constitution, law, or regulation of any State or political subdivision thereof, for such disclosure or for any failure to notify the customer of such disclosure.”4 These are powerful provisions for those like me who believe Congress intends the federal government’s relationship with banks to be iterative rather than formulaic, in order to effectively ferret

out crimes that may be occurring through the banks. They are supported by federal court opinions from a number of different circuits which make clear that banks should not be sued if they work closely—even informally— with America’s crime fighters like they did after 9/11.

Taxonomy of RFPA lawsuits Since 1979, there have been approximately 500 published and unpublished opinions (available on Westlaw) that involve the RFPA. 5 What do those cases say?

Motions to quash The largest component of the RFPA opinions—222 of them, almost half of all RFPA cases—were customer motions to quash some government requests for their bank records before the disclosure, by individuals who were notified of the request by the bank. These are fairly pedestrian matters. The amazing thing about these lawsuits is how uniformly unsuccessful the plaintiffs are when they invoke RFPA to prevent, in advance, individual bank records from being turned as part of an official investigation. Still, they keep on coming. Do the customers ever win these RFPA “motion to quash” controversies? Fourteen opinions—out of 222—did. That is not a good success rate (about 6 percent). Bank customers who are thinking about invoking the RFPA to prevent federal law enforcement from gaining access to their bank records might want to save their legal fees for the main event.

“31 U.S.C. § 5318—Compliance, Exemptions, and Summons Authority,” Legal Information Institute, https://www. law.cornell.edu/uscode/text/31/5318 4 12 U.S.C. § 3403—Confidentiality of financial records, The U.S. Department of Justice, http://www.justice.gov/usam/ criminal-resource-manual-470-12-usc-3403confidentiality-financial-records 5 For anyone who wants to check my work, try of Westlaw search of federal cases for “Right to Financial Privacy Act.” The result (as of early January 2016) is about 570 cases. I winnowed this set down to about 500 by looking at them and eliminating the irrelevant ones that do not involve an application of the statute. 3

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What about the punitive damages award? Those few cases where punitive damages were raised as a specter reflect some truly outrageous facts.

Since 1979, there have been approximately 500 published and unpublished opinions that involve the RFPA Suppression for RFPA violations The RFPA was Congress’ response to the United States v. Miller case, which found that individuals had no reasonable expectation of privacy in records kept by their banks on their banking activity. Because the RFPA is a statutory creation of certain rights, the exclusionary rule—a constitutional remedy— does not apply. However, the RFPA goes even further and states clearly that suppression is not a remedy when law enforcement violates the Act. This clear rule has not stopped accused criminals from arguing that RFPA violations should lead to the exclusion of bank records in the criminal trial and, more rarely, that the indictment should be dismissed. For any federal prosecutor who is faced with this argument, there is case law from every judicial circuit rejecting it (53 such cases in all).

Lawsuits against banks and federal law enforcement After motions to quash, the next largest type of RFPA controversy involves lawsuits against federal agencies and banks, claiming that they (sometimes in tandem) violated customer rights under the RFPA. No counterterrorism agent likes to get sued by their investigative subjects. Similarly, when individual customers sue banks under the RFPA, it is not good for the counterterrorism business. How cooperative will the banks be with us if they think they might be sued

by their customers at the end of the day for working too closely with the federal cops? These cases are not that common, perhaps because the plaintiffs’ lawyers are getting clear-eyed about the limits of the scope of the RFPA. When RFPA plaintiffs win, their payout is typically a statutory sum of $100, although the prevailing party can get attorney fees. The RFPA does allow for punitive damages in outrageous cases, but this almost never happens. The fact is, successful RFPA lawsuits against banks and federal law enforcement are few and far between. There were 97 lawsuits against federal law enforcement and banks generating 147 published and unpublished opinions. Of these, there were just a handful of cases that might be considered cautionary tales for us when banks work too closely with federal law enforcement. The first one might be Neece v. IRS, in which the court found that the IRS had no valid excuse why it obtained informal access to a taxpayer’s banking information rather than through the more elaborate summons procedure outlined in the tax code and the RFPA.6 The aggrieved bank customer, for his effort, won $100.7 Other bank customers have succeeded in showing RFPA by banks, and came away with $200 for two separate RFPA violations.8

Take the case of a Philadelphia Securities and Exchange Commission (SEC) insider trading investigation of Robert Hunter led by an investigator named John Heffernan. As part of this investigation, Heffernan interviewed Hunter’s then-girlfriend regarding her knowledge of Hunter’s stock trading. Heffernan then fell in love with her and the girlfriend broke up with Hunter. Not yet done, Heffernan allegedly hatched a plot to extort money from Hunter, aided by the girlfriend, who told Montgomery County law enforcement officials that Hunter had sexually molested her 11-year-old daughter over a period of four years. Now facing more than insider trading charges, Hunter was arrested and charged with sex-related crimes. He was bound over for trial on several of these charges. The girlfriend sued Hunter for the molestation and demanded $3 million to settle. In conducting interviews with friends, relatives and acquaintances about Hunter’s trading in Independence Bancorp stock, Heffernan acquired “confidential non-public information” about the investigation from third parties, including documents subpoenaed from banks regarding Hunter’s assets and holdings, which he disclosed to the girlfriend for use in connection with her civil suit. Outrageous? You bet. Hunter sued the SEC and Heffernan for the RFPA violation. This is how the court handled the prospect: “When he engaged in communications or transactions with financial institutions and implicitly consented to their maintenance of records reflecting his personal affairs, however, [Hunter] reasonably may have expected that this information could be acquired and disclosed by government agents only as provided by law. It would be reasonable for him to expect that financial records obtained by a government agent in connection with an investigation would be ‘used only for the purpose for which they were originally obtained,’ see 12 U.S.C. § 3413(h)(4), and disclosed only for the purposes delimited by the Right

Neece v. I.R.S. of U.S., 922 F.2d 573 (10th Cir. 1990). Neece v. I.R.S. of U.S., 1993 WL 305963 (N.D.Okl. 1993). 8 Parten v. Air Force, 1998 WL 67770 (8th Cir. 1998). 6 7

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to federal authorities investigating the bank robbery. For her trouble, she was rewarded with a lawsuit by Lewis, seeking $2 million in damages under 42 U.S.C. § 1983 for her role in helping the police—assistance that he claimed violated his rights under the Fourth Amendment. to Financial Privacy Act. He retained a legitimate, if limited, expectation of privacy in information derived from records of financial institutions pertaining to his relationship with them, see 12 U.S.C. § 3401(2), sufficient to protect against gratuitous disclosure by a government agent to a private party for her use in pursuing her personal objectives. [Hunter] has set forth a Bivens claim against defendant Heffernan for invasion of privacy sufficient to withstand a motion to dismiss.”9 The only other case that raised the specter of punitive damages involved a bank that accessed an employee’s banking information for (according to the plaintiff) the express purpose of sharing it with her co-workers (presumably to make them hate her more). Again, some outrageous facts. These cases are rare, as are cases in which true RFPA violations are found.

Lawsuits against state agencies and private actors Bank customers sometimes sue state officials (police, state district attorney offices, municipalities) or private actors (including their own lawyers) for violating the RFPA. However, the RFPA does not purport to regulate these players. These cases are filed, but they never win. There are 33 published and unpublished opinions. No victories here for the plaintiff. The dismissals, in fact, are often very summary, with the court firmly explaining that RFPA does not apply to anyone other than federal law enforcement and banks.

Did we get it right? This historical legal analysis was comforting to me, as I worried about the possibility that American counterterrorism agents might get too close to banks in conducting their investigations during 9/11 and thereafter. The recognition of this jurisprudence is surely one reason why FinCEN set up a hotline for banks to provide spontaneous, informal cooperation about suspicious activities by their customers to the federal government. It also has the benefit of being logical and correct in terms of what we want in a post-9/11 counterterrorism climate, especially when one considers the goals of the BSA. Perhaps a hypothetical will drive the point home. Imagine if a bank robber goes into his local branch armed with a pistol, and takes away several bags of cash at gunpoint. Because he is a customer of the bank and is recognized by the tellers, they have no trouble pulling up his name and address and supplying it to the FBI agents responding to the robbery. This is done without a subpoena. Should the bank robber, once convicted and sitting in prison, be permitted to sue the bank for its “informal” cooperation with the FBI that he claims violated the RFPA? Believe it or not, this is a real case. On November 28, 2001, in Indiana, the Midwest Federal Credit Union was robbed by two masked gunmen. Susan Bolden, on the job as the branch manager, witnessed the crime. She turned over the names and social security numbers of both DeWayne Lewis and Todd Andrews

The court did the right thing. Not only did it not entertain Lewis’ lawsuit, but it issued a protective order preventing Lewis from suing or otherwise harassing her. As the court noted: “As the victim of a credit union robbery who was only trying to help the police in a manner expressly authorized by law, Bolden is entitled to protection from lawsuits demanding millions of dollars from her personally that are based on her assistance to the authorities—lawsuits that require her to hire a lawyer and to expend significant resources in her defense.”10 This may have been our sentiments in the immediate aftermath of 9/11, if any of our friends in the banks’ compliance departments that helped us without formal legal process in the investigation had been sued (especially if the plaintiff was someone who participated in the 9/11 crime). The banks, as I said, were personally impacted by the events of 9/11. They responded, by bending over backwards to help us, on the assumption they knew what we were looking for. Fortunately, much like we anticipated at the time, the RFPA was not rolled out to challenge this act of patriotism. 

Jeffrey Breinholt, counsel for law and policy, National Security Division, U.S. Department of Justice, Washington, D.C., [email protected] The views in this article are the author’s own and do not necessarily represent those of the Department of Justice.

“Hunter v. S.E.C.,” 1995, http://www.leagle.com/decision/19951373879FSupp494_11279/HUNTER%20v.%20S.E.C. U.S. v. DeWayne Lewis, September 21, 2004, http://openjurist.org/411/f3d/838/united-states-v-lewis

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AML CHALLENGES

Banking law enforcement undercover operations

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ndercover operations are an extremely valuable and productive law enforcement tool. They frequently result in high-profile criminal prosecutions. Undercover cases range from public corruption to organized crime, drug trafficking, financial crimes, counterfeit goods, smuggling, government contracting and other criminal activities. Many of these activities also involve money laundering and fraud. In today’s world, the FBI has adeptly applied the undercover technique to deal with homegrown violent extremists, who are intent on committing terrorist acts. Unfortunately, there have been an alarming number of these situations in the past few years. Fortunately, these extremists are not well trained, have the desire to conduct a spectacular terrorist act that they are not capable of without assistance and consequently attempt to recruit other extremists believed to possess the required skillsets, who invariably turn out to be undercover FBI agents.

Two very high-profile FBI undercover operations that took place in the same time period were the Donnie Brasco organized crime case and the ABSCAM public corruption investigation. The Brasco case was initiated in 1976 and ABSCAM was initiated in 1978. Not only did these two cases result in significant criminal prosecutions, but they also served to shape and define the FBI’s undercover program going forward. The movie Donnie Brasco was based on the FBI’s undercover operation. FBI Agent Joseph D. Pistone went undercover using the alias name Donnie Brasco. Pistone succeeded at infiltrating the Bonanno crime family. The operation ran from 1976 to 1981. The evidence collected by Pistone led to 200 indictments and over 100 convictions. This investigation reinforced the requirement for rigorous undercover training for potential undercover agents. Pistone was meticulous, extremely disciplined and detail oriented. Also, due to the nature of the investigation, Pistone crossed the mental line between

law enforcement and organized crime. In part, this led to the requirement of certifying that FBI undercover agents were properly trained and psychologically fit to handle the stressful demands of deep undercover work. ABSCAM started as a sting operation focused on theft, forgery and stolen art. It quickly morphed into a public corruption investigation. ABSCAM resulted in the investigation of more than 30 political figures. Six members of the U.S. House of Representatives were convicted, as was one senator, the mayor of Camden, New Jersey, a member of the state Senate in New Jersey, members of the Philadelphia City Counsel and an inspector for the U.S. Immigration and Naturalization Service. The U.S. Congress was outraged by the ABSCAM investigation and held public hearings criticizing the FBI undercover technique. To ensure the integrity of undercover operations, on January 5, 1981, Attorney General Benjamin Civiletti issued The Attorney General’s Guidelines for FBI Undercover Operations.1

Understanding the methodology ABSCAM taught law enforcement, especially the FBI, the importance of establishing and following stringent rules to govern use of the undercover technique. The undercover technique is an extremely valuable law enforcement tool. If undercover guidelines are not strictly enforced and best practices are not closely followed, law enforcement risks losing undercover authority. Almost all law enforcement undercover operations adhere to strict guidelines. In those rare situations where rogue operations exist, they are dealt with harshly once they are discovered and they will be discovered. The Undercover and Sensitive Operations Unit, Attorney General’s Guidelines on FBI Undercover Operations, was revised on November 13, 1992. The introduction of the guidelines states: “The use of the undercover technique, including proprietary business entities, is essential to the detection, prevention,

Benjamin R. Civiletti, “Attorney General’s Guidelines on FBI Undercover Operations,” 1981, https://www.ncjrs.gov/App/Publications/abstract. aspx?ID=74988

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and prosecution of white-collar crimes, public corruption, terrorism, organized crime, offenses involving controlled substances, and other priority areas of investigation. However, these techniques inherently involve an element of deception and may require cooperation with persons whose motivation and conduct are open to question, and so should be carefully considered and monitored.”2 An undercover operation is a covert operation requiring undercover operatives to use aliases and proprietary business fronts, as part of their deception, in order to penetrate criminal or terrorist activities. By doing so, law enforcement can collect evidence not otherwise available through traditional investigative techniques and to generally do so in a more timely fashion. Frequently, undercover operations present the opportunity to video tape and/or audio tape

activity, potential liability and other considerations, there are different levels of approval. Undercover operations dealing with sensitive circumstances will require presentment of a proposal before a headquarters undercover review committee. In the case of the FBI, the Undercover Review Committee is comprised of FBI and Department of Justice (DOJ) senior executives. The Committee approves or disapproves undercover proposals. Approved undercover operations are subject to ongoing oversight and review for the duration of the operation. This is to ensure the undercover operation adheres to the Attorney General’s Guidelines, remains properly focused, and monitors the safety and psychological well-being of undercover personnel. It is easy to lose investigative focus and stray from an investigative plan.

Continuous oversight—especially for deep and long-term undercover operations—is essential

meetings and conversations. This usually results in developing incontrovertible evidence used to obtain criminal prosecutions. Video and audio recordings do not lie. When subjects of an undercover investigation are recorded openly discussing their criminal activity with undercover operatives they provide compelling evidence against themselves. This has become particularly important in recent years in undercover operations involving homegrown violent extremists planning to conduct terrorist attacks in the U.S. Invariably, these individuals lack the terrorist tradecraft to carry out their plans and wind up recruiting undercover FBI agents, who they believe are terrorist operatives, to assist in bringing their attack to fruition. The scenario is allowed to play out with fake bombs and/or inoperable firearms. Depending on factors, such as the sensitivity of an investigation, the funding requirements, the nature of the criminal

Likewise, it is tempting for undercover operatives to get caught up in their role and become cavalier or impacted by the stress of the situation. This is why continuous oversight—especially for deep and long-term undercover operations—is essential.

Financial institution cooperation In most undercover situations, the undercover operation is going to require one or more covert bank accounts. Section IV (C)(1)(b) of the Attorney General’s Guidelines mandates FBI Headquarters’ approval to “[r]equire the deposit of appropriated funds or proceeds generated by the undercover operation into banks and other financial institutions.” In some undercover situations, law enforcement might contact a financial institution at the outset of an undercover operation to set up a covert bank

account. In many of these situations, it will be with an institution in which the investigators have strong working relationships. In many situations, due to the sensitive nature of the investigation, law enforcement will have the undercover operatives open covert accounts and not disclose the nature of the accounts to the financial institution. In such situations, the financial institution could generate alerts regarding the undercover account through due diligence, transaction monitoring or other alerting mechanisms. This could escalate to contacting the customer (the undercover operative) or filing a suspicious activity report. Depending on the situation, at that point, law enforcement might choose to disclose the nature of the account to the financial institution. Regardless of how a financial institution determines that a customer account is an undercover law enforcement account, once that determination is made, the financial institution has an important decision to make: Do they open, maintain or close the undercover account. This is where public/private partnerships and understanding perspectives come into play. It is incumbent that law enforcement and the financial institution understand the perspective of the other in establishing and sustaining a cooperative relationship regarding these matters. In situations where a financial institution does not identify a covert undercover account, it is not likely that law enforcement will report the financial institution for having anti-money laundering (AML) shortcomings. The approved purpose and focus of an undercover operation is on a specific predicated criminal activity and not on a financial institution’s AML program. The only situation where law enforcement might report or investigate a financial institution in these circumstances, would be if the financial institution’s conduct was determined to be complicit or extremely egregious.

Protecting the financial institution from liability In operating an undercover operation and relying on bank accounts to develop evidence, the primary consideration of law enforcement is to obtain a criminal

“Undercover and Sensitive Operations Unit, Attorney General’s Guidelines on FBI Undercover Operations,” The U.S. DOJ, November 13, 1992, http://www.justice.gov/ag/undercover-and-sensitive-operations-unit-attorney-generals-guidelines-fbi-undercover-operations#introduction

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The objective of an undercover operation is to protect our national security and our economy from criminal exploitation

prosecution. Conversely, a financial institution’s primary consideration is to protect itself against liability and/or monetary loss. Each side must understand and respect the perspective of the other side and work together to establish a middle ground where the prosecution is balanced against the potential liability and/or monetary loss. In situations where law enforcement requests that a financial institution open a covert bank account at the outset, or after the financial institution discovers a covert account and law enforcement requests that the account not be closed, law enforcement should consider providing the financial institution with written assurance. Where undercover operations are involved, law enforcement and the DOJ or the prosecutor’s office (in the case of federal prosecutions, a U.S. Attorney’s Office) should enter into a Memorandum of Understanding (MOU) with the financial institution. In many situations, law enforcement will indemnify the financial institution against financial loss. If a financial institution chooses to bank a law enforcement undercover account, it is strongly recommended that the institution go to the FBI or DOJ website and download the revised Undercover and Sensitive Operations Unit, Attorney General’s Guidelines on FBI Undercover Operations.3 The Guidelines are readily available. In the event that a financial institution is not comfortable with the undercover account activity, they should discuss their concerns with the prosecutor responsible

for the case, or go directly to the DOJ or to the head of the law enforcement field office conducting the investigation. In terms of best practices between law enforcement and financial institutions—regarding the maintenance of undercover accounts—trust, proper planning, education and communication are of paramount importance. Without trust, law enforcement and financial institutions will be reluctant to plan together and adequately communicate with each other. Building trust comes with establishing working relationships and understanding perspective. Proper planning will entail discussing and understanding the purpose for the account, the anticipated flow of funds and why the specific institution or a branch or other institutional entity is required. In one sense, planning would be part of the education process. Education should be a two-way street where law enforcement educates the financial institution about the undercover process and financial requirements. Education also includes the financial institution explaining how banking processes work and emphasizing the importance of financial intelligence and where to find relevant financial evidence. Without clear communication, the elements of trust, planning and education will be hard pressed to succeed.

Post investigation review At various stages of an investigation, and at the completion of an investigation, law enforcement should conduct an after-action review to assess what worked well, what could have worked

better and what did not work. Based on lessons learned, future undercover operations should be better positioned to succeed. Likewise, when a financial institution learns that an undercover case has been completed, or at the time the undercover account is closed, the financial institution should conduct an after-action review to assess how the account operated, what issues were encountered by the financial institution, how they were handled and how they could have been dealt with more effectively. To the extent allowable and practical, law enforcement and financial institutions should meet and jointly assess the undercover account relationship. This is an outstanding opportunity to strengthen trust and identify and heighten best practices. However, this may not be possible because of the sensitive nature of many undercover operations, the grand jury and investigative requirements not to discuss investigative information, and other considerations. However, to the extent information can be shared, it would serve to enhance trust, planning, education and communication.

Conclusion Undercover operations are an extremely valuable and productive law enforcement tool. Invariably, by their nature, many undercover operations must have covert bank accounts. Financial institutions can either impede or facilitate the operation of such accounts. It is imperative that law enforcement and financial institutions work together to ensure that undercover bank accounts are properly used to develop the evidence to support a successful criminal prosecution. At the end of the day, the objective of an undercover operation is to protect our national security and our economy from criminal exploitation. Regardless of their perspectives, law enforcement and financial institutions share the objective of protecting national security and the economy. 

Dennis M. Lormel, CAMS, internationally recognized CTF expert, president & CEO, DML Associates LLC, Lansdowne, VA, USA, dlormel@dmlassocllc. com

“Undercover and Sensitive Operations Unit, Attorney General’s Guidelines on FBI Undercover Operations,” The U.S. DOJ, November 13, 1992, http://www.justice.gov/ag/undercover-and-sensitive-operations-unit-attorney-generals-guidelines-fbi-undercover-operations#introduction

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Facing the challenge of sanctions

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eaders will not need reminding that the obligation of firms to conduct effective due diligence is one that is constantly evolving, not to mention growing. Recent events have also demonstrated that despite the ever-increasing regulatory environment, there has been little in the way of reduction in efforts to circumnavigate those regulations. There will be much commentary on the Panama Papers elsewhere, but the revelations contained therein only serve to illustrate that the greater the efforts are to curb financial crime, the greater bad guys’ efforts will be to find ways around them. This is not a reason to stop, but a reason to remain vigilant and diligent.

financing and sanctions compliance— each of which pose different challenges and require different expertise. As we have seen, even with these resources, some firms often get it wrong.

The violation of sanctions in the jurisdictions to which they apply is, or should be, a criminal offense. Increasingly, states are acknowledging this fact by augmenting their law enforcement agencies with the expertise and knowledge to identify such violations, with a view to prosecuting violators. The Office of Foreign Assets Control (OFAC) in the U.S. has been vigilant in this area, and others are increasing their capacity. The U.K. has recently created the Office of Financial Sanctions Implementation (OFSI),1 which will focus attention on advising the regulated sector on how to implement the various sanctions regime measures, and will also be instrumental in providing evidence of violations to law enforcement for the purposes of prosecution.

The challenge

Big, well-resourced firms in the regulated sector and beyond have the luxury of being able to maintain large compliance departments, focusing on the different obligations and threats posed by both financial crime and the regulations. They will have a compliance department containing sections responsible for internal audit, anti-fraud, anti-money laundering/counter-terrorist

This only serves to highlight the challenges faced by small- and medium-sized enterprises, for whom compliance can place a disproportionate, though essential, strain on their budget. For these firms, there is no luxury of separate departments and an often very small compliance office needs to be omnicompetent and ready for anything. The issue of sanctions is a case in point and one that needs constant attention.

The initial challenge is at the customer onboarding stage. It is imperative that a tight distinction is drawn between sanctioned individuals/entities and politically exposed persons (PEPs). As we know, identification of a potential customer as a PEP creates the need for enhanced due diligence, both at account opening and during the life of the business relationship—this does not of itself mean a bar to that relationship. With an honest PEP and a sound risk assessment, the business can happily be undertaken, albeit with constant monitoring. However, if a customer is identified as being designated under a sanctions regime, it is a very different matter. A lot will depend on the regime under which the customer is designated, but if it is one that covers the jurisdiction in which you operate then you cannot do business with them. Any identification of designation will be a major red flag whether or not it covers your operation, since reputational risk may well be present even if legal risk is absent.

https://www.gov.uk/government/organisations/office-of-financial-sanctions-implementation

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Types of sanctions To clarify the different types of sanctions out there, let us look at some of them. The most well-known sanctions, and those that have universal application, are those imposed by the United Nations Security Council. All countries in the world, save Kosovo, Taiwan and the Vatican City, are member states of the U.N., and are bound by their membership to uphold its resolutions, particularly those adopted by the Security Council under Chapter VII of the U.N. Charter. Therefore, it should be the case that violation of such sanctions, whether by those designated or by those acting on their behalf, are criminal offenses in each member state. Some member states have difficulty achieving this, as their domestic legislation does not include the necessary provisions, for example, to freeze assets pursuant to U.N. sanctions where no actual crime has been committed, but the obligation remains.

The issue of sanctions is a case in point and one that needs constant attention

In many jurisdictions, asset freezing is dependent on the assets’ involvement in terrorism or if they were the proceeds of crime (drug trafficking, theft, etc.). An asset freeze measure is not concerned

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If you have exposure to sanctioned countries or sectors of industry, a thorough knowledge of the details is absolutely essential

INTERNAL AUDIT SANC COMP TIONS LIANC E

with the origin of the assets, only with the fact that they are owned or controlled by a designated individual or entity. Then we have sanctions imposed by the EU and other international organizations, whose reach extends to their member countries. Finally, unilateral sanctions imposed by individual countries, such as the U.S. (under OFAC), and the U.K. (under HM Treasury). Most other developed countries have similar regimes. These latter sanctions generally apply to business conducted with designees within the states’ jurisdiction and sometimes to nationals of those states wherever they are located. This leads to instances where an individual may be identified as being designated under a particular country regime, to which your firm may have no exposure. In such cases, it makes sense to fully investigate the nature of the sanctions regime in question and why the individual concerned is designated thereby. In most cases, a strong reputational risk is attached—depending on the reason for designation—and it is likely that the individual is a PEP as well, since many designees are members of governments. In either case, escalation to senior management for a

should, for example, be frozen. This follows the layering process used in money laundering, utilizing front companies, proxy accountholders and placement of the assets in jurisdictions with less than perfect controls, especially offshore. A quick look at some of those mentioned in the Panama Papers will confirm this.

ANTI-MONEY LAUNDERING

CTF

decision is essential. However, where the sanctions regime covers your operation, there is no doubt that you should submit a suspicious activity report and refuse to do business with them. The last type of sanctions regime covers whole countries and/or particular sectors, such as those imposed on Iran and Russia. If you have exposure to sanctioned countries or sectors of industry, a thorough knowledge of the details is absolutely essential.

Beneficial ownership The experiences of dealing with the asset freeze regime imposed on Libya since 2011 has identified a very difficult issue faced by all those investigating violations—not least compliance departments, that is, identifying the ultimate beneficial owner (UBO) of assets or companies wishing to use your facilities. If a designee has a controlling interest in such assets, this is a bar to doing business. In the U.S., 50 percent ownership by designee(s) is the limit and in the EU it is 25 percent. The difficulty is that many of those subject to sanctions have developed sophisticated means of hiding their interest in assets that

The fact that they are hiding the ownership of the assets to prevent freezing also means that it is very difficult to establish the involvement of a sanctioned individual or company in any business relationship that is proposed or ongoing. Therefore, it is imperative that the know your customer/know your business process demonstrates and records scrupulous identification of beneficial owners, and effective screening of the names once identified. Never rely on third parties’ assurances that they have done the necessary inquiries. Imagine the reputational consequences of having done business with sanctioned terrorists, not to mention the potential criminal penalties. The point of all of this is to emphasize that it is essential to have a firm policy on the matter of sanctions, starting with a broad risk assessment identifying potential vulnerabilities, such as target customer profiles, geographical exposure and sector exposure. What form of name screening do you use and is it fit for purpose? Do you have ongoing screening of your client base (a client could be put on a list tomorrow) and if so, how frequently is it done? You do not want to discover that you have been doing business with an individual who was sanctioned the day after your last check a month ago. Such an in-depth risk assessment, combined with diligent UBO identification and regular client screening with a good quality name checking solution will go a long way toward minimizing the chances of doing business with sanctioned customers with all of the potential consequences this entails. These consequences involve the very real possibility of prosecution, and at least regulatory action, with the concomitant financial and reputational risks, not to mention imprisonment. 

Simon Dilloway, BSc (Hons), MSc, CSyP, FSyI, principal, Lopham Consultancy, South Lopham, Norfolk, U.K., [email protected]

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T

his article is not meant to embarrass, put down, or offend persons suffering from addiction. It is a clear description of persons who use and abuse opiates and synthetic opioids. It is happening now in our communities and it could affect your family members, neighbors, co-workers and members from all professions. It can affect anyone regardless of race, ethnicity, gender or socio-economic status, as illegal drug dealers and drug users are not biased. To drug dealers and users it is about making money and getting high.

Who could have ever guessed that a flowering plant named Papaver Somniferum would cause in our time one of the worst illegal drug epidemics in history? The Papaver Somniferum plant produces a pod that contains raw opium. Morphine is derived from the raw opium and several opiate drugs, including heroin, are produced from the morphine. Is the zombie apocalypse real? Members of law enforcement and firefighters will tell you it is. However, it is not the flesh eating creatures you watch on television or see in the movies, but rather a drug that takes over the body and mind. Visit your local hospital’s emergency room and see what we see almost every day and you will agree that this zombie apocalypse exists.

Production and transportation Afghanistan was the largest producer of raw opium until several years ago when Mexico began growing poppy fields. With illegal drug routes already established to export cocaine, methamphetamine and marijuana out of Mexico, now vast shipments of heroin travel these same routes for distribution throughout the world. Cartels use submarines, vehicles, mail services, underground tunnels and planes to smuggle heroin from Mexico into the U.S. Just recently, a tunnel was discovered that led from

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Mexico to San Diego, California. The tunnel measured over 800 yards complete with lighting and ventilation. Also discovered was over $20 million in cocaine and marijuana. Financial institutions (FIs) can help identify smugglers through both employees and employers of illegal businesses such as these. Usually the groundworkers are paid in cash and at times can be paid very well. Red flags can be found in straight cash businesses. Anytime a customer makes numerous cash deposits a suspicious activity report (SAR) could be warranted. It is always important to know your customer and what is their true business. An excavator, who buys large pieces of equipment for their business but can never say where they are performing their work, is a clue in my opinion. Another common way to smuggle illegal drugs is through a body packer. If you are curious what a body packer is, it is simple: 1) Fill somewhere between 50 to 150 balloons with heroin; 2) Tie off the balloon at the end and coat the balloon to make it slick; 3) Enlist a person through promises of a large payment if successful in smuggling the balloons

AML CHALLENGES

through customs or through threats toward family members for refusal to smuggle the drugs. The enlisted body packer will swallow the balloons and begin a dangerous trip to their destination and a race against time. As the balloons go through the digestive system, the stomach acids begin to eat away at the balloons. The body packer must make it to their destination before the stomach acids dissolve the balloons completely and the heroin is released into the body causing death from overdose. If the body packer is successful, a laxative is taken and the balloons exit the body.

Wholesale and retail Once the heroin has arrived to its destination, it is broken down to be sold at the street level. The wholesaler usually has not stepped on his product at this point. This means there is no cut added to increase the size or value of the drug. The heroin may go through several wholesalers and depending on how much heroin is needed, cut may be added (stepped on) later depending on the number of times it is resold and the reputation of the wholesaler. A wholesaler who adds too much cut to his product will not last long in the illegal drug market. Cut is any additive that has the same appearance as the drug (e.g., inositol, baby powder, creatine, or any substance legally purchased in a retail store). If you have one ounce of heroin and one ounce of a legal powder and you combine the two, the illegal distributor now has two ounces of heroin and their profit is doubled. When heroin is manufactured there is no such thing as 100 percent pure heroin—it will always contain impurities. Once cut is added, the heroin becomes even less pure. The normal purity level in Northern Virginia can be anywhere from 6 to 12 percent pure. This is one of the reasons that lead to overdoses. If an addict continues to go to the same 10 percent purity dealer who sells heroin, and then goes to another dealer who is selling it at 20 percent pure and has a different cut added, the human body will react differently and it may possibly lead to death. Purity levels can be higher in other parts of the world. Purity levels can range from 30 to 50 and even 60 percent. Once heroin gets to the retail phase for sales this is where it truly becomes dangerous for the customer (addict). Jurisdictions throughout the country are

My Safety Plan I know that abstinence (not using) is the only way to be sure I do not overdose. But if I relapse, I will take these precautions to prevent overdose:

□ I know that after not using for a while, my tolerance will be lower. So I will avoid using large amounts of opiates, benzodiazepines, and/or alcohol.

□ I will not use drugs and alcohol together and I will not mix drugs (including prescribed drugs).

□ I will take my prescription medications as prescribed and I will not abuse them.

□ I will be careful where I get my drugs. I know the strength of the drug may differ among dealers.

□ I will try not to use alone so that I always have someone near who can help me if I overdose.

□ I will participate and encourage others to participate in a Revive

opiod overdose reversal training (www.fairfaxcounty.gov/csb/revive).

□ I will try not to use drugs by injection. □ If I relapse, I agree to tell __________ and ask for help. □ If I am in danger, or if someone I am with is in danger, I will call 911.

seeing heroin cut with other legal and illegal drugs. Fentanyl is becoming more common as a cutting agent or is being sold as heroin. Fentanyl is a synthetic opiate and a powerful painkiller and can be 50 to 100 times more potent than heroin. The user will never know what they are injecting or snorting.

Chasing the dragon Once heroin enters the human body for the first time it causes an extreme euphoric effect. It has been described as the best feeling possible. The human body quickly begins to build up a tolerance to heroin and it takes more and more to achieve the high. Users never achieve the same high as the first time and they call this “Chasing the Dragon.” The more the addict uses heroin the more it begins to destroy the human body. The different types of cuts that are used can also affect the human body and at times can be poisonous. The problem with distributors is that there is never a lack of them. Once one is arrested, two more take their place. No dealer sells the same product from the wholesaler. The business of illegal drug dealing is to make money. The more you cut your product the more money you will make. The biggest problem facing

us all is the demand. There is such a demand for heroin that there will always be a supplier. One of the big reasons for the sharp rise in heroin use is the over prescribing of opiate painkillers. For example, a high school student gets seriously hurt during a sporting event. A doctor prescribes an opiate for pain. The student becomes dependent on the drug and the doctor refuses to refill the prescription. The student turns to heroin to feed the habit. Heroin use has no age limit, we have seen persons as young as 16 and as old as 60 use and abuse heroin.

Truth be told: What can I do? One of the more startling statistics in Virginia was a wakeup call for many. There were 728 overdose deaths in the Commonwealth of Virginia in 2014 and 700 deaths related to traffic accidents. In Fairfax County alone, there were six confirmed overdose deaths reported with 28 more awaiting results from the medical examiner in 2015. Fairfax County Police initiated a heroin task force to attack this increasing risk to communities and its residents. A detective is currently responding to every overdose and providing written material

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The first line of defense in saving a life is working together

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on how to get help through community services. As an example, on page 29 is a card that is included in a packet that each overdose victim receives. This is now where FIs come in. Law enforcement will never be able to arrest its way out of this problem. In my 33 years of law enforcement experience there is no other drug that has held a grip on society like heroin. Only together can we make a difference. The money laundering playing field is more sophisticated than ever. Bitcoin, mobile banking, reloadable cash cards and bulk cash smuggling, are just a few methods utilized today. I cannot stress enough the importance of law enforcement and FIs working and sharing information together. Truly if you “See something, say something” is the biggest defense to attack criminal activity. SARs are another great tool, but so is picking up the telephone and calling your local/federal law enforcement agency and vice versa from our end and meeting each other. The sharing and exchange of information from both professions is the key to attacking this growing epidemic. The first line of defense in saving a life is working together. Time and time again, FIs are told to complete a SAR on suspicious activity. As the writer, you want to know what we in law enforcement want to read when reviewing a SAR. The best answer is plain and simple: Why is this suspicious to you? When completing a SAR tell the reader, in the simplest form, why this was raised to a level for you to complete a SAR.

Help us make a difference— Help us save a life We in law enforcement enjoy meeting new people and making new contacts. Anything that can aid us in catching the criminals is what we live for. If you want training, just ask your local law enforcement or contact the federal law enforcement agency in your area. Knowledge is power. Understanding criminals and their desire to make money through criminal acts and their continued attack on FIs to hide ill-gotten gains is necessary. We can both learn from each other and through this, we can make communities safer for all. In addition, know the source countries where heroin is coming from: Mexico, Afghanistan, Laos, Vietnam, Burma,

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Thailand and Colombia. Do they have business with your institution? Does this mean that everyone who conducts business with you from one of these countries exports heroin? Of course not. This is where customer due diligence and know your customer come into play. If it sounds suspicious to you, I can guarantee it will probably be suspicious to us in law enforcement. You will probably never write a SAR on a user who withdraws $20 to $60 at a time several times a day to purchase heroin. You will probably never write a SAR on a street dealer who typically never uses an FI. You will probably write a SAR on a wholesaler who is trying to launder money through an FI. You will probably write a SAR on a person who utilizes cash cards, travel to source countries, stays for short periods, and makes more money than the business they can account for. I do not need to tell you how to do your job nor would I ever. Nor would I want you to come to my office and tell me mine. I am just asking you to help me save a life. I have personally seen what heroin can do to a person, their family and friends. I am truly tired of seeing young people die from an illegal drug when it could have been prevented. I talk to other jurisdictions, federal law enforcement agencies and community services. We are all tired of watching people suffer and die. Wholesalers and dealers do not care and they just want to make money. We should not think that way and as a world, this way of thinking cannot be acceptable. What else can we do? Go into your medicine cabinet and see if you have any prescription drugs that are expired or that you no longer need. This is something we want you to realize especially if you have children or have placed your home for sale and people are conducting walkthroughs to look at your home. Possibly your children, or their friends, a relative, or a potential buyer for your home will go into your bathroom, into your medi-

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cine cabinet and steal your prescription drugs. I guarantee that someone who reads this has already had this happen to him/her. The abuse of prescription drugs leads a user down a road with dire consequences. Prescription pill abuse can lead to the use and abuse of heroin. By removing just one temptation it can lead to lasting results. Moreover, I highly recommend you view a program recently produced by the FBI and the DEA titled “Chasing the Dragon: The Life of an Opiate Addict,” (viewer discretion is advised due to strong language and graphic images). It can be seen by going to www.FBI.gov/ ChasingTheDragon. This documentary is enlightening as well as eye opening.

Conclusion Heroin is a man-made creation that may first lead to a euphoric effect, but in the end can lead to death. It is a monster without a face, feelings, or thought. Addiction is a disease with almost an uncertain cure. One way to end this vicious cycle is stopping it before it starts. Together we can try to make a difference by learning from each other in this ever-growing battle. Only together can we possibly hope to win this war through combined and targeted attacks on criminals and the monies derived from criminal acts. If you see something, say something. Law enforcement and FIs are different professions, but our common goal is the same: not allowing criminals to corrupt society, insuring legitimate businesses thrive and making sure at the end of our perspective shifts that we make it home alive. 

James A. Cox III, CAMS, second lieutenant, Fairfax County Police Department, Fairfax, VA, USA, james.cox@ fairfaxcounty.gov

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© 2016 Dow Jones. All Rights Reserved.

AML CHALLENGES

Human trafficking: Combating this complex crime

H

uman trafficking is the exploitation of people for commercial sex or for labor; it is modern-day slavery. It plagues not only foreign countries but many communities in the U.S. To combat this heinous crime, it is essential for global communities— and particularly law enforcement and those in the financial industry— to better understand human trafficking, recognize its complexity and to do their part to combat it. The crime There is no question that human trafficking occurs globally. The 2014 Trafficking in Persons Report issued by the U.S. Department of State reported that in just one year 44,000 survivors of trafficking were identified worldwide. The report also estimated that more than 20 million victims of trafficking have not been identified. Today, because of this widespread problem, human trafficking is criminalized by most countries. In the U.S., the Trafficking Victims Protection Act (TVPA), which was enacted in 2000, is the federal anti-trafficking law. Title 18, U.S.C., Section 1591 criminalizes sex trafficking, and Sections 1589 and 1590 criminalize forced labor and labor trafficking. In South Florida alone, the U.S. Attorney’s Office for the Southern District of Florida has prosecuted 69 human trafficking cases charging 114 defendants in

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federal court since 2009. These numbers do not include cases that have been prosecuted in Florida state courts. What the statistics do not tell is the pain and suffering behind every human trafficking survivor’s victimization. Every victim’s dark journey into slavery begins with their vulnerability even before they are trafficked. Victims of human trafficking may be vulnerable for various reasons. Many victims are runaway and homeless youth, undocumented migrants, persons addicted to alcohol or drugs, and impoverished groups and individuals. These circumstances make people especially susceptible to recruitment and control by human traffickers. Still, it is important to recognize that some victims of human trafficking do not fall into any of these groups. Some victims of human trafficking are vulnerable simply because they are young, naïve, in a bad relationship, or going through a difficult period in their lives. Sometimes victims of human trafficking are vulnerable just because they happen to be at the wrong place at the wrong time.

Traffickers routinely use false promises and fraudulent representations to lure and recruit victims. Once the victim is obtained, the traffickers will often resort to coercion and force to exert their control. For example, traffickers might falsely advertise that employers are looking for “models” to lure potential victims and then use coercion and force to compel the victims to engage in commercial sex acts. In this scenario, coercion, force and fraud are all methods used to commit the crime of sex trafficking. In cases involving sex trafficking of minors, the traffickers may also use force, fraud, and/or coercion. However, traffickers also use mere influence or persuasion to induce minor victims to engage in commercial sexual acts. The TVPA does not require that the government prove force, fraud, or coercion to prosecute offenders who have engaged in the sex trafficking of minors. Indeed, there is a general agreement in much of the international community that anti-trafficking laws apply in cases involving the recruitment, enticement, harboring, transporting, providing, advertising, or maintaining of children

for commercial sex acts whether or not the minor is willingly engaging in the commercial sex acts. Although victims of human trafficking are often transported to work locations by traffickers, the movement of human trafficking victims across borders or even from one location to another is not required. Human trafficking is not transportation-based like narcotics trafficking or alien smuggling offenses. Human trafficking is about the exploitation of people for commercial sex or labor, and not about border crossings or movement.

Why the identification and prosecution of human trafficking is complicated Identifying human trafficking is extremely challenging for a number of reasons. First, human trafficking is not easily defined because it takes many forms and is also often confused with alien smuggling. Sex trafficking, forced labor and involuntary servitude are criminalized in the U.S. and are the main forms of human trafficking. However, other forms of conduct are criminalized as human trafficking in other countries. To complicate matters further, the use of the term “trafficking” often leaves people to mistakenly assume that the movement or transportation of victims is required in human trafficking. Second, human trafficking is a hidden crime. Whether traffickers are exploiting people for labor or commercial sex, the victimization is usually occurring behind closed doors or away from the public eye. Even victims of forced labor who are working openly at business locations such as restaurants, salons, country clubs or massage parlors are unlikely to be easily identified as human trafficking victims. Third, the schemes used by traffickers to recruit, obtain, or maintain victims vary and every victim’s exploitation is different, which makes it more challenging to identify. For example, labor traffickers often knowingly make false promises and provide false information in labor contracts to obtain workers. These traffickers may

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then use subtle forms of coercion and threats of deportation to maintain custody and control over the workers. However, significant investigation is required to determine what false promises were made in addition to establishing what coercive means were utilized by the traffickers. In another scenario, an adult victim of sex trafficking may have agreed initially to engage in commercial sex acts but is later forced to continue to do so even after the victim no longer wants to work for the trafficker. Here, the crux of the case is corroborating the victim’s statements about the force and coercion used by the trafficker. Because of the varying victim circumstances and degrees of control and coercion used by traffickers, it is not always easy for any of us to identify human trafficking without a more thorough investigation and careful consideration. In fact, I routinely receive calls from law enforcement officers asking me whether or not a particular situation is human trafficking. We usually have to work through the evidence in detail together before determining the answer. Fourth, victims are much less likely to report human trafficking than victims of other crimes. Victims of human trafficking usually do not identify themselves as victims of this crime. To the contrary, although victims of human trafficking know they have been defrauded or abused, many are completely unaware that they have been trafficked. Moreover, traffickers often prevent victims

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from reporting to authorities through force or threats of deportation, physical or reputational harm.

quately demonstrate the fraudulent schemes in human trafficking cases can be complex and time consuming.

The challenges continue even after human trafficking is detected and a victim is rescued. Many victims are afraid and hesitant to cooperate with law enforcement, which makes it difficult to assist victims and ensure that they do not return to their traffickers. Food, clothing, medical attention, psychological care, housing and employment are just some of the things that survivors of human trafficking need when they are encountered. Providing for the needs of human trafficking survivors requires significant resources and is reliant on many different entities and individuals.

Recommendations

Finally, gathering sufficient evidence to successfully prosecute a human trafficking case is always challenging. The government must corroborate the victims’ accounts through other independent evidence such as contractual agreements (if they exist), financial records, travel records, another witness’ testimony, and records for phone and electronic communication accounts. As a federal prosecutor who previously worked on white-collar cases for seven years, I can honestly say that human trafficking matters are some of the most complex cases that I have handled. Separate from the difficulties of corroborating the victims’ testimony, the legal challenges and the ability to put the pieces of the puzzle together to ade-

Although human trafficking is a complex crime that may take many forms, look for three elements that are present in most human trafficking scenarios: 1) vulnerable victims, 2) exploitation, and 3) labor or commercial sex. If the exploitation of the vulnerable victim does not involve labor or commercial sex, it does not violate the TVPA. It is critical to report suspicious activity even if human trafficking is not readily apparent. At first glance, we are more likely to recognize only indicators of human trafficking. In other words, initially, we are likely to discover only a piece of the puzzle. Most human trafficking situations will require thorough investigation to reveal the crime. Nonetheless, the pieces of the puzzle are crucial starting points. Even those who work daily to investigate and prosecute these cases must address the problem with humility, understanding that human trafficking continues to evolve, and remain willing to continue to learn and enhance their skills through advanced level training. Routinely conferring with others who work on human trafficking cases is incredibly helpful to successfully detecting it. For law enforcement and prosecutors, utilizing a victim-centered approach, building rapport and gaining the victim’s trust are key components of anti-trafficking efforts. This means that law enforcement and prosecutors must be patient, understanding and always focused on

AML CHALLENGES

what is best for the victims. Furthermore, prosecutors and law enforcement must ensure that the victims’ needs are met through community resources. It is also essential that all law enforcement and prosecutors collaborate with the financial industry, nongovernmental organizations, medical professionals and community members. This collaboration is necessary to 1) educate others to more easily identify human trafficking and report it, 2) obtain leads and information about human trafficking schemes, and 3) provide for the victims’ needs. Collaboration and community outreach leads to prevention and proactive investigation. Last year, the federal South Florida Human Trafficking Task Force participated in more than 100 community outreach events. In looking for indicators of human trafficking and considering potential charges to be brought against offenders, we must not overlook other criminal activity. Offenders often engage in other crimes while committing human trafficking. Therefore, be mindful of the following criminal offenses that are often related to human trafficking: fraud in foreign labor contracting, visa fraud, extortion, money laundering, violations of false documentation and immigration laws, and any human trafficking-related offenses that have been included in the Racketeer Influenced and Corrupt Organizations Act. Finally, do not underestimate the value of financial records in tackling human trafficking. Financial records not only provide indicators of trafficking that can lead to the identification of traffickers and the rescue of victims, but they also establish the traffickers’ profit and serve as powerful evidence at trial. So you can imagine how pleased I was on September 11, 2014, when the Financial Crimes Enforcement Network (FinCEN) issued an advisory that provides guidance on recognizing activity that may be associated with human smuggling and human trafficking. In this advisory, FinCEN identifies red flags to assist financial institutions in identifying and reporting suspicious financial activity connected to both human smuggling and human trafficking. I urge you to read the report if you have not already.

Conclusion Our anti-trafficking efforts must not be deterred by the complexities of this crime. I have had the opportunity to meet wonderful people who are now survivors of human trafficking. They have changed my life in profound ways and are always a reminder of the importance of working to end slavery. The survivors’ courage and strength has inspired me to work harder, to try to be a better prosecutor and to be a better person. Still, I know that as hard as I may work, one person alone cannot end slavery. Perhaps the most important thing that I have learned throughout the years is that partnerships and a collaborative effort are absolutely necessary to fight human trafficking. Many people play an important role in this cause. It takes much more than just law enforcement, prosecutors and government entities to put an end to slavery. It requires the assistance of the financial industry, nongovernmental organizations, teachers,

religious organizations, victim advocates, medical professionals, private industries and community members. Together, we can rescue victims and eradicate human trafficking. To report suspected human trafficking, please call the National Human Trafficking Resource Center’s 24-Hour National Hotline at 1 (888) 373-7888 or email [email protected]. 

Barbara A. Martinez, chief, U.S. Attorney’s Office, Miami, Florida, USA, [email protected]

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PRIVACY S ince the turn of the century, there has been an alarming global increase in the number and severity of internet-based data breaches perpetrated by hackers seeking to enrich themselves through all manner of thefts of government, financial, proprietary and personal data. As these incidents have increased in size, frequency, scope and sophistication, the root cause and intent of these actions may not be readily apparent to the general public. Although financial crime lies at the core of much of the illicit activity tied to recent large-scale hacks, one of several key underlying “precrimes” driving these incidents is the theft of personal identifiable information (PII), particularly in the U.S. PII is the lifeblood of credit card fraud, financial identity theft, personal account takeovers, medical identity theft, the current flood of fraudulent U.S. tax filings1 and a host of other crimes, so much so that PII maintains a “market value” on the so-called “dark web.”2 Coupled with online profile information gathered or compromised from sources including social media sites, PII makes crimes such as business account takeover and wire fraud—now a top priority issue of the U.S. Federal Bureau of Investigation (FBI)—much more challenging to prevent.3 Companies such as Acxiom, Amazon, Google and many others have been in the business of predictive behavior modeling for some time. They ultimately function as data brokers and thrive on the PII that we willingly or unwittingly provide, as well as the PII that these companies develop based on

algorithms designed to create individualized profiles of their customers.4 From a Bank Secrecy Act/anti-money laundering (BSA/AML) compliance perspective, similar behavior-based modeling is taking shape in the BSA/AML information technology (IT) solution space, as data derived from customers lies at the heart of what are becoming core processes for the collection and use of PII at many financial institutions (FIs) for customer risk scoring, customer due diligence (CDD), transaction monitoring and enhanced due diligence/know your customer (EDD/KYC) reviews.

Furthermore, under U.S. privacy regulations, the Gramm-Leach-Bliley Act (GLBA) and the Red Flags Rule require FIs to “explain their information-sharing practices to their customers and to safeguard sensitive data”5 and “to implement a written identity theft prevention program designed to detect the ‘red flags’ of identity theft in their day-to-day operations, take steps to prevent the crime, and mitigate its damage,” 6 respectively. In the current compliance environment it may be time to reflect on the controls surrounding the use of customers’ data within AML processes, such as information sharing.

Information sharing under Section 314(b) and GLBA: Mutually exclusive? It would first seem that the sharing between FIs under the USA PATRIOT Act Section 314(b) would violate consumer privacy protections against dis-

closure of nonpublic personal information (NPPI) offered under the GLBA. Furthering the confusion is that consumer information housed in so-called “cloud” computing environments may be scanned for 314(b) information sharing purposes, not by the FIs who own the data, but by third-party vendors in some instances.7 It is easy to see how AML professionals have been struggling to find the right balance between compliance with BSA suspicious activity reporting requirements and compliance with the GLBA non-disclosure of NPPI provisions. The information below provides compliance requirements and federal guidance released clarifying the requirements.

The GLBA, enacted in 1999, contains numerous sections applicable to various FIs.8 Specifically, Section 501, “Protection of Nonpublic Personal Information,” states that “each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ nonpublic personal information.”9 This section goes on to state that each FI must “protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer.” Strict reading of Section 501 would lead one to believe that sharing information under 314(b), whether within or outside of a cloud environment, could violate the protections afforded by the GLBA, since a governmental investigation into a consumer as a result of NPPI reported on a suspicious activity report (SAR) (as a result

“Stolen Identity Refund Fraud,” FBI, March 23, 2016, http://www.ic3.gov/media/2016/160323.aspx Aimee Picchi, “The rising tide of tax filing fraud,” CBS News, February 9, 2015, http://www.cbsnews.com/news/the-rising-tide-of-tax-filing-fraud/ 3 Jim McCabe, “FBI Warns of Dramatic Increase in Business E-Mail Scams,” FBI, April 4, 2016, https://www.fbi.gov/phoenix/press-releases/2016/ fbi-warns-of-dramatic-increase-in-business-e-mail-scams 4 Natasha Singer, “Mapping, and Sharing, the Consumer Genome,” The New York Times, June 16, 2012, http://www.nytimes.com/2012/06/17/ technology/acxiom-the-quiet-giant-of-consumer-database-marketing.html?_r=0 5 “Gramm-Leach-Bliley Act,” Federal Trade Commission, https://www.ftc.gov/tips-advice/business-center/privacy-and-security/gramm-leachbliley-act 6 “Fighting Identity Theft with the Red Flags Rule: A How-To Guide for Business,” Federal Trade Commission, May 2013, https://www.ftc.gov/tipsadvice/business-center/guidance/fighting-identity-theft-red-flags-rule-how-guide-business#who 7 “Cloud computing,” Merriam-Webster, http://www.merriam-webster.com/dictionary/cloud%20computing 8 FIN-2012-R006, FinCEN, July 25, 2012, https://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2012-R006.pdf 9 Gramm-Leach-Bliley Act, “Protection of nonpublic personal information,” Cornell University Law School, https://www.law.cornell.edu/uscode/ text/15/6801 1

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of information sharing under 314[b]) could theoretically be argued as to have resulted in “substantial harm and inconvenience” to a customer in exceptional circumstances. Further adding to the regulatory morass, consider that Section 502, “Obligations with Respect to the Disclosures of Personal Information,” states that “a non-affiliated third party that receives from a financial institution nonpublic personal information under this section shall not, directly or through an affiliate of such receiving third party, disclose such information to any other person that is a nonaffiliated third party of both the financial institution and such receiving third party, unless such disclosure would be lawful if made directly to such other person by the financial institution.” This section appears to imply that the sharing of NPPI under 314(b) would comply with the privacy protections offered by the GLBA. Assuming compliance with 314(b) information sharing provisions—such as current registration and proper usage—the GLBA seems to support the sharing of NPPI by a FI with another properly registered FI since the sharing would be deemed lawful under 314(b). Can an FI’s vendor legally share NPPI owned by the FI with a party not affiliated with either the FI or the vendors, and does the fact that the sharing may occur in a cloud environment affect the decision? First, one can read Section 502 of the GLBA to state that the FI’s vendors (non-affiliated third parties) are able to share NPPI provided by the FI with another non-affiliated third party (registered 314[b] participant) since sharing would be lawful if made directly by the FI that owns the NPPI to the registered 314(b) participant. Assuming that vendors may legally share, in certain circumstances, the NPPI provided by FIs—which is, unfortunately, not the current state—the question still remains whether vendors’ use and sharing of the information is in violation of GLBA protections if the sharing occurs in a cloud environment. The answer appears to be “no,” as nowhere in Section 502 of the GLBA or elsewhere in the act does it state that FIs yield protections if a cloud environment is used.

To recap, Section 501 of the GLBA gives indications that the sharing of a consumer’s NPPI under 314(b) would be in violation of the act as the sharing could result in harm or inconvenience to the consumer if the sharing resulted in an investigation, indictment, arrest or conviction of the consumer. However, Section 502 indicates that sharing, whether by the FI itself or a vendor of the FI, would be legal if the requirements of sharing information under 314(b) are met—which can be a bit confusing. On this topic, the U.S. Financial Crimes Enforcement Network (FinCEN) states in its 314(b) Fact Sheet that Section 314(b) provides FIs the ability to share information with one another, under safe harbor, to identify and report money laundering and terrorist activities according to published guidance.10 FinCEN’s FIN-2012-R006 states that the term “financial institution” also includes an association of FIs defined as a “group or organization the membership of which is comprised entirely of financial institutions.”11 The clarification of the definition of FIs to include an association comprised of FIs was critical to the Inter-Bank Intelligent Risk Data Search (I-BIRDS) receipt of FinCEN approval to analyze 314(b) information of multiple FIs to determine whether reportable activity exists. The service was touted to be “a contributory-based model under the safe harbor of the 314(b) clause” as “I-BIRDS does not require individual banks to contribute their data for intermingling with other banks. All [f]raud and AML data sits and remains behind the banks’ respective firewalls. When an individual bank sends out a request to the I-BIRDS community, only risk scores are returned. No [PII] is returned. This gives the querying bank enough information to suggest that their person of interest has either defrauded another institution or not.”12 The model described sounds similar to that being utilized by cloud vendors, where customer information from FIs, including protected NPPI, may be housed within a cloud separate from other FIs along with results from the FI’s transaction monitoring analysis. Rather than a participating FI initiating an information request as with I-BIRDS,

the cloud vendor proactively matches information from the transaction monitoring performed by its customers to determine if reportable activity exists. The cloud vendor then distributes an email to each 314(b) participating FI, which may have a positive match alerting it to potential suspicious activity concerns. The email may contain information on the other FI(s) which may also have an interest in the alerted customer or transactions. As of 2009, FinCEN clarified the utilization of 314(b) for fraud-related investigations by stating “Information related to the [specified unlawful activities (SUAs)] (in 18 U.S.C §§1956 and 1957) may be shared appropriately within the 314(b) safe harbor to the extent that the financial institution suspects that the transaction may involve the proceeds of one or more SUAs and the purpose of the permitted information sharing under the 314(b) rule is to identify and report activities that the financial institution suspects may involve possible terrorist activity or money laundering.”13 Therefore, if the investigation involves a covered SUA and is money laundering or terrorist financing related, 314(b) safe harbor applies and GLBA protections exist for the FI. Thus, when properly used, 314(b) information sharing requests may not violate GLBA consumer protections; however, as with any controversial AML topic—particularly those concerning cloud-based information sharing—discussions will surely continue.

Web searches and privacy concerns Consider a moment where PII, such as addresses; Internet Protocol information or email addresses; biometric information; loan collateral information, such as vehicle registration number or title number; information about the individual (e.g., date/place of birth, current geographical location, past and/or present employer, etc.); and financial information, is available to AML investigators. Countless times a day, AML investigators enter multiple pieces of unique information about a customer into online search engines in the pro-

Section 314(b) Fact Sheet, FinCEN, October 2013, https://www.fincen.gov/statutes_regs/patriot/pdf/314bfactsheet.pdf FIN-2012-R006, FinCEN, July 25, 2012, https://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2012-R006.pdf 12 Brian Monroe, “Private Arizona Company Can Collect BSA Data with Patriot Act Protections,” ACAMS moneylaundering.com, September 25, 2012, http://www2.acams.org/webmail/8572/220971451/0a03b3c435cb53d4488fae1aa101949a 13 FIN-2009-G002, FinCEN, June 16, 2009, https://www.fincen.gov/statutes_regs/guidance/html/fin-2009-g002.html 10 11

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cess of conducting negative news searches. As part of the internal controls structure of AML programs, have we as AML professionals taken the time to consider that these searches, so vital to our understanding of our customers, could infringe upon laws and regulations such as GLBA and Red Flags? What if the information includes biometric data such as fingerprints and retina scans? Could other regulations apply in regards to the use of this information? Certainly, there are specific exceptions to the privacy of consumer financial information under U.S. Regulation P, which permits the release of protected information to comply with federal, state, or local laws, rules and other applicable legal requirements, of which suspicious activity monitoring and other AML-related activities would be included.14 However, as we well know, internet searches and browsing activity is tied back to the user’s account activity— in this case the AML investigator’s activity—and may indirectly “seed” individuals’ online profiles. Therefore, consideration should be given to how online searches may impact customers from a compliance internal controls standpoint. How much information do search engines retain about a customer and what is ultimately done with this information? For example, if an AML investigator enters “John Smith trucker human trafficking” into a search engine, they may have unwittingly placed information about the customer’s profile into the public space in a manner that could be linked to other sources with that person’s PII and NPPI down the line. John Smith banks with Main Street Bank. John Smith is a trucker. And when other terms are added—such as “John Smith trucker Largetown California human trafficking arrests”—could reputational damage to both the FI and the customer result in unforeseen consequences over time, particularly if it is linked to the individual’s online profile developed through their own internet activity? This and other outcomes remain untested when considering what the aforementioned data brokers may collect on us all.

Control measures and summary IT solution systems and data lie at the core of AML compliance programs. As such, the handling of the information within them—or potential for mishandling—requires stringent internal controls and risk mitigation measures, especially when weighing PII and NPPI (whose black market value continues to rise, as proven by data breaches yet to be announced to the public). As AML compliance programs’ focus moves into this direction, it is time FIs reassess the importance of internal information controls and risk framework. To delegate this responsibility to IT compliance misses the fact that the manner in which PII is used within AML compliance programs may result in indirect regulatory risk exposure. AML managers should consider the following in designing or enhancing internal controls within the AML environment inclusive of use of vendor-based solutions: • The purpose in collecting the information—What will it be used for and why? • Information access including user permissions, systemic controls, functionality of tools and systems architecture—What is the “need to know?” • Information retention—What is the purge cycle (do purge dates comply with FFIEC AML guidance)? What happens to data gathered over time from multiple systems? • Information quality—In the context of privacy requirements, should PII and NPPI be “masked” or obfuscated to protect customers’ information? Can information be recalled efficiently for auditors and regulatory authorities? Is the data “auditable?” • Information location—Where are host and distribution servers located, and particularly if they are offshore, are there additional privacy compliance risks? In addition, can auditors and regulatory authorities readily review the information held offshore?

Although the GLBA and Red Flags Rules are typically the focus of U.S. FIs’ IT compliance programs and not AML, current trends indicate a stronger lean toward the use of customers’ information files—which contain PII as well as transaction patterns—to drive more complex customer risk scoring models to in turn develop risk scores. Such behavior-based risk rating in itself is not necessarily an issue; however, given the current inherent need for, and propensity toward, using multiple IT solutions to either source or overlay risk rating and monitoring solutions, the effectiveness of application of internal controls in the management of PII deserves discussion. In addition, the use of secondary tools such as Google and other search engines may raise a whole additional set of concerns with respect to regulatory risk. The trend of migration to next-generation IT solution systems that utilize behavior-based algorithms and data analytics to help FIs identify, detect and monitor potential suspicious transactions in customer behavior remains active. Now is a good time to assess what this push toward stronger CDD and EDD/KYC ultimately means in terms of the use of PII and NPPI, as unforeseen regulatory risks may arise depending on how and to what degree the internal and external acquisition, transfer, communication and maintenance of PII and NPPI may have on FIs’ capacity to remain compliant with various regulations associated with customer privacy. 

Brian Arrington, MBA, CAMS, communications director of the ACAMS Chicago Chapter, Chicago, IL, USA, [email protected] Amy Wotapka, CAMS, AML program manager, Johnson Bank, Racine, WI, USA, [email protected] The views and opinions expressed herein are those of the authors and do not necessarily reflect those of their employers or any U.S. regulatory agency.

“Regulation P: Privacy of Consumer Financial Information,” Board of Governors of the Federal Reserve Bank, http://www.federalreserve.gov/ bankinforeg/regpcg.htm

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CHAPTERS

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 professional relationships and provide local forums for discussion around region-specific issues. *Chapters launching soon

Cultivating Comradery Worldwide

Find a local ACAMS chapter near you or start one today! www.acams.org/chapters | [email protected]

INTERVIEW

PETER WARRACK AND CONSTABLE LEPA JANKOVIC:

Raising awareness about human trafficking

A

CAMS Today had the opportunity to speak with Peter J. Warrack, CAMS, CFE, from the Bank of Montreal (BMO) and with Constable Lepa Jankovic with the HamiltonNiagara Financial Crime section about their fight against human trafficking (HT) and sexual slavery and what they are currently doing to bring awareness to these horrific crimes. Warrack is currently director of risk intelligence for BMO anti-money laundering (AML). Warrack leads a highly trained, multicultural team of investigators drawn from banking and law enforcement where he is involved in major crime investigations and management, training and intelligence analysis. Prior to joining BMO Financial Group, Warrack headed up Royal Bank of Canada’s Investigations Unit in the AML FIU. Until 2002, he served as a senior officer and detective with the Northern Ireland police during the height of the ‘Troubles.’ He previously served in the British Army in an intelligence capacity. In Canada, Warrack has been a proponent of joint/law enforcement investigations and has been actively involved with law enforcement in the legal sharing of information and best practices, which has resulted in numerous arrests, the interdiction of crime and the prevention of fraud losses.

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In addition, Warrack has a master’s degree in organization and management and he has published and presented on the subjects of AML/fraud investigations and risk mitigation and he teaches these subjects at Seneca College. Known as ‘a practical academic,’ he strives for consistency of approach among the professions, common standards and shared best practices. Warrack’s contribution to the AML industry was recognized by his peers in 2011 when he received the ACAMS Professional of the Year Award. Constable Jankovic began working for the Canadian Federal Government in 1996 as a customs officer in Niagara Falls. In 1999, she joined the Royal Canadian Mounted Police (RCMP) and was assigned to general duties on a small island in Nova Scotia. Due to her Eastern European background and ability with languages, she transferred to the Combined Forces Special Enforcement Unit in Toronto where she was in charge of the Criminal Visa Screening Unit for the Eastern European Organized Crime Unit. Constable Jankovic successfully led this small unit into a national unit based out of Ottawa. Moreover, Constable Jankovic worked for the Immigration and Passport Section of the Hamilton-Niagara RCMP detachment where she was the lead investigator on Project OPAPA which is dubbed as Canada’s largest HT investigation to go before Canadian courts. Currently, Constable Jankovic is an investigator with the Hamilton-Niagara Financial Crime Section and she is preparing for a transfer to the Sensitive and International Investigations Unit in Ottawa.

ACAMS Today: How did you become involved in fighting human trafficking (HT)? Peter Warrack: Hearing Timea Nagy, (a

victim of HT and sexual slavery) speak at the December 2015 ACAMS Conference in Toronto broke my heart, opened my eyes and strengthened my resolve to do something about it. I realized that I had been blissfully ignorant of the criminal connotations to the barrage of adult classified ads we are exposed to on a daily basis in newspapers and online and that these ads are the public face of a sinister underground economy exploiting people like Timea. To me the ‘C’ in ACAMS stands also for ‘Committed’ AML professional and I knew in the room at that

conference there were numerous likeminded people who could collectively make a real difference. I stepped up to the microphone and effectively said, “Leave it with us.” No sooner had I sat down when Canada’s FIU (FINTRAC) said they wanted to be part of it, John Byrne of ACAMS said, “Whatever you need” and peers in all the major banks signed up before we left the room.

AT: Could you please tell us about the unique public-private partnership that is in progress in Canada to address the crimes of HT and sexual slavery and how it came about? PW: The major banks, FINTRAC and law enforcement (federally and municipally) have come together in partnership under a common banner and the official launch was on January 19, 2016. A lot of work was done prior to this by the part-

pose and good hearts, but fragmented in their approaches and often unaware of each other’s efforts. For example, at the federal level, HT is investigated regionally; in other words, a particular region may investigate a case but be unaware that the same suspects are being investigated in other parts of Canada. The irony is that as banks identify suspected traffickers through their transactional activity we see frequent movement of suspected traffickers between major cities in Canada and sometimes on a weekly basis. Thus, traffickers are not limited by jurisdictional boundaries. The good news is that by working with Lepa, in particular, we have managed to introduce law enforcement HT departments to each other and bring them in under the partnership. We have collectively shared significant educational materials between the partners and this has had tangible results in providing FINTRAC with information, which has been shared as intelligence to law

Traffickers are not limited by jurisdictional boundaries

ners. For instance, they worked together to quantify the problem, explore the use of technology to identify human traffickers and began to further educate AML staff in financial institutions. At the January meeting we agreed on a two-pronged strategy of education and awareness and the identification of suspected traffickers for the attention of law enforcement actions and continuous feedback between the partners regarding evolving indicators and red flags.

AT: It sounds like a lot has already been achieved, can you expand on what else has also happened? PW: Several things. It quickly became

apparent how siloed the efforts of both law enforcement and various charities and community groups are in this space—all united with common pur-

enforcement. At the Toronto ACAMS Chapter HT/Sexual Slavery Event in April 2016, FINTRAC advised that in the three months since this partnership was launched, disclosures to law enforcement in 2016 equal those for all of the previous year (an increase of 400 percent). We’re very proud of that. I can’t praise FINTRAC’s contribution enough. Finally, law enforcement and the Federal Crown have started to explore innovative ways to prosecute HT/sexual slavery cases using money laundering (ML) legislation as opposed to having to call victims to give evidence and be subjected to gruelling and intrusive cross examination and in effect, be victimized all over again. Argentina has taken the lead in this area and in my opinion this offers real hope. Lepa can talk more about that.

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AT: Lepa, could you please expand on the innovative ways the Federal Crown (federal prosecutor) is exploring to prosecute HT? Lepa Jankovic: In all the different genres and levels of international versus domestic cases, women victims versus male victims and how we push a case through the court, it is always the same problem: The victim is not able to make it to the court dates. So how do we get around this? How do we handle a large HT investigation without actually putting the victim on the stand? I’ve been asking this for years now. It comes down to money just like every crime, whether it is drugs, diamonds or human beings. So why don’t we go after these traffickers and their money instead of revictimizing these victims over and over again? We started to look at the ML legislation under the Criminal Code and reviewing how we can apply this to HT like any other crime. Why aren’t we looking at laundering of proceeds from HT, which is a crime and also part of organized crime? We could also be looking at organized crime charges. In the past we have looked at organized crime charges and we actually succeeded in laying organized crime for the purposes of HT. In the case where we succeeded using organized crime charges, many people were shocked to hear that it wasn’t even for the sex trade. It was for male labor. Men were taken to Canada for the purposes of trafficking them in the labor field in Canada. We prosecuted that case in Ontario and we had convictions on 13 traffickers all through the organized crime of HT. It was the first case ever in Canada, but it happened and we had a conviction for it. Peter mentioned earlier about a case in Argentina. In Argentina they had the very first case of ML convictions for HT. An article said they were able to use the ML legislation in their court for the HT case and they were successful. I don’t have the details on this as this is relatively new, but I would actually like to get the verdict from the judge to see what his statement was on this case. In the article, Prosecutor Carlos Gonella told La Nación that, “As in all organized crime, you have to attack the profits of the organization. Prison time for the guilty is important, but going after their money is critical to ending this type of crime.”1

PW: HT is a crime like any other crime. You launder proceeds of that

crime and that is money laundering and that’s reportable to FINTRAC. So, HT is a predicate offense and can be reportable through FINTRAC. I would encourage other jurisdictions at the state and federal level to get together with law enforcement, FinCEN, banks and locally at the ACAMS chapter level to raise this as an issue. In addition, educate yourself and bring yourself up to speed on the latest indicators and trends. There is great opportunity within the ACAMS chapters for information sharing.

AT: How do you stop HT once you discover a case? LJ: Police officers across the country who are involved in HT investigations

know that it is extremely important to have your victim on board. If you don’t have a statement from your victim stating that they were trafficked, you don’t have a case. The first challenge you have is breaking down the victim’s barrier and having the victim come forward and stating their exploitation to law enforcement. It is so difficult to get a young girl to tell us what happened to her. This has been a common theme throughout all investigations. Even if she does come forward and tells us what happened, how she was recruited, exploited, beaten and forced into prostitution and had everything taken from her, we still have to take her to court. It’s like a drug case. In a drug case your evidence is a bag of cocaine. With the cocaine evidence you can come back to it in a few years, blow off the dust and bring it before a judge. But with HT, your evidence is a human being. You can’t put her on a shelf. So, how does the victim continue through this process for two years and then bring herself before a judge? It is a very difficult task to do.

1

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Sam Tabory, “Argentina Follows the Money in Human trafficking Investigations,” InSight Crime, February 8, 2016, http://www.insightcrime.org/ news-briefs/argentina-follows-money-in-human-trafficking-investigations

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INTERVIEW

AT: How can we help victims through the trial process? LJ: Through associations we have with non-governmental organizations (NGOs). For example, Free Them. Free Them is a great NGO we have here in Canada. Another one is Walk With Me and there are many more that we have across the country. The problem we have is trying to find housing for these young women and men. It is not always best to keep them in the area where they were trafficked because traffickers tend to find them again and lure them back. It sounds crazy to believe that these victims would even go back, but these traffickers have these chains on the minds of these victims and they manage to lure them back. So trying to find a location far enough away and finding someone who is going to take care of a girl who has been raped over and over again for months and would have had up to 15 clients a day is tough.

You have to understand what HT is about, how it functions and how it works if you are going to investigate it

People can most definitely volunteer to help the victim through this difficult time with the help of NGOs. For instance, we have had cases where victims were foreign nationals and did not speak the language. So, if they don’t speak French or English we have to find someone who can translate. For example, trying to find a Hungarian translator for someone was not an easy task 10 years ago. Today it is much easier and there are people who have translated for us over the years. Also, the survivors that succeed are those survivors who have had great support from NGOs, from police officers and law enforcement. Some law

enforcement officers keep in contact with their victims after they find them. Trust is very important for these cases. You have the trust of law enforcement, the trust of the NGO, the trust of the system and of the prosecution as well. For the cases we have had, our prosecutor has actually met with the victims themselves and sat down with them to discuss the court proceedings. So having a strong prosecution team when you are dealing with victims of HT is essential to having a successful case in the court system.

AT: Peter spoke earlier about Timea and her tragic experience, how can we help survivors and how can we work alongside them to fight this horrific crime? LJ: There is the prevention before the victim even becomes a victim. There are predators looking for victims. The key is to educate young women—and men for that matter—across our country about these predators. It is difficult to educate a 12 or 13 year old about this because they don’t really understand that this can happen to them. At that age if somebody treats you well and they say they love you—you fall for it. It is hard to tell a 13 year old that “He doesn’t love you” and that “He is actually a predator.” Awareness and prevention prior to anybody being trafficked is vital and our NGOs are doing this. NGOs are going to schools and speaking to young people. Awareness is out there and HT awareness is much more in the public today than it was 10 years ago. Twenty five years ago you would see a girl being prostituted on the street corner and that was where girls were being bought and sold. Today that street corner does not exist. The street corner is now on the internet. You no longer see it on the streets because they are hidden in hotel rooms. Given this, people do not even think HT exists. It is a crime that is very difficult to talk about when you don’t even see it. PW: But they are also hidden in plain sight. And they aren’t just kept in sleazy outlying hotels. I could be sitting on the 28th floor of a brand name hotel and there could be people sitting in their rooms waiting for the next “client” to come in. There has been this huge upsurge in education and awareness on the one hand and that’s great. But on the

other hand, every day you are exposed to these HT ads in the local paper. There’s a big gap between the two.

AT: What can FIs do to prevent HT? PW: Keep the problem and the extent and seriousness of it alive through continuing education. At the front line level, education and awareness is important. For example, if a girl is brought into a bank by someone else—woman or a man—who is translating for them to open an account, make sure you question what is going on there. Be alert to it. The second level is for AML investigators and transaction monitoring teams to be alert to what they are seeing in people’s transactions and their profiles. Since we have started increasing the training in this area, our filings have increased considerably. It is important to be alert and to get the message out. Any one of the major banks in Canada has the opportunity to educate 50,000 employees at a time and that translates to being alert and aware.

AT: What can law enforcement do? LJ: You have to understand what HT is

about, how it functions and how it works if you are going to investigate it. For example, what are you looking for as an AML investigator when you are looking for HT indicators? The HT that occurred 15 years ago has progressed. It is not just one avenue on the internet. There are a number of avenues (or platforms) on the internet that these traffickers are using to advertise the sex trade online. It is a matter of knowing how to identify what is trafficking, its indicators, what it is not and how that applies to the AML investigator.

PW: Continue to share best practices,

latest indicators, trends and what to look for.

AT: Lepa, you were involved in OPAPA, Canada’s largest HT investigation, can you tell us about your involvement and how you were able to catch the traffickers? LJ: The case was called OPAPA because

the victims came from a small town in Hungary called Papa and the O stands for Ontario. I was the lead investigator on that investigation along with my partner. The two of us worked on it for

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nearly two years. The victims in the case were men who were brought to Canada for labor. Many looked at this as a labor dispute investigation and not as an HT investigation. But these men were being trafficked. It was a very hard sell in the court to show that these men were actually victims because one would say, “How can a grown man be a victim? They can just walk out of the basement and go home.” But it is the chains that are held on the minds of these victims by these traffickers that prevent them from leaving. They don’t know the language, they don’t know anybody here, they don’t have a key, they have no money, they don’t have their documents and everything was taken from them and they are being threatened. The same indicators that you have for female victims are present. The difference is that there weren’t any sex acts in the trafficking and it was strictly for their labor. The reason why this case was so successful was because of Timea. Without her this case would not have made it to the courts. She worked with all 23 victims on the case. She took them under her care found them a place to live, had them fed and made sure that they had their financial obligations taken care of. She did that for them for the entire two years. It was a lot of work for her. We had funding from NGOs such as Free Them and Niagara Regional Police had a fund that they donated to our safe house for our victims. That was very helpful in the prosecution to keep the victims on board. The prosecution team looked at this investigation as fraud. We needed to follow the paper trail to show that these men were telling the truth, to show that these men were being defrauded and that they were brought to Canada under false pretense. They were being promised one thing overseas, but when they came here they found something else. We had to show the court that they were being defrauded in order to show that it was HT. And it worked. It worked so well that it showed that the traffickers worked together and organized the trafficking of these men to Canada for a different purpose than what they were told. We proved this through the documentation, airline tickets that were purchased, the invitation letters that were written and the information that was given to immigration when they arrived here. It was a big project, but we managed to obtain convictions on every suspect. And this was for participating in

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an organized crime group for the purposes of trafficking in persons. So once again we moved away from the victim and looked at the money. We obtained banking information to show how money was moved. However, we mainly showed how the people were moved around on paper and the lies that were told from one document to the next.

AT: What is the biggest misconception society has about HT? PW: In Canada, the vast majority of victims are not trafficked from abroad, but are recruited domestically. They are vulnerable people from fractured homes, befriended at shopping malls and the like. LJ: Ten years ago most people were just

surprised to hear that we had HT in Canada. But today, the biggest misconception is people think that the victims of HT in Canada are foreign nationals being brought to our country. However, it is actually domestic girls. Domestic girls are the number one victims that we find across the country that are being trafficked. Something that is even more surprising is that people are astonished to hear that the average age of entry into the sex trade is 13 years old.

AT: What type of clients seek out trafficked victims? LJ: There is a book called The Johns: Sex for Sale and the Men Who Buy It, written by Victor Malarek. The book tells us that the Johns—or clients—are a variety pack of people that actually seek out the sex trade to find sex workers. Johns can be married men, younger men, older men and any ethnic background. There’s no special “poster child” of the John.

AT: What other types of crimes have you discovered that are linked to HT? PW: Some additional crimes are drug

trafficking, credit fraud, (using the victims’ identities), etc.

LJ: Those are the common ones you would expect, but there are others such as kidnapping and sexual assault. The charges we forget about is organized crime and conspiracy. They are very important, especially if the trafficker/ suspect is a foreign national in Canada.

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I am not sure how this plays out in America, but in Canada if the trafficker is a foreign national and they are convicted of trafficking people in our country and we add an organized crime charge on top of that, Canada Border Services Agency (CBSA) under the Immigration and Refugee Protection Act, may be able to deport these people because they are involved in organized crime. For example, for Project OPAPA, CBSA deported suspects charged for organized crime for the purposes of HT. They deported each one of those people except for one because he was a Canadian citizen. But the remainder of them were foreign nationals in our country. Whether they were a landed immigrant, on a refugee claim, or a successful refugee claimant, they were deported from the country because of that organized crime charge.

AT: Where can we go to report HT or where can we obtain more information? LJ: I like to think of things internationally and look at what is going on across the world with HT. I like to go to the U.S. tip report out of the U.S. State Department and I read it every year. I look for the key countries I want to read about. It shows what the pulse is of HT in countries around the world and how people are moved from country to country. What is interesting in Canada is that we are told we have foreign nationals in our country that are being trafficked. We have one conviction in Canada for HT relating to the Immigration and Refugee Protection Act. We need to have a better pulse on the foreign nationals in our country that are being trafficked. The U.S. tip report provides much information regarding that theme itself. Another place—and I love this NGO—is Free Them. They have a wealth of information on what’s going on every single day on HT. I get their tweets on what’s happening across the country and the world. They are up-to-date on everything that is going on and are linked in with their members of parliament, and with movie producers. They provide a lot of information on a regular basis. 

Interviewed by: Karla MonterrosaYancey, CAMS, editor-in-chief, ACAMS, Miami, FL, USA, [email protected]

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Dear BSA officer

I

hope this letter finds you and your team(s) well. A quick glance at news reports on legislative action as a result of the San Bernardino tragedy1 and enforcement actions related to Bank Secrecy Act (BSA) deficiencies2 tells me all I need to know about your workday— specifically that you and your team(s) are under increasing pressure to ensure that your financial institution is not banking the next headline-making fraudster or terrorist.

It is in all of our interest to foster a strong public/ private relationship.3 JENNIFER SHASKY CALVERY, FORMER FINCEN DIRECTOR, FINCEN 2015 LAW ENFORCEMENT AWARDS CEREMONY

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Forgive me for saying so, but the position of BSA officer, while critical to the success of a financial institution’s antimoney laundering (AML) and financial crimes program, seems to me to be a somewhat thankless position. Due to confidentiality provisions, the public, including legislators, remain unaware of the suspected criminal activity your program identifies. There are no accolades for identifying and reporting the bad guy in your world because that is what you have been brought onboard to do and that expectation will continue to increase. However, failure to perform your job to a level that meets regulatory expectations may result in more than a simple job termination. Poor performance in your job can lead to very bad things: • For your institution: Additional regulatory scrutiny and financial havoc caused by bad press • For the BSA officer: Personal civil financial penalties4 and criminal incarceration5 Like me, I bet you have some sleepless nights. Thus, perhaps we can help each other. You are keenly aware that law enforcement (local and national) relies on intelligence gained from the output of

your organization’s AML program in many ways—314(a) search reports, Office of Foreign Assets Control screens, currency transaction reports (CTRs) and suspicious activity monitoring. The suspicious activity reports (SARs) submitted are especially valuable in identifying and convicting financial criminals and terrorists. I think your program will benefit by building strong partnerships with law enforcement. For example, a better understanding of how SARs are reviewed by agencies and task forces will undoubtedly have a positive impact on how you present reportable information in your SARs. I understand that financial institutions have regulatory requirements which must be met regarding SAR filings. Can we agree that it is possible to meet the regulatory expectations and create an end product that is usable to law enforcement? Let us discuss how SARs 1

2 3

4

5

6

can better assist law enforcement. Remember, the ultimate reason financial institutions have AML and BSA programs is not just to comply with regulatory requirements, but rather, to assist in combating financial crimes, terrorist financing and other significant national security or financial crimes. As you continue to develop and enhance your AML programs, I ask you to remember that SARs were never meant to be a “check-the-box” exercise. Jennifer Shasky Calvery, former director of the Financial Crimes Enforcement Network (FinCEN), has quite accurately underscored that law enforcement officers, like myself, use SARs in four key ways:6 1. Tips to initiate investigations 2. To expand existing investigations 3. As a tool for international information exchange

Lisa Lambert, “U.S. lawmakers to act on terrorism financing after California shootings— Hensarling,” Reuters, December 10, 2015, http://www.reuters.com/article/california-shootingfinancing-idUSL1N13Z2MP20151210 “Enforcement Actions,” FinCEN, https://www.fincen.gov/news_room/ea/ Jennifer Shasky Calvery, “FinCEN 2015 Law Enforcement Awards Ceremony,” May 12, 2015, https://www.fincen.gov/news_room/speech/pdf/20150512.pdf “Assessment of Civil Money Penalty,” FinCEN, December 18, 2014, https://www.fincen.gov/ news_room/ea/files/Haider_Assessment.pdf “United States of America v. H. Jack Miller,” U.S. Department of Justice, http://www.justice. gov/sites/default/files/usao-edpa/legacy/2014/10/22/miller_information.pdf “Remarks of Jennifer Shasky Calvery,” FinCEN, August 12, 2014, https://www.fincen.gov/ news_room/speech/html/20140812.html

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BSA Proactive SAR Narrative Search Keywords Financial and Tax Related 314(b) 314b 314(a) 314a advance fee arm’s length avoid BSA avoid reporting bankruptcy bit coin bitcoin brokerage brokerage account casino conflict of interest corporate fraud embezzle evade CTR funnel gambling gaming ID theft identity theft insider letters of credit loan fraud market manipulation mortgage penny stock Ponzi pump and dump refund fraud securities security fraud self-dealing shell structure tax evasion tax refund trading tax refund fraud CREF foreclosure rescue scam

C-Terror/ C-Intel/C-Proliferation/ Public Corruption al Qaeda al Qaida al-Qaeda al-Qaida aerospace atomic auto export auto sale carbon fiber chemical China congressman consulate corruption councilman defense defense industry deputy dual citizen dual use Dubai elder explosive export control Gaza government contract gun Hezbollah international wire international Iran ISIL ISIS Islamic state ITAR jihad judge Latvia law enforcement lobbyist foreign corruption MX restriction marine technology

*Items highlighted in yellow are SAR narrative key terms that are linked to FinCEN advisories and other publications.

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masjid mayor military missile technology mortgage loan nanotech no fly no-fly nuclear OFAC overseas wire parts purchase passport plutonium police officer police policeman pump rocket technology Russia sanctions shell company sheriff sovereign space South Border southwest border region Jordan terror training transfer transship UAV technology uranium visa West Bank international wire wire transfer tech technology BMPE TBML

Mail/ Porn/ Human Trafficking adult adult entertainment backpage brothels cantinas cash deposit cash transaction child porn children coercion commercial sex domestic worker economic purpose erotic exploitation false documents force labor human smuggling human trafficking human international wire International interpreters larger bills lottery mail fraud massage migrant MO money order overseas wire parlor porn postal prostitute safety deposit seasonal work servitude sex sexual exploit smaller bills advisory human smuggling smuggling spa sponsor sweat sweepstake trafficking wire transfer advisory human trafficking

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Drug/Immigration alien border chemical cyber drug export fund deposit illegal illegal document import international internet marijuana smell smuggle southwest border traffic

Transportation gasoline gasohol diesel CNG fuel oil petroleum IFTA decals trucking

transportation tax free gas station service station alternative fuel

Health care asset clinic CMHC community mental health center diagnostic DME doctor Dr. durable medical equip durable medical funnel health fraud health care health home health hospital interstate cash Medicaid Medicare mental health nurse out of state hospital program

4. To identify patterns of activity or discern emerging trends Did you know that law enforcement actually does perform searches for keywords in SAR narratives? And we use the tool quite often. FinCEN periodically issues guidance which include instructions to include “keywords”7 to a SAR narrative when reporting correlating activity. The table on page 50 specifies keywords law enforcement uses when performing keyword searches in SAR narratives. It is critical that your SAR narratives include these keywords, when applicable, not only for law enforcement searches but because FinCEN also uses keywords to track reported activity. Law enforcement representatives involved in SAR working groups or SAR review committees will search SAR nar7

pass-through pharmaceutical pharmacy PHP physical therapy therapist funnel account

Other conviction guilty pled plea prior bust out HECM/FHA payment processor IVTS SIGTARP cigarette firearm gun tobacco access device admit application check counterfeit church confess counterfeit goods

ratives for keywords based on the activity that is applicable to their agency. For example, a law enforcement representative from the Internal Revenue Service Criminal Investigations may search for keywords such as tax evasion, tax refund fraud, structuring and avoid reporting, whereas a representative from the Federal Bureau of Investigations may be searching keywords such as border region, human trafficking, counterfeit goods and terrorist financing. Oftentimes, law enforcement and SAR task forces see only the narrative portion of filed SARs; therefore, the narrative is the “star of the SAR.” Drafting a quality SAR narrative is truly an art. I am sure you know all about the four C’s and the five W’s and there is no need to cover these in great detail in this letter; however, I want to quickly reiterate how important it is for law enforcement

counterfeit merchandise counterfeit product counterfeit checks counterfeit coin counterfeit currency counterfeit money culture center currency currency CTR EFT fraud elder enforcement was notified false identity fee fraud unusual check insider Islam center Mosque PayPal security signature social security SSN telecom fraud total loss unemployment green dot elder financial exploitation SKN passport account takeover fraud

to clearly be able to identify in each SAR narrative, who conducted the activity, where the activity occurred, when the activity occurred, what activity occurred and most importantly why the activity is suspicious. I also like to include the forgotten “H.” It is beneficial to include how the activity occurred. For example, funds transfer, cash deposits or ACH transaction. Effectively writing this information in a clear, concise, chronological and comprehensive manner results in a SAR that is actually useful for law enforcement. The introductory paragraph is the single most important part of the SAR narrative. There may be some law enforcement officers/agencies or SAR task forces that have the luxury of time to fully read and digest every SAR that is applicable to their area of focus—but they would be the exception. Most

“Suspicious Activity Report (SAR) Advisory Key Terms,” FinCEN, May 28, 2014, https://www.fincen.gov/news_room/advisory/AdvisoryKeyTerms. html ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

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SAR Do’s and Don’ts DO:

DON’T:

 Incorporate keywords, when applicable  Tie the activity—if you can—to a specified

 Use jargon, lingo or acronyms (if you

unlawful activity (SUA)  Ensure the narrative clearly states why the reported activity is suspicious  Summarize totals and identify debits and credits separately  Address CTRs filed (number, aggregated or single transactions, CTR literature given)  Focus on the red flags and flow of funds  Clearly identify the subjects and how they are related to the financial institution  Perform quality reviews  Stress clear, concise and chronological formats

enforcement agents reading SARs have only a few seconds to determine if the reported activity merits investigation. Thus, the introductory paragraph must concisely describe what is being reported and why it matters to law enforcement.8 This is your prime opportunity to get law enforcement’s attention. If you do not tell law enforcement why this activity is suspicious in the first paragraph and why they should continue to read your SAR, then it will be just another report among many which crosses their desks. Long narratives do not win brownie points with law enforcement. The SAR form is not the place to write the great American novel, it is the place to document suspicious or otherwise reportable activity in a concise, complete and accurate format.9 It may help to understand that oftentimes, we do not see the narrative in the nicely formatted manner which your team took pains to draft. What most enforcement agents are presented is a continuous string of words and numbers. We have become pretty good at ferreting out the information we need. Thus, adding extraneous information only makes our job more difficult. You may not believe me when I say con8

9

52

must, define it first)

 List transactions in the narrative (instead

use the attachment feature)  Use “he,” “she,” or “it” to describe people or entities (instead be specific and use full names or last names)  Address violations of internal policy or procedures (instead ensure that the activity is SAR reportable)  Leave the narrative field empty

tinuous string of words and numbers; however, below I included a small example just to further report why clear, concise and accurate is important. What law enforcement sees: E123456 TRANS DATE 12/12/2015 AMT IN 0.00 AMT OUT 8000.00 ACCT NUM 123456 TRANS DATE 12/14/2015 AMT IN 0.00 AMT OUT 5000.00 ACCT NUM 123456 TRANS DATE 12/16/2015 AMT IN 0.00 AMT OUT 3000.00. Being a law enforcement agent does not automatically turn us into bankers. The use of lingo can, at times, throw us for a loop. A non-arm’s length mortgage— what is that, and more importantly, why is the transaction SAR-worthy? I would bet that your SAR narratives would be drafted much differently if your team actually thought about the end user of the SAR during the writing process. Our partnership could add value to your SAR quality assurance program. Just based on what we have covered here, you might consider adding the “Do’s and Don’ts” above to SAR quality assurance checklists. The list was compiled by several law enforcement agencies throughout the U.S.

Robert Collier once said, “Success is the sum of small efforts, repeated day-in and day-out.” I assure you that adding these small efforts to your daily suspicious activity monitoring and reporting program will result in providing law enforcement successful SAR narratives and continue to comply with regulatory best practice. Think of the value your program may derive by forming strong partnerships with law enforcement. I would truly appreciate the opportunity to speak with you and other members of your industry. Please reach out to me directly to further these discussions. I look forward to hearing from you soon.  Your partner in fighting crime,

Law Enforcement Officer Amy Wotapka, CAMS, AML program manager, Johnson Bank, Racine, WI, USA, [email protected] Lauren Kohr, CAMS-FCI, FIU senior manager of governance, risk and quality control, Pentagon Federal Credit Union, Alexandria, VA, USA, lauren. [email protected]

“Guidance on Preparing a Complete and Sufficient Suspicious Activity Report Narrative,” FinCEN, November 2003, https://www.fincen.gov/ statutes_regs/files/sarnarrcompletguidfinal_112003.pdf “Keys to Writing a Complete and Sufficient SAR Narrative,” FinCEN, November 2003, https://www.fincen.gov/statutes_regs/guidance/pdf/ narrativeguidance_webintro.pdf

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®

The stepping stone for a career in AML compliance In every profession, you need that starting point – the foundation on which to build a successful career. Register for the ACAMS AML Foundations e-learning program for introductory-level AML training. Upon completion, you will have a solid understanding of AML principles and be set on the course toward earning the Certified Anti-Money Laundering Specialist (CAMS) certification.

Visit www2.acams.org/foundations for more details

COMPLIANCE

I

n 2015, the heirs of reputed gangster, Meyer Lansky, announced their intent to seek compensation from the Cuban government for the nationalization of the Riviera hotel by Fidel Castro back in 1959.1 The once elegant and prestigious casino is one of the last remaining vestiges of an empire ruled by an influential crime boss cloaked in intrigue. If all that has been printed is true, Lansky was the chairman of the board of a global enterprise churning out copious profits from illegal alcohol, casinos, racketeering and the distribution of drugs. Lansky’s alleged wealth, echoed repeatedly by journalists, approached $300 million, and is supposedly pocketed tightly away in Swiss accounts far from the prying eyes of law enforcement. To be fair, Lansky denied such riches but in his own words he said, “I admit quite frankly I made a fortune from bootlegging.”2

Meyer Lansky: The Godfather of money laundering 54

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Lansky was the FBI and IRS’ great white whale and they tailed and bugged him relentlessly. One day the feds overheard a doozy of a statement. While in a hotel room watching a news report on the extent of organized crime, Lansky quipped, “We are bigger than U.S. Steel.” Lansky denied he uttered that exact phrase and the FBI did not record the conversation. Nevertheless, those six words branded them as gangsters for the rest of their lives.  In the movie, The Godfather, the character of Hyman Roth—a stately and successful syndicate leader—is said to be based on Lansky.  The obvious clue being Roth said word for word in the movie “We are bigger than U.S. Steel.” For Hollywood, the story of Lansky was made for the big screen, or maybe vice versa. Born in 1902, his close associates included a who’s who list of American gangsterdom—all of which looked toward Lansky for his sound gangster wisdom. Lansky even had a vibrant partnership with the most famous gangster in the world, Al Capone. While Capone was violent and ruthless, Lansky was smart and methodical. Known as “the thinking man’s gangster,” Lansky’s gift was innate mathematical prowess. Other gangsters marveled at his ability to effortlessly solve equations in his head and remember the slightest of figures.3 Having no better calibrated moral compass, Lansky did, however, disdain senseless killings. Murders only brought public outrage and law enforcement heat. Lansky knew that those in position of trust had little fortitude to control their greed. Graft was a much better influencer than the Tommy Gun. Lansky firmly believed that when everyone gets their fair share, contentment abounds and business flourishes.4 Lansky brought the science of business management to organized crime. As acclaimed Investigative Journalist Sally Denton put it, “He organized crime along corporate hierarchical lines,

delineated authority and responsibility, holdings and subsidiaries, and more important, meticulously distributed shares of profits and proceeds, bonus and perquisites.”5 Lansky was also the prophet that enlightened mobsters to the gospel of hiding ill-gotten gains. In other words, he saved them from the cops hunting down their money trails. A consummate collaborator, it was only natural that Lansky would partner with trusted friends from his youth street gang days—such as Lucky Luciano and Bugsy Siegel—to exploit the misguided 18th Amendment to the Constitution prohibiting the sale of alcohol. Luciano and Siegel would go on to achieve gangster notoriety and both owed their downfalls to forsaking Lansky’s sage advice. At first they opened a front company—a car and truck rental garage—with pristine books and some actual customers in case anyone questioned their unexplained cash. But as the currency piled in, the rental business was no longer adequate cover. Even back then depositing large amounts of currency could draw the attention of lawmen, especially the tenacious Treasury agents referred to as the T-MEN. Necessity, the mother of invention, propelled Lansky to devise schemes to keep the cash out of the banks and simultaneously create a façade of legitimacy.6 Bankers back then were reluctant to lend money to the garment industry, which were mostly struggling immigrant shops. The industry did not work on preorders so they needed quick capital to make product to sell. Lansky saw a money laundering opportunity in the bankers’ mistrust of foreigners and the industry’s need for constant short-term loans. Lansky took his illicit cash and lent it to the clothing manufacturers. And when the inevitable came—the inability to pay back the loan on time— instead of breaking legs, Lansky made them an offer they could not refuse: to

turn over a portion of ownership and profits.7 Lansky now had the appearance of a clothier. When Capone and New York’s public enemy number one—infamous gangster Waxey Gordon—were convicted on tax evasion, Lansky realized that Treasury developed a doomsday machine that could obliterate men of his ilk. During his closing arguments, even Capone’s defense attorney admitted the inevitability of tax convictions on gangsters when the T-MEN came calling. “I have no illusions about what is going to happen in this or any of the so-called gangster cases.”8 Capone thought he had the upper hand by not letting his name appear on any document or ledger. Waxey was more sophisticated with hundreds of bank accounts that layered transactions to obfuscate the money trail. But federal law enforcement were getting better at the art of following the money. And both Capone and Waxey unwittingly exposed a big fat Achilles’ heel—the ostentatious enjoyment of ill-gotten gains. The T-MEN tediously calculated how much both spent on expenditures including shirts, suits and underwear.9 It was dubbed the silk drawer approach— proving income indirectly through living expenses. For Lansky, the misfortunes of Capone and Waxey served to solidify the formation of his money laundering principles. First, use shell companies and front men that on paper owned and controlled operations. Second, portray a man of modest means by avoiding lavish spending, big houses and flaunting wealth. Third, never neglect to file tax returns showing income that squares with the life of moderation. Fourth, move the bulk of the profits skimmed from the tax returns to offshore havens such as Switzerland. And the fifth, the superior principle, practice unwavering self-control by not letting vanity, greed and a pursuit of power overtake your gangster facilities.

Daniel Trotta, “Heirs of Meyer Lansky Want Compensation for Cuban Casino,” Reuters, December 9, 2015, http://www.reuters.com/article/ us-cuba-usa-lansky-idUSKBN0TS2U920151209 2 Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. 3 Ibid. 4 Robert Lacey, “Little Man Meyer Lansky and the Gangster Life,”1992. 5 Sally Denton and Roger Morris, “The Money and The Power,” 2001. 6 Robert Lacey, “Little Man Meyer Lansky and the Gangster Life,” 1992. 7 Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. 8 “Start Closing Arguments in Capone’s Trial,” Chicago Daily Tribune, October 16, 1931. 9 Elmer Irey, The Tax Dodgers: “The Inside Story of the T-Men’s War with America’s Political and Underworld Hoodlum,” 1948. 1

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Fulgencio Batista

As the T-MEN unleashed their wrath, Senator Huey Long—a populist presidential candidate and one of the largest recipients of Lansky’s graft—was in a desperate need for a money laundering solution. The T-MEN were hot on his money trail and Long was feeling the feverous heat. Lansky offered Long a numbered Swiss bank account with $3 million, the annual cost of doing business in his state. Lansky told Long that no one would be able to identify the true ownership and the bank would only give authority to the person with the correct password. Lansky admonished Long to never write down the password.10 Years prior to the repeal of Prohibition, gangsters had the forethought to nurture healthy income streams from other vices. Casinos were Lansky’s play on vice. They were referred to as “carpet joints,” illegal gambling operations tucked away in rural counties where the sheriff was the overlord and rather nonchalant about controlling illegal gambling when properly compensated. Before Lansky got into the casino business, most illegal gaming operations were known as “clip joints,” where games were rigged to fleece patrons. This was not Lansky’s style. The calculus was easy; the house always wins and the reputation of an honest casino would bring the masses through the doors. To this end, Lansky ensured his casinos provided patrons with an honest game, nice meal and entertainment.11

Fidel Castro

In the areas where Lansky set up his carpet joints he became the Santa Claus of graft-spreading joy to all those who could complicate matters. One clever way Lansky allowed county officials to avoid the appearance of impropriety coalesced around court fines. Municipal court records shows a dramatic increase in civil fines that coincide with the establishment of a Lansky operation. It seems the same group of Lansky associates were charged repeatedly for disorderly conduct but none ever made their court appearance, conveniently allowing the assessment of a hefty nonappearance fine.12 These financial transactions that served to promote Lansky’s criminal operations would have been violations of federal money laundering laws if enacted back then. None of Lansky’s casinos where ever titled in his name. Lansky handpicked crews well-versed in casino operations to serve as front operators, trusted men paid equitably to ensure their loyalty. Lansky was the behind the curtain guy. A Wizard of Oz of sort, covertly pulling the strings to ensure maximum efficiency but never acknowledging his freehold.13 Las Vegas, the only state in the Union that legalized gambling, poised an alluring opportunity for Lansky. By the 1940s, Lansky’s collaboration with other crime bosses grew into what law enforcement called the “National Crime Syndicate.”14 Lansky and his syndicate had a secret ownership interest—commonly referred to as “points”—in sev-

Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. Ibid. 12 Robert Lacey, “Little Man Meyer Lansky and the Gangster Life,” 1992. 13 Ibid. 14 Senate Committee, “Kefauver Reports,” 1951. 15 Robert Lacey, “Little Man Meyer Lansky and the Gangster Life,” 1992. 16 Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. 17 Ibid. 10 11

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Al Capone

eral Vegas casinos from which they methodically skimmed profits. Lansky ensured the skim was proportionate and not aggressive, so that the casino covered expenses and showed moderate profit. Lansky then made certain each of his fellow syndicate bosses were paid their respective booty based on their points. Lansky even organized their figures to report to the IRS for his fellow syndicate leaders.15 Lansky continued to evolve his money laundering as money flowed in from his carpet joints and Vegas casinos. Bagmen with suitcases brimming with skimmed profits couriered the cash around the country and then ultimately to Swiss banks. One of his couriers was a Swiss citizen giving him easy access in and out of the popular haven. Another was given the moniker “the lady in mink” because she liked to dress exceedingly well on her syndicate delivery excursions.16 Numerous shell corporations were used to cloud the money trail and once they were sufficiently layered these overseas companies would lend money back to front entities. No financial trailing was left exposed to inquisitive auditors. The front companies even paid interest and deducted the amounts accordingly on the tax returns which caused the government to unwittingly subside Lansky’s operations through write-offs. Lansky’s official biographer explains it as “a financial maze that was virtually impenetrable.”17

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In the early 1950s, the Kefauver Committee—a U.S Senate committee enacted to determine the scope of organized crime—brought much unwanted public attention to the conflagration of criminal enterprises exploiting vice across the country. Some of the witnesses subpoenaed before the committee were Lansky’s associates or recipients of Lansky’s under-the-table patronage. The Committee directed the T-MEN to spearhead a racketeering task force that led to the convictions of corrupt sheriffs and noteworthy gangsters such as Frank Costello and Mickey Cohen.18 The Kefauver Committee forced Lansky to appear three times and in their final report to Congress they named Lansky the leader of an “East Coast Crime Syndicate.” Other than the pejorative mention in the final report, Lansky walked away unscathed from criminal charges but that was too close for comfort. The Kefauver hearings served as another teaching moment. Lansky realized that the only way to fend off another inquisition was to move his operations outside the jurisdiction of the U.S.19

terized the permissive financial behavior as “devices an honorable and conscientious citizen would [not] adopt.” 22 As the hearings demonstrated, many money laundering accoutrements were already in place for Lansky thanks to crafty attorneys. Cuba was Lansky’s bold move in the Caribbean. With close proximity to Florida, it became one of the most visited tourist destinations for Americans. The resident dictator, Fulgencio Batista, was well versed in the ways of graft and took to Lansky’s payoffs in Swiss bank accounts like a fish to a baited hook. Moreover, in a twist of irony, Batista enlisted the crime boss to ensure casinos on the island provided an honest game. Cuba had received a good spout of negative press regaling Americans on how their casinos where actually clip joints rigged to fleece the throngs of unsuspecting visitors. Under Lansky’s watchful eye only operators Lansky trusted to run an honest game were allowed access to the island.23

Cuba seemed so promising that Lansky decided to double down on Batista’s laissez-faire government. Lansky was already doing brisk business with his Montmartre Casino but Lansky felt that in order to attract even more big-time gambles, a grand resort was in order. At a cost of $19 million, Lansky’s Riviera hotel was going to be the most luxurious resort casino in the world, rivaling anything in Vegas. Even though Lansky oversaw every aspect of the design in true Lansky tradition there were no paper trails to his hidden ownership. Lansky had only one official association with the Riviera: He held the lowly position of director of kitchen operations.24 In 1957, the Riviera opened to a fanfare of movie stars, social elite and more importantly uber high rollers. The resort quickly manifested into Lansky’s vision of a vibrant, world class casino free from meddling law enforcement and regulators. But his exuberance was short lived. In an epic strategic failure, Lansky underestimated the swell of support for

Lansky was introduced to the Caribbean islands back in the 1920s when he and fellow gangsters traveled there to meet with European distillers who conveniently built distribution centers on the islands soon after the enactment of Prohibition. 20 By the late 1920s, the islands also became a hot bed of financial activity for wealthy Americans not interested in paying their fair share of taxes. These tax dodgers sought the services of Bahamian attorneys and banks to establish accounts and shell entities.21 The Bahamas, in particular, became so desirable for tax cheats that at one point banks ran out of vaults and the walls of law practices inside and out were littered with name plates of shell companies. The flight of tax dollars became such a concern that Congress held hearings in 1937 publicly exposing several prominent citizens that used schemes devised by ingenious New York law firms. Treasury Secretary Henry Morgenthau Jr. publicly charac-

At a cost of $19 million, Lansky’s Riviera hotel was going to be the most luxurious resort casino in the world, rivaling anything in Vegas

Hank Messick, “Secret File,” 1969. Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. 20 Hank Messick, “Syndicate Abroad,” 1969. 21 “Tax Dodgers’ Are Named At Joint Inquiry,” Christian Science Monitor, June 18, 1937. 22 “The C.I.O And The Tax Investigation,” Chicago Daily Tribune, June 24, 1937. 23 Robert Lacey, “Little Man Meyer Lansky and the Gangster Life,” 1992. 24 Ibid. 18 19

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a young revolutionist by the name of Fidel Castro. In 1959, Castro’s coup seized power from Batista and forced casinos to close and the properties were nationalized.25 It was a painful amputation of an income appendage Lansky was hoping to lean on. But the ever resilient Lansky licked his wounds, learned from his mistakes and focused his casino attention to other Bahamas islands.26 The Swiss bank of choice for Lansky and other gangsters was the International Credit Bank (ICB) whose customers included “some of the most powerful members of the underworld in the United States.” And through the ICB back entrance came the “most astonishing steam of couriers in the history of Swiss banking.”27 To provide valued customer service, ICB established branches in the Bahamas easing the travel burden for underworld couriers.28 In the Bahamas it was Bank of World Commerce (BWC). To Lansky and his associates, BWC became a key generator of loans (the funds of which were used to invest in legitimate businesses including Florida hotels). The bank was established by his cronies and Lansky handpicked a close associate to serve on the BWC’s board of directors.29 It only seems natural that an elite money launderer would progress to control a bank. In March 1971, federal investigators finally broke through Lansky’s complex web of hidden money trails and were poised to indict him on two counts of tax evasion.30 But Lansky had a strong premonition that the FBI and IRS were closing in so he fled to Israel and applied for citizenship. Prodded by information from U.S. law enforcement, Israel eventually denied Lansky’s citizenship. Dejected and in increasing poor health, Lansky begrudgingly made his way back to the U.S. to face the charges.31 With the news of the indictments, the press worked themselves up into a speculation frenzy. The Associated Press called Lansky the “reputed financial genius of the underworld” and the Miami Herald gave him the lofty title of “Gangland Finance Chairman.” But with all the media hype, a Miami jury thought otherwise and acquitted Lansky of the first tax evasion count.32 The second tax evasion count involved skimmed profits from the Las Vegas Flamingo Hotel and Casino. Lansky’s attorney successfully motioned the court to

58

have the trial moved to Nevada given the bulk of the evidence resided in Vegas. As the trial approached, Lansky’s attorneys informed the court that their defendant was too ill to travel across the country. Attorneys on both sides argued the matter for several years and finally the Nevada judge ordered the case dismissed based on the government’s own physicians opining that Lansky was in no physical condition to withstand the vigor of travel and trial. Rumors abound that the kingpin paid someone off but it was never remotely proven. Now it was law enforcement licking their wounds and resigning to the fact that the kingpin would go to his grave—as one FBI agent put it—“laughing that he whipped us all.” 33 Lansky finally passed away on January 15, 1983, with the outward appearance of a man living his last days almost destitute unable to fund his severely disabled son’s care. 34 Much can be speculated on Lansky’s involvement in organized crime. To what extent was the size and scope of the syndicate’s larcenous empire? Did Lansky really possess a mountainous fortune—the legendary $300 million? Was there an agreement that all his fortunes were to go to syndicate lead-

ers rather than family? Or, was his money so tightly laundered away through a network of entities and front men that he ultimately lost control and access over time? These questions—to date—are left unanswered. Lansky did not invent the complex money laundering schemes that became the gold standard for criminal enterprises. This credit probably goes to New York attorneys back in the 1920s eager to assist tax dodgers.35 But the evidence is much less speculative that Lansky was a transformative figure in gangsterdom. Without Lansky, organized crime would not have effectively industrialized. And more importantly, crime bosses would have been sitting ducks with their exposed money trails. But Lansky shared his money laundering principles, taught them the ways of effectively hiding cash and making ill-gotten gains work for them through legitimate ventures. In this sense, Lansky was the underworld’s Godfather of money laundering. 

Paul Camacho, CAMS, vice president of AML compliance, Station Casinos LLC, Las Vegas, NV, USA, [email protected]

Ibid. Hank Mesick, “The Syndicate Abroad,” 1969. 27 Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. 28 Ibid. 29 Ibid. 30 Robert Lacey, “Little Man Meyer Lansky and the Gangster Life,” 1992. 31 Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. 32 Robert Lacey, “Little Man Meyer Lansky and the Gangster Life,” 1992. 33 Ibid. 34 Dennis Eisenberg, Uri Dan and Eli Landau, “Meyer Lansky: Mogul of the Mob,” 1979. 35 “The C.I.O And The Tax Investigation,” Chicago Daily Tribune, June 24, 1937. 25 26

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Risk versus reward —The Public Savings Bank investigation

U

.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) is the largest investigative arm of the Department of Homeland Security. HSI special agents have long recognized the importance of conducting financial investigations, which has led to a vast array of expertise in conducting all types of investigations related to financial crimes. HSI’s broad jurisdictional authorities make the agency uniquely positioned to target the methods through which criminal organizations earn their illicit funds. These methods include narcotics smuggling; terrorist financing; money laundering, such as the Black Market Peso Exchange; intellectual property rights; counterfeit pharmaceuticals; human smuggling and trafficking; commercial fraud; export violations; and cybercrime. HSI brings a wealth of experience and authorities in tracking the illegal movement of funds derived from criminal activity into and out of the U.S. It is this expertise and experience that led HSI Philadelphia special agents to focus on a small bank in Philadelphia that was responsible for moving enormous amounts of money internationally.

In 2008, H. Jack Miller became the president and chief executive officer (CEO) of Public Savings Bank (PSB), a private closely-held bank that was chartered in Pennsylvania. PSB only operated one branch office located in Huntingdon Valley, Pennsylvania. According to the U.S. Department of Justice, “As a financial institution, PSB was subject to the requirements of the Bank Secrecy Act (BSA), which was enacted to prevent financial institutions from being used as intermediaries in the movement of money derived from criminal activity.”1 Miller controlled all operations at the bank and was the bank’s largest shareholder. The first failure of the bank under his watch was it never established an effective anti-money laundering (AML) program. In addition, there was never a competent

BSA compliance officer appointed and there was never any implementation of policies and procedures necessary to protect the bank and the American public against money laundering. Why was there no adequate AML program or competent BSA compliance officer? These failures can be directly attributed to both Miller’s inexperience as a CEO for a financial institution and his desire to build capital quickly through the use of foreign correspondent accounts. Both of these factors led to the opening of over 230 foreign correspondent bank accounts, many of which were currency exchanges in Venezuela whose sole presence in the U.S. were their PSB accounts. Under the BSA, correspondent bank accounts are subject to enhanced due diligence which PSB was not capable of conducting given the foreign location of the banks and their inadequate program. These accounts—and the massive amount of money flowing through them—attracted the attention of HSI special agents in the HSI Philadelphia office. HSI special agents have over 40 years of experience in conducting money laundering and related financial crimes investigations. HSI, through its legacy agencies, have been at the forefront of AML programs and legislation since the inception of the BSA and the various legislative fixes that have followed through the years. HSI Philadelphia’s analysis of these Venezuelan currency exchangers’ accounts at PSB indicated they operated as passthrough entities, receiving multiple wire

“Bank President Charged with Failure to Comply with Requirements of the Bank Secrecy Act,” U.S. Department of Justice, September 11, 2013, https://www.justice.gov/usao-edpa/pr/bank-president-charged-failure-comply-requirements-bank-secrecy-act

1

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transfers for amounts in the hundreds of thousands of dollars from businesses and individuals in South America, Central America and the U.S. These accounts then generally funded multiple smaller outgoing domestic transfers to other banks on the same or next day. In February 2011, HSI Philadelphia officially opened an investigation to document the suspicious activity and to determine if there was any criminal activity associated with it. The investigation found that from 2008 through April 2011, over $1.2 billion in such wire transfers passed through PSB’s foreign currency exchange accounts. As a result of PSB’s failure to comply with the BSA, these foreign entities were not subject to the due diligence and transaction monitoring required under the AML provisions of the BSA. HSI Philadelphia partnered with the Federal Deposit Insurance Corporation (FDIC) Office of the Inspector General, the Asset Forfeiture and Money Laundering Section of the Department of Justice and the Internal Revenue Service–Criminal Investigations to investigate PSB and Miller. In August 2011, the FDIC assumed control of PSB due to the bank’s poor financial condition. PSB was sold by the FDIC to Capital Bank of Rockville, Maryland.

As a result of this investigation, the federal charges against Miller included failing to develop, implement and maintain an effective AML program at PSB,2 aiding and abetting3 and failing to file a suspicious activity report.4 The latter charge was in connection with a wire transmission of approximately $86,400 that was sent on March 25, 2010. The money was transferred into the account of a Venezuelan currency exchange customer.  The investigation later determined that these funds were the proceeds of narcotics trafficking in the U.S. However, no evidence indicating that Miller or any other PSB employees were aware of the criminal source of the funds was ever developed. On October 7, 2013, Miller waived his right to indictment and pleaded guilty to a criminal information charging the above violations as part of a negotiated plea agreement. On July 1, 2014, U.S. District Judge Timothy J. Savage imposed a sentence of two years of probation and a $5,000 fine on Miller stemming from his prior guilty plea. This was one of the first times a principal of a financial institution had been charged and convicted as an individual with these BSA violations.  Prior investigations have resulted in legal action against financial institutions as entities and not individual bank execu-

tives. While Miller’s sentence may not seem significant compared to the complete disregard for the BSA and money laundering risks he exposed his customers to, his prosecution—one of the first of its kind—should serve as a warning that this behavior will not be tolerated. The risk that you expose your bank, your customers and your own individual freedom to is not equal to any reward you may receive from these criminal acts. Understanding the importance of the BSA and having an effective AML program can be the difference between your bank seeking assistance from law enforcement or your bank being the target of a money laundering investigation. Be proactive, ensure you know the rules and regulations, and seek help when you are unsure what to do. One place where you can go is HSI. HSI launched its Cornerstone Outreach Initiative in 2003 to forge cooperative partnerships with the private sector and other nations in order to identify and reduce vulnerabilities in the existing and emerging financial systems. As part of the Cornerstone initiative, designated special agents in HSI field offices serve as liaisons to the private sector and provide them with training and assistance. HSI’s enforcement capabilities and pioneering investigative techniques make them well positioned to combat money laundering and related financial crimes. The wide array of statutory authorities given to HSI puts them at the forefront of combating transnational criminal organizations. Tracking down and seizing the lifeblood of these organizations, and prosecuting those responsible for the related money laundering violations, is crucial to shutting down entrenched criminal activity and it plays a pivotal role in protecting the homeland. 

Kevin M. Tyrrell, CAMS, supervisory special agent, HSI, Philadelphia, PA, USA, [email protected]

Title 31 USC 5318(h) and 5322(a), willful failure to maintain an effective anti-money laundering program 3 Title 18 USC 2, aiding and abetting 4 Title 31 USC 5318(g) and 5322(a), willful failure to file suspicious activity reports 2

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Riches in rags

A

customer makes his way to the teller window and presents several thousands of dollars in cash that seem contrary to his disheveled appearance. His account balance has gone from overdrawn to five figures regularly, and like in Johnny Rivers’ song he lives on the “poor side of town.” Tellers routinely see others like this, perhaps less disheveled but still very blue collar in appearance doing executive-level banking. Although we conceive that money launderers are lavishing in prosperity, many who are pulled up on the Bank Secrecy Act (BSA) radar will be the worker bees of the money laundering world. They are the couriers and retail vendors of dirty deeds. Many will remain comfortably connected to a modest blue-collar lifestyle despite the executive sized money they regularly handle. “Forever in blue jeans” is not some Neil Diamond song but the only way of life they know. The mismatch between the money and the lifestyles is a basic anti-money laundering lesson, a sort of BSA 101 for investigators.

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One recent example is of a couple who in just over two years had at least $35 million in pure currency pass through their unwashed hands. During that time this pair spent more time on the road than your average trucker. They had so many schemes going on at one time that the truth—even if they were to speak it—had no more relevance. When they were investigated (after several suspicious activity reports [SARs] were filed on them) and were eventually indicted, they were all but broke. The couple’s future freedom prospects were left to the public defender. Another example would be Carlos (not his real name but one he used from time to time). Carlos saw a lot of cocaine and a lot of cash pass through his hands. At times he would be in possession of multiple kilos of cocaine worth hundreds of thousands of dollars. At the same time he would have to call his D.C. area buyer to front him the airfare money he needed to bring the cocaine up from Florida. His first confrontation with the

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police was when he was approached by agents at the airport after a ticket agent alerted them to the wad of cash she noticed in his bag. Being flush with currency from the sale he just completed, Carlos attempted to upgrade his economy seat for the return trip. The agents seized the cash suspecting it was exactly what it was—illicit drug proceeds. When he got back to Florida he gave his contacts there the receipt the agents gave him when they seized the cash. The excuse he gave for not having their money was accepted by his Florida conspirators. Carlos would continue to work with them for at least another two years. In the world of terrorist financing, human trafficking and cause-committed fanatics, lavish lifestyles are not in the lexicon. Gang membership, ethnic or religious acceptance and notoriety, or perceived societal obligations can sometimes make the numbers a secondary concern. Millions can flow through their hands with no cognitive count ever being kept by them. They are strangers to the world where this kind of money normally gets attention and respect. They neither envy nor aspire to that. They neither know nor understand it. The money making and later money laundering schemes that fund these activities can be from seriously controlled narcotics to the simple avoidance of tax and markups on items as common as imported cheese. Moreover, cigarettes have become a favorite low-risk of enforcement in these worlds. The easy money made from tax avoidance from state-to-state variances becomes as addictive as the actual commodity. Cars, trucks and vans are packed and loaded to the max with cigarette cartons followed by repeated sometime daylong journeys

The “trace evidence” of a money laundering scheme can be messy and unsophisticated

between states. Sleeping in vehicles is commonplace and often more comfortable than the actual accommodations they know as home. The bonus-sized fast food meals are their biggest luxury in dining. They are living a vagabond lifestyle which belies the serious money passing through it.

lifting and “internal shrinkage” as part of doing business. Financial institutions do the same for various levels of fraud and theft. The reality is there is much more tolerance for similar accepted losses in the illicit money laundering world than commonly portrayed by popular culture.

The actual contraband supporting most illicit operations is rarely distributed in upscale neighborhoods. Various law enforcement agencies and departments routinely seize six and seven figures in cash from “beater” vehicles or rat infested dilapidated dwellings. Within the financial institutions or areas under the purview of the BSA, these blue-collar money launderers will account for a fair share of the SARs filed. Their financial institution transactional behaviors are textbook for raising compliance alerts. While the out-of-character cash deposits attract the attention of Bank Secrecy Act/antimoney laundering (BSA/AML) departments, their chronically overdrawn account balances are unattractive for launching law enforcement investigations. Law enforcement management, especially for those in the AML world, expect to see big balances. Thus, miscreants like these are big headaches. Other deeds and offenses traditionally disrupt people like Carlos or our notorious couple more than AML efforts.

While Hollywood likes making movies about the trials, tribulations, or folly of those making attempts to abscond with suitcases of criminal money, in the real world such suitcases are routinely passed off by otherwise near indigent conspirators. Violence gets attention— the kind of attention money laundering schemes do not want or need. Creating disturbances can disturb profits. There are rarely overt “hit men” or “big guys from Philly” to administer street justice standing by if a payment or two is disrupted. However, the trust accorded amongst these scoundrels can sometimes be amazing.

Carlos would burn through his money as if it had a “use by” date on it. He would stay at hotels until his latest profits ran out and then he would stay on the streets. In the prime of his many illicit schemes Carlos had written off or lost thousands at various times with little thought of retaliation. Carlos needed these schemes more than they needed him. In the long run he was reliable and profitable. Retail giants write off shop-

Although “sophisticated” is a word normally associated with money laundering, AML investigators should never lose sight of the fact that many of these schemes have some rather unsophisticated aspects and participants along the way. The “trace evidence” of a money laundering scheme can be messy and unsophisticated. Many AML investigators want everything clean. Charts and spreadsheets are neat and clean. Money laundering can be messy. That is why they call it dirty money. The handling of the money at this stage is clumsy and is handled by undereducated and unkempt reprobates. The behaviors are simplistic but the amount of money involved gives the impression of a complexity which is actually lacking. Investigating people like Carlos and our illicit dynamic duo is essential for any serious AML but it is imperative to not be influenced by the appearance of the lady and the tramp.  These true life scenarios are the baseline for what suspicious activities look like. This is a return to BSA 101 basics. When serious money leaves a normal path, AML investigators need to follow it even if leads into a rat hole. This is for sure BSA 101. 

Steve Gurdak, CAMS, supervisor, Washington Baltimore HIDTA, Northern Virginia Financial Initiative (NVFI), Annandale, VA, USA, [email protected]

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Putting slavery out of business A

surprisingly common misconception held by many is that slavery ended in the 19th century; however, it did not. At no time in human history are more men, women, boys and girls enslaved than now. In 2014, the Global Slavery Index estimated that 35.8 million men, women and children are trapped in modern slavery.1

Modern slavery2 is prevalent today—in one form or another—in every country in the world encompassing forced and compulsory labor and human trafficking.3 According to the National Crime Agency, “Traffickers and slave [drivers] coerce, deceive and force individuals against their will into a life of abuse, servitude and inhumane treatment. Victims may be sexually exploited, forced to work for little or no pay or forced to commit criminal activities against their will.”4 Whether it is “women and children forced into prostitution; children and adults forced to work in agriculture, domestic work, or factories and sweatshops producing goods for global supply chains, [or] entire families forced to work for nothing in order to pay off generational debts,” these illegal practices still blight the contemporary world.5 U.S. President Barack Obama stated the following about human trafficking: “It ought to concern every person, because it is a debasement of our common humanity. It ought to concern every community, because it tears at our social fabric. It ought to concern every business, because it distorts markets. It ought to concern every nation, because it endangers public health and fuels violence and organized crime. I’m talking about the injustice, the outrage, of human trafficking, which must be called by its true name—modern slavery.”6

1 2 3

4

5

6

64

The Global Slavery Index, http://www.globalslaveryindex.org/findings/ “What is modern slavery?,” U.S. Department of State, http://www.state.gov/j/tip/what/ “What is modern slavery?,” Anti-Slavery, http://www.antislavery.org/english/slavery_ today/what_is_modern_slavery.aspx “Potential Indicators of Slavery and Human Trafficking,” National Crime Agency, December 2014, http://nationalcrimeagency.gov.uk/publications/631-potentialindicators-of-slavery-and-human-trafficking/file “What is modern slavery?,” Anti-Slavery, http://www.antislavery.org/english/slavery_ today/what_is_modern_slavery.aspx “Office to Monitor and Combat Trafficking in Persons,” U.S. Department of State, http://www.state.gov/j/tip/

ASPECTS OF ASIA

Human trafficking and AML As part of the global financial system, banks and other financial institutions can become an effective instrument against facilitating the proceeds from slavery. Although not every jurisdiction has a specified predicate offense for human trafficking yet, the Financial Action Task Force (FATF), which sets the de facto global standard in anti-money laundering (AML) and counter-terrorist financing (CTF) regulations, has included human trafficking, as well as associated crimes (i.e., sexual exploitation, kidnapping, illegal restraint, etc.) in its FATF Recommendations as designated categories of money laundering offenses for a number of years.9 The U.N. Convention against Transnational Organized Crime, adopted by General Assembly Resolution 55/25,10 entered into force on September 29, 2003, and was further supplemented by the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children.11 The U.N.’s view on human trafficking, as an organized crime, is very clear. The AML risk to the financial system from human trafficking resulted in FATF publishing a specific study in 2011 on “Money Laundering Risks Arising from Trafficking of Human Beings and Smuggling of Migrants.”12 The AML fundamentals are already in place.

Much of the current strategic efforts to fight slavery focus on victim identification, rescue and restoration, and the prosecution of the traffickers. The International Labour Organization estimates that slavery generates $150 billion into the global economy.7 It is strongly believed that much of that revenue— from sectors including agriculture, construction, manufacturing, entertainment, mining, forestry and fishing­­—is passing into and through the banking system undetected. According to a Thomson Reuters article on human trafficking, “A simple and logical deduction would infer that denying criminals this profit, or simply disrupting the flow of finances in this transnational trade, would significantly compromise illicit operations.”8 This is an area where banks and other financial institutions can play a key role.

The global financial system, under AML/CTF regulation has long precedence of systemic requirements, especially toward know your customer (KYC), customer due diligence (CDD) and transaction surveillance. Comprehensive KYC and CDD processes and procedures should identify clients that may be benefiting from or facilitating the funds from the proceeds of slavery. In addition, financial institutions are required to conduct a risk-based approach (RBA)13 to their AML/CTF programs to identify, assess and understand the money laundering and terrorist financing risks to which they are exposed and take AML/ CTF measures commensurate those risks in order to mitigate them effectively. RBAs should include the risk of handling the proceeds of human trafficking on behalf of their clients.

Tools and resources to assess risk There are a number of existing tools and resources that can be leveraged by banks and other financial institutions to help them form a strategy to include the risk of human trafficking into their decision making.

“Forced labour, human trafficking and slavery,” ILO, http://www.ilo.org/global/topics/forced-labor/lang--en/index.htm Duncan Jepson and B.C. Tan, “The role of intelligence in the disruption of human trafficking, slavery and forced labor,” Thomson Reuters, December 2, 2015, http://thomsonreuters.com/en/articles/2015/disrupting-human-trafficking-slavery-forced-labor.html 9 “The FATF Recommendations,” FATF, February 2012, http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF_ Recommendations.pdf 10 United Nations Convention against Transnational Organized Crime and the Protocols Thereto,” UNODC, https://www.unodc.org/unodc/en/ treaties/CTOC/index.html 11 “Human Trafficking,” UNODC, https://www.unodc.org/unodc/en/human-trafficking/what-is-human-trafficking.html 12 “Money Laundering Risks Arising from Trafficking of Human Beings and Smuggling of Migrants,” FATF, July 2011, http://www.fatf-gafi.org/ publications/methodsandtrends/documents/moneylaunderingrisksarisingfromtraffickingofhumanbeingsandsmugglingofmigrants.html 13 “Guidance for a Risk-Based Approach: The Banking Sector,” FATF, October 2014, http://www.fatf-gafi.org/media/fatf/documents/reports/RiskBased-Approach-Banking-Sector.pdf 7 8

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ASPECTS OF ASIA

Source: www.globalslavery.org

In assessing geographic risk, there are several indices of country risk: • U.S. State Department’s Trafficking in Persons Report— This is an annual assessment of each country. Each country is placed onto one of three tiers based on the extent of their governments’ efforts to comply with the “minimum standards for the elimination of trafficking” found in Section 108 of the Trafficking Victims Protection Reauthorization Act (TVPRA).14 • Global Slavery Index—This index presents a ranking of 167 countries based on the percent of a country’s population that is estimated to be in modern slavery. The graph above highlights 10 countries with the highest number of people in modern slavery.15 In assessing industry/product risk, there are several sources of industry/product risk:

• U.S. Department of Labor List of Goods Produced by Child Labor or Forced Labor—This is a list of goods believed to be produced by child labor or forced labor in violation of international standards—as required under TVPRA—and their source countries. This list can be found on the U.S. Department of Labor website.16 • U.S. Department of Labor List of Products Produced by Forced or Indentured Child Labor—This is a list of products (and their source countries) produced by forced or indentured child labor, pursuant to Executive Order 13126. Executive Order 13126 is “intended to ensure that U.S. federal agencies do not procure goods made by forced or indentured child labor.”17 • Verite’s Research on Risk in 43 Commodities Worldwide— This report presents narratives on 43 of the world’s most important primary commodities, describes the connection, if any, between the commodity and forced labor and/or child labor, as well as documented instances of human trafficking in the industry.18

“Trafficking in Persons Report,” U.S. Department of State, July 2015, http://www.state.gov/documents/organization/245365.pdf The Global Slavery Index, http://www.globalslaveryindex.org/findings/ 16 “List of Goods Produced by Child Labor or Forced Labor,” U.S. Department of Labor, December 1, 2014, https://www.dol.gov/ilab/reports/pdf/ TVPRA_Report2014.pdf 17 “List of Products Produced by Force or Indentured Child Labor, U.S. Department of Labor, http://www.dol.gov/ilab/reports/child-labor/list-ofproducts/index-country.htm 18 “Strengthening Protections Against Trafficking in Persons in Federal and Corporate Supply Chains,” Verite, 2016, http://www.verite.org/sites/ default/files/images/Verite-CommodityReports-2016%200229.pdf 14 15

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Annual profits of forced labor per region (US $ billion) 60

51.8 50

46.9

40 30

18.0

20

12.0

8.5

10 0

Asia-Pacific

Developed Central and Economies South-Eastern and EU Europe and CIS

Africa

Latin America Middle East and the Caribbean

Source: International Labor Organization, Profits and Poverty: The Economics of Forced Labor (2014), p.14.

How big is the problem? Modern slavery is defined by the Global Slavery Index as to “involve one person possessing or controlling another person in such a way as to significantly deprive that person of their individual liberty, with the intention of exploiting that person through their use, management, profit, transfer or disposal.”

N/A

world today——more than at any time in human history.

6 of the 10 countries with the most enslaved people are in South and Southeast Asia

The exploitation of people generates USD 150 billion per year——1/3 of these profits are from Asia

EN

LIST OF COUNTRIES WITHOUT SLAVERY:

There are 36 million people enslaved in the

T

E RY C RIS AV IS L S

CURR

-

13.1

Half the world’s enslaved population live between Mumbai and Hong Kong

A human being is enslaved every 15 seconds—over 2 million new slaves each year

(Credit to Running To Stop The Traffik for all the date sources).

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ASPECTS OF ASIA

Tools and resources for surveillance There are a number of resources on slavery red flag indicators and typology information that may assist banks when optimizing their client risk assessment and client transaction surveillance systems. • FinCEN—“Guidance on Recognizing Activity that May Be Associated with Human Smuggling and Human Trafficking: Financial Red Flags”19 • The Bankers’ Alliance Against Trafficking—“Human Trafficking: Customer and Financial Transaction Traits That May Present Risk”20 • Finance Against Trafficking—“Suspicious Financial Activity and Human Trafficking Red Flags”21 • FATF—“Money Laundering Risks Arising from Trafficking of Human Beings and Smuggling of Migrants”22 Banks should use human trafficking typologies from global, regional and domestic sources to refine their surveillance rules and strategies, as well as client risk assessment. However, there is a shortage of typology information available, especially from the Asia/Pacific region. As shown in the graph on page 67, the Asia/Pacific region accounts for the largest number of forced laborers in the world. Although there are over 50 percent of the world’s slaves coming from Asia-Pacific and they have the largest annual profits of forced labor, there are very few typologies coming from this region. There is a significant need for typologies from AsiaPacific countries, local “on the ground” Asia-Pacific sources and current Asia-Pacific methodologies.

Tools and resources for KYC/CDD In order to assess whether clients are potentially involved in or at risk from facilitating or benefiting from the proceeds of slavery, it is imperative that banks include the need to screen for adverse keywords for slavery in their KYC/CDD processes.

For example: • Internal staff handling client reviews at new-to-bank client onboarding and existing-to-bank client scheduled reviews should include adverse keywords for slavery in adverse media searches. • External due diligence firms should be required to include adverse keywords for slavery in CDD research and reports. • Third-party databases should be required to include coverage for human trafficking, forced labor and slavery content. Lists of adverse words and phrases commonly used in reference to human trafficking and modern slavery can be obtained from http://www.humantraffickingsearch.net/glossary-and-definitions.

Conclusion There is no doubt that the involvement of banks, to turn their powerful AML/CTF infrastructure to collectively focus on monitoring for payments and clients involved in or benefiting from the proceeds of slavery, will undoubtedly enhance efforts against slavery. There is little that needs to change from the existing AML/CTF processes and procedures already in place. What does need to be done is to incorporate the risk of human trafficking into the existing infrastructure. What is needed is more information on typologies about slavery, made readily available from local financial intelligence units and from FATF regional subgroups in their regular typology working groups, and emphasis placed at all levels—global, regional, country, bank—to make the identification and mitigation of clients and proceeds from slavery a priority. The end game should always be to put slavery out of business before the numbers trapped in slavery grow further. 

Steve Farrer, MBA, CAMS, CFE, head of information strategies, Liberty Asia, Hong Kong, [email protected] The author makes no representation as to the accuracy of the data from the various sources, nor the degree of weight that should be attributed to such sources, if any.

“Guidance on Recognizing Activity that May Be Associated with Human Smuggling and Human Trafficking,” FinCEN, September 11, 2014, https://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2014-A008.pdf 20 “Human Trafficking: Customer and Financial Transaction Traits that May Present Risk,” Bankers’ Alliance Against Trafficking, February 17, 2014, http://www.osce.org/secretariat/115618?download=true 21 “Finance Against Trafficking Resources,” Finance Against Trafficking, http://financeagainsttrafficking.org/resources/?path=resources 22 “Money Laundering Risks Arising from Trafficking in Human Beings and Smuggling of Migrants,” FATF, July 2011, http://www.fatf-gafi.org/ documents/documents/moneylaunderingrisksarisingfromtraffickingofhumanbeingsandsmugglingofmigrants.html 19

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INTERVIEW

David Szuchman:

Never let your guard down

A

CAMS Today spoke with David Szuchman, executive assistant district attorney and chief of the Investigation Division of the New York County District Attorney’s office to discuss cybercrime, fraud and identity theft. Szuchman began his legal career at the Manhattan District Attorney’s Office in 1997 as an assistant district attorney in Trial Bureau 40. Szuchman later became a trial attorney in the criminal division of the U.S. Justice Department, assigned to the Child Exploitation and Obscenity Section and then worked as an assistant attorney general in the New York Attorney General’s Office on complex fraud and anti-trust cases. In 2009, Szuchman was appointed as the director of the New Jersey Division of Consumer Affairs. This department enforced laws and regulations designed to protect New Jersey’s residents in the marketplace, including securities regulation and mortgage fraud enforcement. Szuchman was also responsible for internet safety initiatives on behalf of former New Jersey Attorney General Anne Milgram. He rejoined the office in 2010 as chief of the Cybercrime and Identity Theft Bureau. The Bureau is tasked with prosecuting all types of cybercrime, ranging from cyber stalking and child pornography cases to computer intrusions and

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malware. In addition, the Bureau handles over 200 identity theft cases per month. In April 2012, Szuchman was appointed deputy chief of the Investigations Division. In this position, he assisted Division Chief Adam Kaufmann in developing policies and investigative strategies, maintaining relationships with outside agencies, and helping to supervise investigations throughout the Division. He was appointed executive assistant district attorney and chief of the Investigation Division on November 15, 2012. Szuchman graduated from the University of Vermont in 1994 with a bachelor’s degree in political science, and received a law degree in 1997 from Hofstra University School of Law.

ACAMS Today: How can financial institutions assist law enforcement in cracking down on all types of fraud? David Szuchman: First and foremost, financial institutions should maintain an open dialogue with law enforcement. We’re not necessarily seeking criminal referrals, but it is critical for the protection of consumers and the industry as a whole that there are criminal consequences for fraud. Otherwise, the perpetrator is emboldened to commit additional crimes in the future. We encourage all industries to report fraud to law enforcement. Groups like the international, not-for-profit Global Cyber Alliance, which share information about threats and intrusions across sectors, and are critical to combating fraud.‎

INTERVIEW

duced on your device and compromising your personal information. Once it is compromised in one place, the fraud is easily multiplied across accounts, credit cards, and the like.

AT: How has the explosion of mobile technology in the last decade affected cybercrime investigations? DS: The impact has been huge. Cybercriminals are no longer

hiding behind a computer or laptop in a house anymore— everybody is on the street, using handheld, mobile devices and apps to commit crimes. Law enforcement has had to adapt to the changing face of cybercrime by deploying different techniques and tools to keep pace with ever-changing technology.

AT: What is the most surprising cybercrime case you have come across? DS: I’ve been in this field long enough that few things surprise

me anymore. That being said, in the Manhattan DA’s Office, we frequently come across local actors affiliated with traditional street gangs in New York City buying personal identifiable information from hackers in places like Ukraine. This breaking down of international borders has been a major, if not surprising, transformation in the way cybercrime and cyber fraud is committed.

AT: Which type of crime is the most challenging to prosecute and why? DS: In terms of investigations, any type of money movement is challenging to prosecute because the flow of money often takes place outside of the U.S., and we lose visibility as to where the money is going and how it’s being transacted. It can be especially difficult to follow the money in places where we lack the ability to quickly gain access to records or freeze proceeds. Personally, child abuse and child exploitation cases have been some of the most challenging for me to prosecute, for all the obvious reasons. It’s difficult and important work, but I also consider them the most gratifying that I will ever prosecute.

AT: How can financial institutions and individuals protect themselves from identity theft, hackings and other types of fraud? DS: The easiest way for financial institutions to protect them-

selves is to share information about threats or attacks with law enforcement. This is why DA Vance made a $25 million investment last year in the Global Cyber Alliance, with our partners at the City of London Police and the Center for Internet Security. The group has pledged to not collect any personal identifiable information, and works with voluntarily provided data to describe or identify the attackers’ information, not the victim’s, and any associated threats. Members include leaders from security, defense, retail, healthcare, insurance, energy, aviation, education, law enforcement, government, and finance institutions, and the list is growing by the day. For individuals, it is important to remain vigilant. All those tips you read about frequently monitoring your bank and credit card accounts should be followed. Be wary of phishing emails, know how to recognize them, and most importantly, do not click on them. All of those warnings that everyone has become mute to need to be followed to avoid having malware intro-

AT: If you are a victim of a cybercrime, what are the next crucial steps? DS: Check your credit reports regularly and report any suspicious activity to financial institutions, credit monitoring services and law enforcement. Financial institutions are great at reimbursing customers who fall prey to identity thieves, but it is critical to not let the data associated with your compromise end with the bank or financial institution. Law enforcement needs to know about it so we can tease out patterns across multiple institutions, prevent future cybercrimes and ideally hold the criminals accountable.

AT: Can you share some lessons learned from recent identity theft cases? DS: There is no single profile for an identity theft criminal. It’s being done in so many different ways today. Criminals are taking advantage of loopholes in the banking system, or taking advantage of unsuspecting victims. The lessons learned are, unfortunately, that you can’t let your guard down for a minute without exposing yourself to some degree of risk.

AT: How are terrorists leveraging technology to fund their terrorist attacks? DS: We’re not really seeing crowdsourcing; what we’re seeing is terrorists advising others to use technology, especially encrypted apps, as a way to communicate with associates about the need for funding. Notably, most of the terrorist attacks you read about are being executed with relatively little funding. Huge dollar amounts aren’t needed to commit many of these attacks perpetrated by homegrown, violent extremists.

AT: What challenges will law enforcement face when investigating cybercrime in the next five years? DS: A significant challenge we’re facing right now is default device encryption, which Apple introduced in September 2014 before Google quickly followed suit. Apple’s iOS and Google’s Android run 96.7 percent of smartphones worldwide, meaning the criminal evidence on this universe of devices is currently inaccessible to investigators, despite lawful, judicial warrants to search them. Smartphone makers offered strong encryption without any documented security problems before September 2014, but have never explained why the switch to default encryption was necessary. This is not a problem that is unique to my office—it’s shared by federal and state prosecutors and police departments around the country, and I can only hope that we find some kind of resolution in five years. 

Interviewed by: Karla Monterrosa-Yancey, CAMS, editor-inchief, ACAMS, Miami, FL, USA, [email protected]

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AML POLICY

How high do we build the BSA wall?

A

fter months of talking politics and following the campaign, there is still no doubt over the question of who our next president will be and what policies may come into play. One particular issue that has caught the attention of voters, politicians and the financial industry is the discussion surrounding illegal aliens and immigration policy into the U.S. For the future president, this will become a landmark issue. For the financial industry, it remains to be seen what the effect will be. The past few months have seen a slew fest of political jousting regarding potential immigration policy. With loose discussion points of how long an immigrant has resided in the U.S. to proving payment of tax liabilities (yes—the U.S. tax laws do require tax filings by legal and illegal immigrants) a host of alternate proposals have been put forward during this political campaign. This much is known: Immigration policy as we know it will be transformed regardless of which political party is elected this coming November.

Immigration and financial industry past experiences Just as the Bank Secrecy Act (BSA) evolved over a number of years, the debate regarding immigration has simmered and has reached a boiling point. In banking, we have seen within the past few years the discussion of underbanked individuals and those industries served by the money services business (MSB) sector. The problems after 9/11 became an overreaction of BSA filing and a determination of the appropriate level of government response. The end result was the lack of access to banking by some MSBs. The solution to that particular crisis was time and education where cooler minds eventually prevailed. Learning more about customers and their businesses within domestic and international MSBs allowed everyone to

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have a comfort level and understanding that not all international money transfers were related to illicit activity and terrorism.

ever, it may be other forms previously unheard of within banking circles that may be asked to provide more BSA service and duty in the future.

Law enforcement and regulators learned that separating the perennial “wheat from the chaff” in the MSB industry was a very difficult activity to detect. Law enforcement also learned that teaming up with MSBs to educate themselves became fundamental to their mission. MSBs soon observed that law enforcement and BSA reporting were not nearly as difficult as initially conveyed.

The existing BSA borders

Based on this aforementioned scenario, perhaps we can project what potential financial industry and/or BSA implications pertaining to immigration we may face in the near future. Within the entire framework of the BSA, the forms naturally applicable to the financial industry are the suspicious activity report (SAR) and the currency transaction report (CTR). These familiar forms have proudly served BSA compliance for numerous years. They most certainly will also be important components relative to future immigration policy. How-

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The Report of International Transportation of Currency or Monetary Instruments (CMIR) (Financial Crimes Enforcement Network [FinCEN] Form 105) is generally filed for U.S. currency of over $10,000 either entering or leaving the country. It is perfectly legal to move this amount (or much greater amounts) into or out of the U.S., but it is the failure to file the form where law enforcement takes action. The CMIR form is easily understood by anyone who has ever traveled into the U.S. Generally it is required to initially file a declaration card and describe any small gifts or items acquired abroad. However, for those fortunate few traveling with more than $10,000, this declaration is replaced with a more formal CMIR form upon passing U.S. Immigration and Customs.

AML POLICY

The CMIR collects general data such as names, identifier information and addresses. In particular, it is the information blocks pertaining to passport and citizenship declaration that is of interest to this discussion. Those affirmative historical reports and declaration of citizenship (or false information) could become a significant factor in future immigration status proceedings. Another existing BSA form of interest is the Foreign Bank Account Report (FBAR) (FinCEN Form 114). This form is required to be submitted annually for any outside U.S. bank holdings in amounts greater than $10,000 at any time during a calendar year. The law specifies this requirement for U.S. citizens as well as U.S. residents. A recent Forbes article explains an explosion of interest in FBAR filings resulting in more than 1,163,229 of the FBAR forms being filed in 2015 based on data provided by FinCEN. In fact, according to FinCEN, the filing of FBAR forms spiked and filings increased at a rate of 17 percent annually over the past five years.1 Although immigration can come in different variations, the description of BSA forms for those having more than $10,000 is not the conventional wisdom when fully discussing this topic. In reality, the more common thought of immigration is relevant to those working in the U.S. and perhaps remitting much smaller amounts of money back to their home country of origin. As we shall see later in this article, this too has many BSA implications.

A look at the existing BSA wall Another aspect and potential component to future immigration policy is the requirement for aliens (legal or illegal) to file U.S. income tax returns. Again, for any immigrant attempting to meet any time or tax test, good records will become essential. Illegal immigration became important to the Internal Revenue Service (IRS) in 1996 when they created special ninedigit numbers especially for this group of individuals without social security

cards. The Individual Taxpayer Identification Number (ITIN) is used by those immigrants who are ineligible to acquire a social security card but by virtue of their residency (legal or illegal) have tax obligations to the U.S. Many banks have seen the nine-digit number format of 9xx-7x-xxxx or 9xx-8x-xxxx. If you compare your own social security number, you can see that these other ITIN numbers are virtually indistinguishable from any other social security number used for everything from banking to identification. According to an official IRS press release (IRS 2014-76) over 21 million of these ITIN numbers have been issued to date. A recent newspaper article points out that SAR filings on suspicious activity as reported by FinCEN reached a total of 1,726,971 in 2014 and 1,851,863 in 2015. The article continued by stating that in the past year the World Bank estimated that a total of $54 billion was sent by immigrants in the U.S. to foreign destinations.2 To be certain, most of these SAR filings were made by MSBs. Perhaps some of this wealth transfer was captured by MSB SAR filings, or perhaps not. Those seeking asylum or amnesty in the future hopefully will have kept track of each money receipt, paid proper taxation, and have documentation to prove their status. Unfortunately, all of the events mentioned in this article are for the most part daily survival from an immigrant standpoint. In all probability, these same potential immigrants do not have home desks and offices filled with the type of paper documentation that may at some time be required. The true job of establishing initial residency in the U.S., being current on taxes and other legal matters may someday be based upon BSA regulatory filings required today.

future. This is a significant topic and we can see from this brief discussion that BSA reporting may be important to immigration policy. BSA reporting requires all financial institutions to maintain records for at least five years. While many financial institutions utilize longer periods of record retention, even longer periods may be necessary for immigration rules and regulations. Although the BSA forms are available to law enforcement, regulators and FinCEN—for an indefinite period of time— proper record keeping by financial institutions may develop into new business lines and more service opportunities for their clients. For example, the ability to sort, analyze and accumulate MSB cash transmission records showing multiple years would be beneficial to a client who has lost all of his/her paper receipts. Documenting when bank accounts were established, when additional signors to the account were added, what identifying and citizenship documents were presented, will all become of vital importance. In summary, the United States of America is ever becoming a more popular destination and has become known as the country of opportunity and freedom. Concerning future immigration policy, it will be all about being able to establish a timeline or a paper trail. For financial institutions, being able to create custom reports to help clients may offer new lines of service opportunities. Once the dust settles, with the election far behind and immigration policy finally established, we may develop newer BSA regulation and forms. Until then, be assured that current BSA will serve future immigration just fine. 

Opportunities for the financial industry in building the wall

Erick Malette, CAMS, CFE, delivery senior consultant, NTT DATA Federal Services, Inc., McLean, VA, USA, erick. [email protected]

In most aspects, it appears that the financial industry is in a good relative position to whatever immigration rules and regulations become law in the

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of NTT DATA Federal.

Kelly Phillips, Erb, “FBAR, FATCA Filings Top 1 Million as IRA Increases Scrutiny on Foreign Accounts,” Forbes, March 15, 2016, http://www. forbes.com/sites/kellyphillipserb/2016/03/15/tax-filings-for-foreign-accounts-reach-record-high-top-1-million/#1bcfdb6e1202 2 Rob Barry and Rachel Louise Ensign, “Losing Count: U.S. Terror Rules Drive Money Underground,” Wall Street Journal, March 30, 2016, http:// www.wsj.com/articles/losing-count-u-s-terror-rules-drive-money-underground-1459349211 1

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A tribute to the law enforcement community Editor’s note: This article is written as a special tribute to law enforcement and to share the great event envisioned by the ACAMS Greater Twin Cities Chapter (GTCC).

I

usually write from the perspective of a subject-matter expert discussing various terrorist financing, money laundering or fraud issues. This article is much more personal. It is about love and respect for those who chose the path of law enforcement. This story is particularly poignant to me because I spent 28 years in law enforcement. It starts with the GTCC and their desire to honor law enforcement by hosting a law enforcement appreciation event on April 26, 2016.

The seed was planted One evening during the ACAMS 14th Annual AML & Financial Crime Conference in Las Vegas last September, my wife Molly and I had dinner with Shannon Bennett and her husband Robert. Our discussion led me to reminisce about my law enforcement career by telling a number of Lormel war stories. Depending on your perspective, we all either laughed with or at me as I recounted my adventures—or perhaps better stated my misadventures. I ended the discussion by stating that I was very fortunate to be in law enforcement when I was because the consequences of being a law enforcement officer today are much more daunting than what I encountered in my day. At that point, Bennett shared an idea she wanted to present to the ACAMS GTCC board. Bennett is the chapter co-chair and a well-respected person in our profession. Bennett expressed her concern about a recent rash of killings of police officers and her sense that police officers did not receive the respect they deserved. She advised that she planned to present a proposal to the GTCC board about hosting a law enforcement appreciation event. Bennett emphatically talked about her respect for law enforcement and her desire to let law enforcement know how the AML community feels about them. She asked me if I thought a law enforcement appreciation event would be embraced. Having been in law enforcement and now being a consultant observing the interaction between the financial sector and law enforcement, I was absolutely blown away. I told Bennett it was a fabulous idea and I would do whatever I could to support the effort. That is what afforded my opportunity to witness the marvelous efforts of the ACAMS GTCC to take a vision and bring it to closure in such a successful manner.

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KNOW YOUR CHAPTER

The joy and mutual respect that manifested itself as a result of this idea and the actual event was very rewarding for all involved. Likewise, the enthusiastic response by chapter members and the law enforcement community in the run-up to the event was very touching and infectious.

The Law Enforcement Appreciation event The ACAMS GTCC committee meticulously planned a combined learning and social event. The learning event included an ambitious agenda of meaningful topics. Sandwiched into the middle of the learning event was the tribute to law enforcement through the presentation of a beautifully large decorated sheet cake and a heartfelt round of applause for the law enforcement personnel in attendance. The learning event was followed by a networking social. To cap off the evening, many of the participants ventured out together to attend the Minnesota Twins baseball game. Despite the chill in the air, the goodwill and camaraderie of the ACAMS GTCC Law Enforcement Appreciation event carried over to the game with a sense of warmth and fraternity. To make the night better, the Twins won the game with a walk-off hit in the last inning. The ACAMS GTCC Law Enforcement Appreciation event drew over 200 attendees from the Minneapolis area financial services industry and law enforcement community. More than 50 federal, state and local law enforcement members attended. They all work closely with financial institutions. Also

recognized were approximately 10 retired law enforcement personnel now working in the industry. Bennett, the ACAMS GTCC co-chair and chair for the planning committee, along with John Byrne, executive vice president for ACAMS, set the tone for the event in their welcoming comments. Bennett spoke about the level of respect the ACAMS GTCC had for law enforcement and how she enjoyed working with law enforcement. Byrne stressed the importance of public-private partnerships and how ACAMS private sector members strive to provide law enforcement with the financial intelligence necessary to obtain criminal prosecutions. From a training perspective, Byrne stated, “Our most successful programming occurs when we have law enforcement involvement.” The learning event echoed Byrne’s sentiments. There were four panel presentations given by predominantly law enforcement presenters. The panels addressed business email scams, IRS scams and the Minneapolis SAR team SAR review process, elder fraud and abuse, and human trafficking. I was afforded the opportunity to lead the training session off with a presentation on terrorist financing. I spoke right after Bennett and Byrne opened the event. Before beginning my presentation, I advised how much the event meant to me as a retired law enforcement officer and thanked the committee for their consideration. I noted that law enforcement is a more challenging profession today as opposed to when I served and I thanked the law enforcement attendees for their dedication and service.

In a fitting gesture of appreciation, Bennett and the ACAMS GTCC board, along with Byrne, presented a cake to the law enforcement personnel in attendance. Bennett requested that the law enforcement attendees stand. Bennett thanked them on behalf of the ACAMS GTCC and led the chapter in saluting the law enforcement honorees with a round of applause. She then repeated this gesture by acknowledging the retired law enforcement attendees. At one point during the networking reception, Bennett and I had a discussion with Barry Untinen. Untinen is an IRS special agent. Untinen stated that as a result of the learning event he was considering getting CAMS certified and seeking his next career in the AML and fraud space.

The unique bond between financial institutions and law enforcement Financial institution anti-money laundering (AML) and fraud compliance personnel share a unique bond with law enforcement. Both professions have many members who are dedicated professionals. Each profession serves on the front line in different ways in the fight against money laundering and fraud. AML and fraud professionals work diligently to identify suspicious activity and to safeguard their financial institutions from criminal exploitation. They also work vigorously to provide law enforcement with the financial intelligence necessary to make prosecutable cases. Law enforcement is the beneficiary of the work performed by AML and fraud professionals. Many

ACAMS GTCC board during the law enforcement appreciation cake presentation. Pictured from left to right: Shannon Bennett, Ryan Montgomery, Maria Dolor, Angela Jensen, Sande Bayer, Paul Achman, Ashley Fink, Andi Wentworth, Carrie Rosvold, Jenna Willie, Jessica Kelly and Alesia Brel.

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KNOW YOUR CHAPTER

this topic. She provided me with the comments set forth below, which are in her words:

impactful criminal convictions have been achieved through this unique public-private collaborative relationship. The interaction between AML and fraud professionals with law enforcement has led to many lasting friendships. The significant differentiator between AML and fraud professionals and law enforcement is that law enforcement officers put their lives on the line to protect society. Too many law enforcement officers have died in the line of duty. We, as a society, do not do enough to thank law enforcement for their dedication and sacrifice. We in the financial services sector truly appreciate law enforcement and cherish the relationships we have developed. This unique bond is what motivated the ACAMS GTCC to show their affection and gratitude for law enforcement.

Shannon Bennett’s perspective: Partnering with law enforcement— Our mission and appreciation as a community Based on our numerous conversations and her passion about supporting law enforcement, I asked Shannon Bennett to share her personal feelings about

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“As someone that has been in the financial industry a long time, I have had the good fortune of working directly with law enforcement. It started in the mid90s when I was working for a small community bank. On several occasions—due to the number of hats I wore—my interaction with law enforcement came in many different variations. There are two dealings with law enforcement that stand out to me. The first was when I was asked by the FBI to provide the description of an individual that had perpetrated a crime against the bank due to my exchange with the suspect. Based on that information, I was then asked to confirm the identity of that individual through photos. The individual was apprehended, found guilty and made to pay restitution to the bank. The other interaction that I recall that truly impacted my decision to focus in this area includes working with a local police detective. Throughout my stint at that bank, we had many different interactions, one being his attempt and success to recoup a substantial loss from fraud. This reinforced my appreciation and desire to help law enforcement identify and prevent financial crime. The passion and determination I witnessed during these interactions from these individuals was contagious. Fast forward 20 years and I have had even more memorable interactions and significant instances where helping law

enforcement made a momentous difference in the lives of many individuals. In a recent role, my boss (who was a former secret service agent who I very much respected) my team and I worked directly with law enforcement in the capacity of liaisons. Our objective was to support law enforcement’s effort by providing a single entry into the company to ensure we provided the partnership and collaboration required to meet our shared goal. I have since seen this similar approach taken by many in the industry to reinforce and provide a mechanism to make it easier for law enforcement to request and receive the needed information as quickly as possible. Understand that my passion with and respect for those working in law enforcement who are helping protect the institution, community and country is shared amongst those of my peers that choose to work and specialize in this area of focus in detecting and preventing financial crime and other criminal activity. We recognize that financial institutions and law enforcement are very much intertwined and rely on each other to defeat this growing problem, whether it is identifying possible terrorists or victims of fraud or worse. With so much going on in our nation and the world, it seemed to be an appropriate time as a community to show law enforcement our appreciation for all their dedication and service. I mentioned this as a possible opportunity for a future event at an ACAMS GTCC board meeting and found that I was not alone in my desire to show some form

Attendees enjoyed America’s favorite pastime at Target Field, a baseball park located in downtown Minneapolis.

KNOW YOUR CHAPTER

Top: Human Trafficking panel discussion at the ACAMS GTCC Law Enforcement Appreciation event. Pictured from left to right: Sean Johnson, Tonya Price, Sande Bayer and John Byrne. Bottom row left: Dennis Lormel presents on the changing landscape of terrorist financing.

of gratitude to the community of individuals that protect us, whether locally or nationally. At the ACAMS 14th Annual AML & Financial Crime Conference in Las Vegas, my husband and I were having dinner with Dennis Lormel and his wife. I mentioned what we wanted to do as a chapter and Lormel embraced the idea and offered his assistance. He agreed that it was time to pull together and recognize these individuals and so we began our collaboration to provide an appreciation event recognizing law enforcement. The agreement for this recognition was then reinforced by John Byrne and Mike Rodriguez from ACAMS. At the beginning of the New Year, the chapter’s event committees, law enforcement liaisons, along with the treasurer, worked with us to determine the agenda and venue. Much to my amazement, Lormel quickly reached out to the heads of the criminal divisions at the FBI and IRS and began to build momentum for the event from law enforcement. We determined that it would be great to show appreciation with recognition during a half-day learning event followed by a networking reception and Twins baseball game.”

Results of the event Through Bennett’s vision and the commitment of the ACAMS GTCC, a very meaningful professional and social event took place that further enhanced the mutual respect and bonds between the private and public sectors. To say that the ACAMS GTCC Law Enforcement Appreciation event was a success is an understatement. The affection, respect and enthusiasm demonstrated throughout the day were the product of meticulous planning and engagement by the planning committee, the ACAMS GTCC and the law enforcement community. The committee began planning for the event in earnest in January 2016. All aspects of the event were brought to closure flawlessly. Bennett’s passion and drive was shared by the ACAMS GTCC. Many hours were spent by Bennett and her team to transform an idea into an event. Such efforts epitomize what ACAMS stands for in building public-private relationships. I am very proud to wave the ACAMS banner. This event reinforced my pride in being associated with ACAMS. For that, I thank the ACAMS GTCC. Here is a shout out to the ACAMS GTCC event committee who ensured this special day

was exactly that—a special day. Ryan Montgomery, Angela Jensen, Kami Belchak, Paul Achman, Jennifer O’Donnell, Jessica Kelly, Jenna Willie, Maria Dolor and Ashley Fink, your sweat equity was well worth the effort. Here is a special shout out to Sande Bayer for all she did to support Bennett, the committee and the event. Their sentiment is mirrored by the entire ACAMS community. What was particularly heartening for Bennett and the planning committee was the genuine enthusiasm and engagement that law enforcement demonstrated in embracing this special event. The ACAMS GTCC experienced firsthand the gratitude from law enforcement for the consideration they gave. At the end of the day, being a law enforcement officer is challenging. Knowing you are appreciated and respected for the difficult and dangerous work you undertake is rewarding. Well done, Minneapolis. 

Dennis M. Lormel, CAMS, internationally recognized CTF expert, president & CEO, DML Associates LLC, Lansdowne, VA, USA, dlormel@dmlassocllc. com

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s n o i t la u t a r g Con

to the 50th ACAMS Chapter—

Greater Omaha! O

n April 27, 2016, the ACAMS Greater Omaha Chapter held its inaugural meeting, highlighting ACAMS’ continued drive toward the national expansion of ACAMS activities to meet the needs of members and the markets in which they serve. The launch of the chapter marked the Greater Omaha Chapter as ACAMS’ 50th chapter. As described by John J. Byrne, ACAMS executive vice president: “Greater Omaha is a perfect example of the model for ACAMS’ chapters’ focus on privatepublic educational partnerships and improving the AML community through networking and information exchanges. We congratulate the 50th ACAMS Chapter!” The Greater Omaha chapter launch would not have been a true Midwest-chapter launch without some prospective tornado activity; however, a little inclement weather could not keep us down. We found that the bark of the storm was worse than the bite as we had over 50 perspective members in attendance!

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The Chapter Launch Networking Event was held at Brix-Midtown Crossing. Crowe Horwath, LLP sponsored the event and Paul Osborne, partner at Crowe Horwath and an ACAMS CAMS-Audit faculty member, was the guest speaker. His professional involvement with the detection and prevention of financial crimes was evident and he was able to provide attendees with an invaluable perspective on ACAMS’ certifications, reigniting even the oldest ACAMS members’ desire to pursue additional CAMS training. Anti-money laundering (AML) practitioners from various financial institutions throughout the region attended and participated in the launch, including representatives from surrounding banks, credit unions, law enforcement, service providers and regulator officials. The Greater Omaha Chapter will continue to advance the knowledge, skills and experience of local AML professionals dedicated to the prevention, detection and reporting of money laundering and other financial crimes within

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the region, and to educate and promote positive communication between regulators, law enforcement and local financial services professionals. The chapter is dedicated to providing a forum for the professional development and networking opportunities of its members, and will host similar events throughout the coming year. While headquartered in Omaha, the Greater Omaha Chapter hopes to benefit all ACAMS members in Iowa, Kansas, Northwest Missouri, South Dakota and Nebraska. Members who attend learning events may receive ACAMS continuing education credits. On behalf of our executive board, we would like to thank our attendees for taking Omaha by storm and making our inaugural event a stellar success! 

For membership questions or further information about the ACAMS Omaha Chapter, please contact chapter Membership Director Shelly Vandenberg at [email protected].

KNOW YOUR CHAPTER

Congratulations to the

50

th

ACAMS chapter!

The newly minted Omaha Chapter members

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EUROPEAN CONNECT

The latest in Europe Aliaksei Kruhlenia/Shutterstock.com

Editor’s Note: European Connect is a section in the ACAMS Today magazine that will update members on ACAMS news and activities in Europe.

T

he month of May had many exciting events in Europe. The month started off with the launch of the ACAMS Nordics Chapter in Copenhagen on 11 May. Followed by this year’s 12th Annual AML & Financial Crime Conference in London on 24–25 May, where we welcomed delegates from a wide range of organizations and countries, including many new payment technology innovators. It was interesting to hear from a wealth of public and private sector speakers from across Europe, including Rena Lalgie, head of HM Treasury’s new Office of Financial Sanctions Implementation and our brand new European FATF Forum that was chaired by Rick McDonell and featured David Lewis, executive secretary of FATF. We also heard from several other Heads of Delegation. In addition to the conference on Monday, 23 May, we hosted a meeting with European chapter boards where we discussed how best to foster anti-money laundering (AML) education through peer networking and how to engage with anti-financial crime professionals from across the community. In May, we also saw the publication of the ICIJ database containing information on thousands of offshore entities that are part of the Panama Papers and the offshore leaks investigations. In addition, on 12 May, the Prime Minister hosted the U.K.’s much-heralded Anti-Corruption Summit as a call for global action to expose and fight against corruption.

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And finally, our next European Focus webinar “Bolstering Compliance Programs to Fight Terrorist Financing and Human Trafficking” will take place on Friday, 24 June 2016.

ACAMS new AML director Europe I would like to take this opportunity to introduce Samantha Sheen, ACAMS’ new AML director Europe who joined us on 3 May. Some of you may know Sheen from her role as a Guernsey regulator or as a highly rated trainer on ACAMS’ Sanctions Compliance training program. Sheen will be working closely with me, John Byrne and all of you, to ensure that we are offering the right education and training for our members in Europe, and to further develop our multilingual education faculty. Also, by the time you read this, the CAMS exam in French will be live and we will be looking at timetabling the translation of the CAMS exam into German.

European chapters In addition to the above, ACAMS’ new and long-running chapters across Europe are running a full program of events— details of which can be found on the individual chapter pages on ACAMS.org. If you are interested in joining or establishing a local ACAMS peer-to-peer networking event or attending a chapter event in your area, please email us at europe@ acams.org. 

Angela Salter, head of Europe, ACAMS, London, U.K., [email protected]

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

MEET THE ACAMS STAFF

Ilse Robayo: Membership growth

I

lse Robayo leads the sales support team at ACAMS that is responsible for generating critical reports and presentations to the global sales director and sales team. In addition, she is directly responsible for disseminating sales leads in a timely manner and supervising the day-to-day activities of the sales administrative assistants and enterprise-wide license client relationship specialists. Since arriving at ACAMS in 2011, Robayo has witnessed the sales staff double in size and the creation and expansion of the full-time sales administrative support and enterprise license support team. Prior to ACAMS, Robayo held administrative support roles in the financial services as well as international trade sectors for organizations such as Venecredit Securities, Standard Chartered Bank and Intertek. Robayo is bilingual in English and Spanish and currently resides in Miami.

ACAMS Today: What do you enjoy most about your job? Ilse Robayo: Contributing to the success of our sales team and knowing that ACAMS continues to grow its community of members around the world. 

AT: What would you say is the most challenging part of your job? IR: Compiling complex reports for our sales team in order to identify areas where ACAMS can continue to expand and increase its membership base.

AT: Since you joined ACAMS, what significant changes have you seen in regards to the products offered to the membership? IR: The introduction of the ACAMS

enterprise membership is by far the most exciting development that I have witnessed at ACAMS.  Prior to the enterprise membership, our focus was on individual professional memberships. However, as the membership community began to grow within organizations, the introduction of the enterprise membership was the next logical step in order to establish what is in essence a corporate type of membership.  It’s great that ACAMS’ products such as membership, subscription to our webinar and on-demand training catalog, subscriptions to moneylaundering.com and to ACAMSToday.org are now more widely available and accessible to our members through the enterprise-wide license. 

financing and financial crimes prevention professionals.  Whenever I am at a conference—like the one we just concluded in Hollywood, Florida—I enjoy seeing the pride CAMS holders show because they have earned the premier designation in the compliance field.  They wear their CAMS pins with pride on their lapels and their CAMS ribbons on their conference badges. 

AT: When you are not working, what is your preferred pastime? IR: When I’m not in the office, I’m always spending time with my family, but whenever I have free time, I bake. I love to make cake pops, French macarons and other desserts.

AT: What is the best advice you have received? IR: That happiness is a choice and every-

AT: Which is your favorite ACAMS product?

thing else is a matter of perspective. 

IR: The CAMS certification because it

Interviewed by: Karla MonterrosaYancey, CAMS, editor-in-chief, ACAMS, Miami, FL, USA, [email protected]

truly is the global gold standard for antimoney laundering/counter-terrorist

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

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GRADUATES

Advanced Certification Graduates

Reading someone else’s copy of

Join ACAMS and you can receive your own copy every quarter, plus:

Australia William A. Chapman, CAMS-Audit Ramanathan Karuppiah, CAMS-Audit

China Qian Chen, CAMS-Audit

Hong Kong Shibu Abraham, CAMS-Audit Ka Ki Chan, CAMS-Audit Hue Dang, CAMS-Audit Jang Yu John Hu, CAMS-Audit Tony Lee, CAMS-Audit Wing Yan Gloria Lee, CAMS-Audit Andrew Li, CAMS-Audit Betty Sze Wai Ng, CAMS-Audit

Malaysia Aaron Lau, CAMS-Audit

Mongolia Munkhbat Nyamaa, CAMS-Audit

• Unparalleled networking with leading professionals in the field. • Significant discounts on education and training through conferences, seminars, workshops and webinars. • Professional advancement via ACAMS’ worldwide Career Development Center. • Accreditation as a Certified Anti-Money Laundering Specialist (CAMS), the most globally-respected professional credential in the industry.

Singapore Fairoz Khan, CAMS-Audit Manisha Khanna, CAMS-Audit Kok Cheong Leong, CAMS-Audit Henry Lim, CAMS-Audit Erik Vledder, CAMS-Audit

Taiwan Hao Jan Wang, CAMS-Audit

For more information and to join contact us by: Phone +1 (866) 459-CAMS Outside U.S.: +1 (305) 373-0020 Fax: +1 (305) 373-7788 Email: [email protected] Online: ACAMS.org

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ACAMSToday.org

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GRADUATES

CAMS Graduates: February–April

Anguilla

Barbados

La Fleur J. Dublin

Julia Husbands

Argentina

Belgium

Christian L. Hormigo

Arvind Kumar Singh

Carla A. Scorza

Belize

Aruba

Ashton D. Longsworth

Mirla T. Rasmijn

Bermuda

Australia

Rebecca K. Holloway Dale Curtis Jackson

Vicky An Mark Mackenzie Amit Malik Paul Randall

Bolivia Luisa Arnez Cuellar

Adam T. Russell

Botswana

Kylie Shaftesbury-Brooks

Masego Molly Chakwenya Koongalele Sibi Chube Tebogo Mophakedi Tebogo Thapelo

Marsetio Suseno Rebecca Wadley Laura Weidenauer Jason W. Yu

Brazil Austria Viktorija Norvaisaite

Rafael Martins Thomas Tonello

Bahamas

British Virgin Islands

Tamara J. Johnson

Nesha C. Felix

Siran A. McKenzie

Canada

Robyn A. Newton

Bahrain Alya Sadeq AlAkram Saud Ebrahim Ali Ali Adel Husain Laura Nakfour Ismail Senates Mohammed Siddiq Arshi Prabha Ramnath Singh

Omnya Abdel Maksoud Marie-Andree Alain Cheryl Alexander Zarah Ophelia Anda Elizabeth Anton Abdelouahab Azzouzi Piyush Bassi Stacy Bates Andrea Bauer Jessica C. Bergander

Andres Betancourt Dana A. Booth Eric A. Brock Keith W. Bussey Crispin Chan Tsz Ting Zia Chan Vivian Kar-Ting Choy Wing Ka Ada Chu Shivani D. Datt Rabindra D. Deodat Alana Detenbeck Tiziana Di Matteo Alexander Dobrynin James Ellis Ian M. Feser Jessica Fleming Julian Frankiss Lisa C. Fraser Carlos Funes Olivia Furieri Kirushanthy Ganeswararajan Giancarlo Gonzales Marc-André Haché Abeselom Haile Mahdi Hussaini Paul Ianieri Berenger C. Idjidina-Piper Ishita Jadeja Mandeep Johal Keon Osei Jordan Ashwin Jose Sukhraj Kalla Taryn Kelly Donna Sze-Chia Kooi Michael Kostiuk Bandara Kulathunga Kendi Hill Tung Lam Denes Dini Laszlo Jacob Liszewski Ping Kan Liu Shailesh Madkaikar

Lysa Marie Mancini Aaron McInnis Anita Mehta Pauline Molohan Franca Nardella Oluseun A. Odunlami Diane G. O’Neill Teija-Riitta Page Tingting Joanne Peng Joshua Poonai Anthony Poropat Pragya Priyadarshini Angélique Prono Craig H. Ripenburg Michael Rosenberg Sasha Saini Anagha Salvi Saud Sattar Geraldine A. Sefi Kenny Seto Rohit Sharma Qays Shihabuddin Samson R. Singh Simon Sossoyan Zoe Stabler Nelson Taylor Sol Bridgit Tomka Nancy Tychowski Faisal M. Vakassi Ingrid A. Valentine-Williams Thi Hoang Quyen Vo Jennifer E. Willim Kevin Wilson Jing Bo Yang Edwin Yau Gregory Yott Elenda F. Yuma Morisho

Cayman Islands Renee R. Donaldson Laura C. Larner

Chile Matias E. Romano

China Ying Chen Li Deng Tian (Sandra) Dong Shan Shan Stella Huang Renee Run Mei Lu Siu Yi Ma Ying Ma Dan Wang Huan Wang Rui Wang Ruixin Weng Yue Ying Wu Xiaojing Xian Olive Yan Lei Yun Wei Zhu

Cook Islands Martin Burr

Costa Rica Heyman Robles M.

Côte d’Ivoire Ekra Ebla

Curaçao Nyree Drommond Kevin Dunseath

Cyprus Avraam Demetriou Vasilis Ioannou Marios Kyriakou Christakis D. Vayianos

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GRADUATES

Dominican Republic Ramón Alberto González

Ecuador Jorge A. Chavez

Egypt Omar Ali Ahmed S. Elhayani

El Salvador Karina X. Barrios De Lopez Juan Carlos Rivas Ramos Alvaro E. Sánchez Turcios Eduardo R. Vasquez

Finland Eija Luostarinen

France Guillaume Huchet Paul-Marc Lachaud Veronique Lullier

Germany Lisa Elges Brigitte Marten Alexandra Ortwein Frauke Westerheider

Ghana Francis C. Briandt Appiah Nana Fosu Gyeabour Richieson Gyeni-Boateng Anthony Kofi Tengey

Grenada Michelle Sayers-Griffith

Guam Jacinta B. Elm

Guyana Leon E. McDonald Vidya L. Singh

Hong Kong Hon Ming Au Yasmine Barlieb Ching Kwun Chan Chun Ho Chan Lai Man Maggie Chan Lut Ting Chan Pui Kwan Chan Sarah Shuk Wah Chan Vivian Chan Yuk Bong Chan Eliza Chan Pui Ki Chun Ping Chau Hubert Cheng Eddie Kai Chung Cheung Wing Ka Cheung

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Tsz Kwan Chong Yu On Chung Sam Fung Loktin Got Luke A. Raymond Groth Anurag Grover Mitesh Haria Sabeen Hasan Bo Shun Ho Sun Pui Ho Tiffany Ho Ting Fai Ho David Huang Charlotte Hui Wing Woon Carol Kan Sze Lam Gladys Ko Patrycja Kosc Cheko Lai Kevin Lai Kim Fung Lam Ka Shing Lau Ming Kui Lee Ka Kit Steven Leung Ka Man Leung Man Hing Leung Pui Wang Steven Leung Ka Chun Li Karen Li Wai Yin Lo Iris Lok Yiu Leung Louie Kong Lung Lui Ching Kwan Corio Luk Lily Ma Andrew M. Meehan Chun Kwan Albert Ng Siu Ling Ng Rick Ngan Joseph Kwok Ming Pang Mui Kwai Pang Thomas J. Phillipson Conrad Poon Richard Shen Paulina Skorupska Chi Hang Suen Wing Hong Tang Ting Fung Ting Ieng Ieng Tsai Chok Leung Wong Dennis Wong On Tak Wong Tim Man Wu Yat Ming Provis Yam Katrina Yan Wai Han Yeung Ching Yee Charlotte Yiu

Srikant Akundi Govindaraj Anbazhagan Kamal Arora Pramila Badam Sagar Bairagi Jayshiv Bankeshwar Saroj Behera Kavita Bhagat Mohit V. Buvariya Anthony Marian Cyril Leonard Gregory D’costa Mohammad Faizan Ullah Priyanka Gupta Abu James Gaurav Khare Mukesh Kumar Ranjit Malik Padma Meesala Pareen N. Mehta Sujith Menon Syed Kaja Moiddin Pramila Narendran Yogendra Phadke Monikandan R. Sachindra Rai Venkatesh Rao Vamshi Rompikuntla Chavi Sawhney Chirag Shah Irfan Shaik Ruchi Sharma Pranvat Singh Sharmila Singh Ranjita Sinha Verrey Sreenu Arunkumar Srinivasan Sekhar Babu Tatavarti Jinoy Vailappilly Varun Vanchi Srinivasan Varadharajan Sateesh Velaga

Indonesia Leny Marlina

Ireland Kamila Mazurek Paul McCarthy Simon Robinot

Israel

Karen R. Spencer

Krishna Kant Bishnoi Navneet Dwivedi Diana Glantz Merrick S. Harper Mahesh Kumar Sharma Sandeep Shrivastava R. Shailesh Unnithan

India

Jamaica

Sudipta Adhikary Preethi Adiga

Karim G. Kiffin Cecelia Terrelonge

Hungary

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

Japan Yukiko Akioka Satomi Arakawa Akinori Araki Satoshi Fujii Yujiro Fujimoto Masaoki Fujita Takefumi Fukuda Hitomi Hanada Takaki Hashimoto Taro Hashimoto Tatsuya Hyodo Yasuo Iwamura Miho Kasai Ayame Koyama Kojiro Kuroi Tomoko Machida Takahisa Maeda Takuya Manabe Ei Miyamoto Rui Mizoguchi Tsukuru Nagahama Mitsuhiro Nagano Yoshihiro Nakamura Masaharu Nakanishi Nobuaki Nakazawa Motofumi Noda Rumi Odo Tomoyuki Onuma Mariko Otsuka Georgi B. Patev Hidemitsu Sato Atsuko Shomatsumoto Yasufumi Sugiura Ken Tagami Miho Tajima Toru Takaha Kunihiro Takahashi Shohei Takashima Masayuki Takeda Teppei Tsujimoto Yurie Tsutsumi Takeshi Uehara Yoshisuke Yamada Yasuyuki Yamashita Satoshi Yamazaki Toru Yamazaki Hiroshi Yano Mamoru Yoshizumi

Jordan Fatin Nabil Abudayeh Ala’ Badie Abulhija Reem Mustafa Al-Louzi Majdi Yaser Altibi Ahmad Aref Dweikat Ahmed A. A. Fattah Fesokh Montaser Jamal Haddad Mohannad Yaser Hammad Yousef Wasef Hassan Odai Tareq Saleh Mahmoud Salam Khalil Mahmoud Eyad Hani Al Masadeh

Laila Yousef Munem Waleed Taufeeq Nasser Zaid Ahmad Rihawi Lana Salous

Kazakhstan Gulzhan Assanbekova Anuar Bakirov Nagistayeva Karlygash Gulnara Mussina Darkhan Sagynayev

Kenya Keziah Kawira Murungi

Kuwait Mohamed Ahmed Ammar Danah Ahmed Al Khayat Anfal Abdullah Alkhudhari Eman Jamal Alqazweeni Waleed Sultan

Latvia Oliver Bramwell

Lebanon Samar Antoine Bejjani Haissam Halabi Mira Haydar

Lithuania Lina Staniulyte

Luxembourg Catarina Branco Alexis Precas Na Qi Zsofia Tanay

Malaysia Adzlia Adnan Rejinamary Anthonysamy

Mauritius Preetum Lucknauth

Mexico Guillermo R. Colquhoun Alejandro Jimeno-Peralta Victor Martinez Barrera Alan O. Ramirez Hernandez

Monaco Melanie de Verner

Morocco Najwa Benmadani

Netherlands Jeroen Fijneman Rosa Huizinga Vincent Koelemij

GRADUATES

Frank G. Nieuwenhuis Jos Pouw Vincent Romeijn Mona B. Schram Rudolf E. Veldhuis

New Guinea Velekiri Nalu

New Zealand Mark Cubitt Richard Manthel Andrew J. Neill Diah Widjaya

Nigeria Damola Adenopo Olaniyi Ismail Alao Chidi Eboigbe Elvis Ogobi Chinyere Okorie Chukwuma Onwuka Okwudili Prince-Isaac Taiwo Sanusi Ibrahim Yeku

Oman Fawziya Albusaidi

Pakistan Athar Khan Syed Musavi Mubashir Mustafa

Philippines Maria Cathrina Ancheta Narlette Manacap-Jaravata

Poland Marta Marczak Tomasz Wilga Natalia Zawieja-Trzebiatowska Wojciech Zieba

Puerto Rico Merari Rosa

Qatar Moncef Krichene

Russia Anna Bolshunova Alla Kaskovich

Saint Kitts and Nevis Shaunette Pemberton Oscar (Trey) Wyatt III

Saudi Arabia Suliman M. Alfaihan Saud Al-Faris Ahmed Al-Sarwani

Serbia

South Korea

Aleksandar Lovcevic

HyoJoo Gwon Irene Ha

Singapore Livia Aminah Somaraju Bhanumathy Nick Chan Pei Wen Chan Michelle Yann Fun Chia Shyamala Devi Ritu Dutta Ronita Dutta Jasmine Moli Fu Shirley Goh Vivek Kumar Gupta Tadashi Hamada Gillian Heng Shernice Ong Geok Hong Tracy Huynh Preeti Khasturi Kian Sing Vincent Koh Evgeny Korneev Ashish Kumar Dharmendra Kumar Jha Arun Kumar Singh Wei Ying Aline Kwok Sebastien Lacroix Geraldine Lam Siew Boon Leck Jess Lee Kin Chung Wilfred Lee Kai Zhen Leong Wanguo Li Colin Lim Jun Yao Wilfred Lim Sean Lim Jing Sheng Loi Krishna Mohan Mucharla Angela Ng Sin Wee Ng Frank Nguyen Guo Xiong Ong Jaicy Paul Wee Meng Phua Siddhabattula H. Poornima Nikhil Ravindra Salvi Wilson Seah Deepak Sharma Inoki Taheruddin Gwek Lin Joys Tan Phillip Chin Soon Tan Fiona Bee Guat Tay Jee Lien Wong Wai Ling Wong Ruishan Xu Philip Ji Zhang

South Africa Rozanne Carstens Rieghardt Kapp Lebogang Lekoloane Manuel Rodrigues Caldeira

Spain Vishal Chabaldas Naraindas Alfonso Del Castillo Benitez Santiago F. Dominguez Beatriz Laborel Abarca Michael Unger

Suriname Marciano Westmaas

Sweden Mikael P. Ekdahl Joachim Rusz

Switzerland Farida Abbate Meisser Anna Lippert Audrey Milesi John Spyropoulos

Taiwan Amanda Chen Jacky Chi-Wen Huang Chia-Yun Lee Che-Hung Liao Ching-Wen Lin Ting-Pu Lin Wan Ching Wang

Trinidad and Tobago Josanne Belfon Cindy Ramsingh Andre K. Sealey

Tunisia Hichem Guedda

Turkey Erkan Abbasioglu

Turks and Caicos Islands Zennie J. Morris

Uganda Irene Bashabe Kyomuhendo

United Arab Emirates Firdous Al Ahmed Katsiaryna Areshka Said A. Baalawy Kantilal P. Bhati Shipra Chamoli Ahmed Faraz Faruqi Ali Hachem Garen Hariri Dima Hreirati Marco Itani

Hemant T. Jayadevan Lipsa Karmiani Amit Anand Keshri Farhan Ali Khan Joheb A. Khan Wensy Mathews Sashidharan Menon Dinil C. Mohanan Farah Moukahal Deepa Ramsunder Bhakti Shyam Rohra Bindu Sajithkumar Nilesh Sarker Vishnu Sivanandan Joyal Valan Ramesh Venkatesan

United Kingdom Tony Abah Ayoade Adeyemo Olusola Akeju Johnson Ayorinde Ariane Baldwin-Webb Robert Cook-Hays Stephen Davenport Natalie Davidson Hembapura T. De Silva Anna (Anya) Fainberg Marc Fessler Aine E. Fitzpatrick Amy Fong Nathan Goodwin Hannah Griffith Alexander Houston Stacey Lee Gisela L. Leon Sneha Manohar Peter Morris Adetayo Felix Ogunneye Flavio de Castro Oliveira Marina Panteleeva Sarah L. Phillips Madeleine Press Angela Rai Sandeep Rai Jasper Randall Anupama Ratan Philip C. Sage Sophie Sarrion Muhammad Sharif Natali Shatchan Felix D. Styles Coong Su Ian Taylor Krista Taylor Nigel Taylor Ugo Kalu Ukwu Tom Vidović Xuan Wang JingJing Yan Figen Zorlu

United States David E. Achzet Nancy Acosta-Pacheco Anthony A. Adagboyi Cheryl A. Adams Gary R. Adams Sam Adams Bridget B. Adams-Davis Adekemi Adejumo Oluwole O. Afolabi Ann Akers Shahin Akhter Aizhan Akimova Henry Akiotu Scott Alexander Judy M. Allen David J. Alonso Aitbek Amatov Angelique Amunet Carl Anderson David P. Anderson Kathleen Anderson Margaret D. Anderson Benardino Angon Matthew D. Anker Laura S. Antal James R. Antonino Ricardo Araujo Stephane Ariot Constantine S. Arniotes Alfredo F. Arroyo Georgios Athanasakopoulos Michele Auderer Sandra L. Bachman Yang Bai Ariel Balaez Eugene Balbir Aaron Baldwin Charlene Balfour Shereefat O. Balogun Lester S. Bankhead IV Allison M. Banks Sheena Bankston Whitney D. Barnes Roxanne Barr Caroline J. Barrante Melissa Barringer Sandra Bartalini Kathleen C. Bayley Cherrish Beals Kimberly A. Beatt Jason A. Becker Tanisha D. Bell Livia Benisty Isaac J. Benrubi Heidi Benzinger Alexander Beregulko Omesh Bhatt Shirley Bhutto Catherine Birch Matthew Bizup Devon Blount Bobby L. Blue

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GRADUATES

Patrick Bode Babatunde A. Bolaji Vincent P. Bonaccorso Virginia Bonilla Margaret L. Bonner Edgar P. Borje Katelyn R. Boulden Nicole E. Bovell Claudia Bowen Kara Boyle Katrina Boysen James M. Bradshaw Jera L. Bradshaw Simone N. Brame Steven C. Brant Brandon Brennan Jonathan Brewer Cynthia Brickey Jodi Brisinte Dennis F. Brown Monica A. Buckley Robert E. Buell Kelly Buerke Alex Buffaloe Brian Burdick Brandy Burnett Tiffany Burney Jernoe Leos K. Camot Tanya S. Campbell Rosanne Cantu Daniel Capicchioni Amber J. Carlson William Carlson Jonathan Carr Lindsay Carr Romel C. Carsola Joseph M. Casole Brian Cassem Olaf A. Castañon Franklin R. Castillo-Andino Lainie Castle Victor O. Castro William Castro Ernest A. Cavagnaro Robert R. Centeno Aravind Chakrapani Connie Lai-Nor Chan Eldon Kin-Yue Chan Michael Charland Suraj Chauhan Candice Chen Danni Chen Gong Chen Kuan-Jung Chen Qiong Chen Xihua (Sabrina) Chen Sharon A. Cherry Felisha L. Chiles Christopher Chiodo Yandy Chirino Carmen Chis-Luca Scott Choi Cary Chow Daniel D. Churchill

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John Clark Sidney J. Coe Cinda Coldwell Tracy H. Connell Sean Conner Keith T. Conty Erin M. Cooper Zuley Cortes Amanda Cosenza Miguel Costa Justin Costakis Anna Cotterill Anikberg Coty Monica Merino Cox Chris Crandall Ashley C. Cross Marco Cuesta Krzysztof Czaja Celine A. Dalfonso Octavia A. Daniels Sampad Das Christian Daulong Antwonne L. Davis Cordell A. Davis Justin B. Davis Victoria L. Davis Aubrey Davis-Bigelow Nilda De Boyrie Aydee De Leon Daniela De Pina Irwen C. De Silva Michael A. Defelice Liza M. Dela Cruz Tracy C. Della Joseph Della Penna Alex Delvecchio Nicole Detweiler Anzar Dewani Dorothy DeWitt Vincenzo Di Geronimo Srinivas Dindi Simon Y. Dinits Gena R. Dirani Gayle P. DiTullio Robert F. Donovan Stacy Dorr Amy Doucette Georgina P. Duffy Trevor P. Duffy Michelle Duncan Amanda C. Dupont Dorothy A. Duran William Durand Alexander Dyon Daniel Eaton Andrew Q. Eck Samuel D. Ejiofor Brett C. Ellis Jonathan Ells Yesenia Erodici Stacy Etheridge Trey D. Evans Elizabeth U. Ezeoke

GRADUATES

Lyn H. Farley Robert Farrell Christopher Farthing Johanna Fedorick Beau Feibus Stephen C. Feldman Leonard A. Felske Jose R. Fernandez Natasha Fernandez Elida Ferreira de Almeida Peyton J. Fidler Leonard Figueroa Cynthia M. Fincher Sheila S. Fischer Blakely D. Fishlin Eric R. Fitzgerald Tania B. Flores John G. Flynn Jean-Louis U. Fontaliran Kevin Foo Julian Fortoul John T. Foster Cristin M. Franzitta Brigid Freese Anne A. Frigo Lisa Ann Frikker-Gruss Carmen Fuccillo Jordan Mills Fuller Edward Gallagher Vincent R. Galli Lakshmi Ganapathy Marianne P. Gannon Grant Garber Ariell Garcia Brendon Jay D. Garcia Yvette R. Garcia Felipe Garza Nathalia D’Amico Gastmann Boniface O. Getugi Hieu Giang Innocent M. Githua Tristan Gitman Geoffrey Glass Kshitij Golani David Goldstein Bruce Gollop Amy Gomanie Jeffrey Gontero Allan E. Gonzalez Crystal Goodman Brianna Goodwin Mandalam Sunitha Gopal Abhinn Goswami Cynette Grant-Parks Mark A. Graves Zane Gray Daniel Grazel Mary E. Greenberg Jonathan Greene Mary Greene Elena Greuter Emily Rose Grey Ronald Grimes Neha Grover

ACAMS TODAY | JUNE–AUGUST 2016 | ACAMS.ORG | ACAMSTODAY.ORG

Matthieu Guerineau Gary E. Guerra Pankaj Gupta Sapa Gurbanov Paul S. Hackett Joey Haile Sabrina Hakim Cristen M. Hall Jeremy R. Hamburgh Anthony L. Hames Matthew Hanna Carol Hardiman Tomeka G. Harper Ned Harrison Vincent T. Haslem Valerie Hebert Charles M. Hedji Christine Hempel Elizabeth A. Hickman Nora Hidasi-Costa Sarah A. Highlander Scott E. Hillison Thomas E. Hinojosa Phung Hoang Ann Hofmann Gary Holmes Gerri G. Hom Newt D. Hopkins Marie C. Howe Serena Hu Ya-Han Hu Jennifer Huang Yann-Bor Huang Susan M. Hughey Martin Hurban Frederick Hurst Craig L. Hymowitz Theophilus Igilige Evan Y. Ignall Motoshi Imura Matthew C. Ingram Justin Irwin Jennifer A. Izett Daniel H. Jackson David F. Jasper Casey Jenkins Ari Jensen Wenpeng Jia Kimberly K. Jones Edward F. Joy Angel Juhasz Glenda J. Juliano Melissa A. Kadir James J. Kalabokis Laszlo Kalloi Lauren J. Kang Chandra Kapireddy Brian J. Kapusta John M. Karafa Anurag Karuparti Lauryn Kato Sreeram P. Kaza Katherine Keely

Dennis W. Keller Kamilah D. Kelly Daniele N. Kendall Rane S. Kien Ted K. Kim Teresa Kim Courtland B. Kimble Joseph Kintner Andrew Kirshenbaum Sarah R. Kocher Diana Konstantinidi Heather Koolmeyer Sebastian Kot Steffanie K. Kozlowski Jamie Kraljev Jennifer Krawchuk Johannes Kretschmann Mariya Krivenko Yazmin E. Kuball Melissa S. Kuhlman Santosh Kumar Marie Labat Dorin Ladan Kiersten S. Lalley Jennifer D. Lamb Scott Lapin Huascar S. Lara Crispus L. Larche Christopher Latimer Hiu Ming Lau
 Anthony S. Lauro Freddie Lawson Anne M. Layne Antoinette C. Lazarus Layne Lebaron Hector A. Ledezma Chiung-Chi Lee Daniel Lee Sanggu Lee Stephanie Lee Kevin J. Leicht Patrick Leung Alexander Levin Valerie A. Levin Matthew Liautaud Brett R. Light Isaias Lima Chenlei J. Lin Jasmine Lin Paula Liss Adrian Lloyd Fui Rue Loh Arthur Long Claudia V. Lopez Robert D. Lopez Mayte Lopez-Hernandez Dennis M. Loveridge Kimberly A. Lovett Tatyana Lozhkina Daniel Lu Laurel Ann Luck Denis Lutto James Lutzko Julia M. Lynch

GRADUATES

Xuelin Ma Edward M. MacLellan II Carl Wong MacMichael Dat Mai Marc A. Maietta Michelle Mak Jeffrey M. Maloney Igor Manelis Joanna J. Marathakis Estefania Marin Olarte Crystal L. Markowsky Conor Marrinan Anthony G. Marroney Alexis Martin Kevin R. Martin Patricia M. Martin Svetlana Martynets Debi J. Matheny Melissa V. Mathis Laura P. McCann DePrincia S. McClain Brandon W. McConnell Sheila R. McCrary Neil McDermott Jason McDonald Martta Mcglynn-Ruiz Sean M. Mcguire Jacquelyn McKenzie Shanti A. McManus Meagan McQueeney Jayme Mehrer Holly Meister Anna Meldere Kirill Meleshevich Michael R. Menter Ravi D. Merck Christopher E. Meredith James Mershon Benjamin Metzger, Esq. Timothy P. Meyer Christopher J. Michael Melissa Mielnicki Koffi B. Mignanou Sabrina D. Miles Kevin Miller Kristen M. Miller Mackenzie Miller Sheldon Miller Susan M. Miller Zachary T. Miller Tamekico Milligan Esther Min Lourdes B. Miranda Ujjwal Kumar Mishra Carlene Mitchell Renee Mitchell Michelle K. Mixson Marylin Montero Brian Moore Shawki K. Moore Xaviera Moorer Juan A. Moraga Salamanca Karen A. Moretti Tetyana Morgan

Russell E. Morin Oscar Mota Madhuri Mudiyanuru Ardak Mukasheva Anna P. Mulqueeney Daniel Munoz Thomas P. Murphy Harriet Mwaniki Drew Myers Stephanie Nack Daisuke Nagafuchi Olga M. Naranjo Atreya Nataraj Jermaine Nation Hatsune Naturman Favourite Ndlovu Carrie Nelson Joshua J. Newton Victor Ng Fam Jenna Nguyen Jessica Nichele Candice Nishizawa Kevin C. Nix Henri Nkuepo Kathy N. Novick Magda Ntallis Bond Nthenge Rhea Nygard Janita R. Obie Jennifer O’Brien Jennifer O’Donnell Samantha C. Ofori Susan L. O’Grady Anthony Oladosu Peter J. Olobardi Erik Olson Bobby J. Oney Daniel Orr III Marianela Ortiz-Davis Brittany L. Osborne Luis Osorio Amy K. Owen Anil Kumar Pai Norrica B. Palma Brian S. Palmer Ron Palmer Philip Papaelias Parveen Parmar Elan D. Parra Reese Parrett Kenneth A. Partenheimer Kyle J. Pattinson Susan G. Paul Janice Ann Payne Michael J. Pellizzi Steve J. Persons Tatyana Peskovaya Joshua M. Peterson Darren Petrino Lauren Petty Ethan A. Pham Douglas Pickel Alicia T. Pierce Natalie Pierre-Antoine

Marissa Pisani Michael J. Pisani Timothy G. Pitts William J. Plumeri Jorge L. Portelli Bismarck Prado Nicholas A. Prinzivalli Andreina C. Puigbo Mario A. Pulling Lianna Quetel Christopher J. Rackard Melanie L. Ragan Gihan Rajapakse Quinlan Rakin Saranga Ram Vinod Ramakrishnan Marco A. Ramirez Harold Ramnath Nicole M. Ravagno Semir Redzepagic Suzanne Reed Brian P. Reisbeck Celena Rendon Jose E. Reyes Najera Sulmaan A. Reza Konstantin Reztsov Johnnie Richardson Elizabeth Riggins Katherine A. Riker Vanessa M. Rioux Timothy D. Rist David Rivard Douglas Rivera Gerhard S. Rivera Matthew V. Rizzo Jerold M. Robertson Tammy Robertson Ann Mary Robina Naila Robinson Robert M. Robinson Donald Rockfol Mario A. Rodas Patricia A. Rodriquez Kimani Rogers Samantha E. Rogers Samuel P. Rohde Carol F. Rojas Philip Rojas Conrad D. Roland Chris Roman Danielle K. Romanelli Andrew R. Rosenberg Emily Deacon Royce Jose Enrique Rueda Greg Ruppert Jennifer Sabados Elena Sabkova Bharat B. Sadula Jessica Sales Linda A. Salley Taylor J. Salmon Charles G. Salvilla Amber D. Sanchez Trista R. Sanders

Ankitha P. Satyam Abigail D. Saville Kevin Schippers Suzanne Scifres Sherri Scott Barry A. Sears Tara K. Seegopaul Rajesh D. Seth Bright A. Setsoafia Anna Shapiro Jennifer L. Sheahan Jackie Shellhaas Lei Shen Avisa Sherrell Tatiana Shipkova Shwetangi Shree Margaret Simmermon Aaron Simonson Tony Singh Marina Slavova Kristin Slouber Daniel P. Smith Daniel J. Smith Kevin Snyder Elena Solazzo Yvette Sosa Maria S. Southmayd Arun Mohan Sreevalsam Derek L. St. Hilaire Tanisha St.Fort Altrese Steaman Deirdre R. Stecz David Stein Vanessa J. Stein Geoffrey W. Stephens Mariya Stetsyna Lindy M. Stevens Brian Stewart Kacper A. Strak Paul Strusienski Charlene D. Sturgill Jeffrey K. Sullivan Michael R. Sullivan Ko Sungmin Kara Suro Ernest Sutton III Hitomi Suwa John J. Swert Brenda K. Swiney Beth A. Tacey Sanam Tahir Calvin Tanudisastro Karen Taormina Andrei Tapliga Michael D. Tate Jeffrey G. Taylor Jessica Taylor Michelle A. Taylor Ryan J. Terribilini Michael A. Tetro Matthew C. Thompson Natalie Tierney Anna Tong Maria F. Torres

Rui Totani Katy Tran William Treadwell Gregory A. Tremaglio Micah Trilling Felix P. Tron Becky J. Tu Nicole E. Tull Melissa Tweton Adaobi S. Ukabam Nicholas R. Underhill Daniel Van Winkle Yadira Vega Delmoral James Velsor Michelle A. Vetter Aileen Villar Jorge A. Villavicencio Kierra M Vinnett David E. Voorhees Sophia Vu Sandra Wade Allen E. Wallace Laura Mae Walters Weiran Dora Wang Brittany O. Washington Shanna Weaver Erica L. Wheeler Regina S. White Mark Williams William Wilson Andrew Wittick Jeffrey C. Wolf Jaime N. Wolfe Shi Man Wong Kathleen P. Wood Wanda K. Wright Wilson Junjing Wu Roy R. Xing Hua Yang Sherina H. Yang Fang-Ni Yeh Myong Yi Cecelia Weixi Yu Karen Yu Sean Yu Rainbow Zabronsky David Zacks Chuhao Zhou Tatsiana Zhuk Salima Zhumankulova Gregory J. Zimmer Erin E. Zipprich Peter Zoltowski

Uruguay Salvador Gari

Zimbabwe Osicar A. Dondo Tinashe H. Madzima

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EYEBROW

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