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THE PANDEMIC: A Financial Criminals Playground | PROACTIVE COMPLIANCE: Keeping AML Efforts In Play

A Field of Schemes

A financial criminal today working for an organized crime ring, drug trafficking organization, or terrorist operation, wakes up singing praises to his personal idols Al Capone, Charles Ponzi, and Lex Luthor, as he knows that his world is about to take off like a rocket. The outside world is isolated, scared, nervous, and in disarray due to this worldwide pandemic. But alas, one person’s nightmare is another person’s playground. And it looks like his ship has come in. The financial industry has reduced personnel, priorities have shifted, and more importantly, there are less knights protecting the castle. In most battles, the aggressors try to attack where and when the defensive positions are their weakest. This gives a bad guy several options to work with. A criminal today can go right at a financial institutions’ three lines of defense considering those institutions have less people and resources manning their stations and the personnel who are in place are spread thin across very long battle lines. While financial institutions’ automated AML & fraud systems remain constant, the decrease in human resources hinder their ability to monitor and report in a timely manner and this could provide extra time for the bad guys’ devious plans to work. Will real time sanctions monitoring be compromised? The criminal could also go right after individual customers with any number of scams, cons, frauds, or cyberattacks. With access to a larger number of potential victims using home computers a criminal may have a wealth of unprotected systems to introduce himself to and compromise their data and/or plant nasty items such as viruses, trojan horses, or watering holes to do even greater damage. Heck, even if a financial institution and/or their customer caught wind of the criminal’s bad intentions, how worried should the bad guy be? What is the status of law enforcement? They have similar issues with people and resources. Further, their first priority is most always, public safety, meaning less gumshoes hunting down or even looking for financial crimes. Bad guys must be thinking that they hit pay dirt!

Getting Ahead Of The Curve

From C-Notes Podcast: ”Why AML Efforts Matter” Click Image To View Video In Browser

There have been many items written and talked about on various social media sites, blogs, and in the mainstream media about increases in fraud and cyberattacks. I believe when we tally up the numbers at the end of the quarter or year we will be stunned by the sharp uptick in these types of crimes. Breaking news here: Bad guys don’t shelter in place, they don’t quarantine themselves. Criminals see this time of medical crisis as the opportunity of a lifetime. Today we will see the frauds, and tomorrow we will see the money laundering. Keep in mind that fraud and AML go hand-in-hand. What do you think the bad guys have to do with the profit they make from their fraud schemes? Answer: It must be laundered!

FinCEN’s Foreshadowing

FinCEN has stated that institutions should advise them if there will be any COVID-19 related delays. While it does not state it directly, reading between the lines, it would seem to indicate that FinCEN anticipates there to be delays in mandatory reporting times. So what can a financial institution do? My strong suggestion is that they do not abandon the financial crimes unit. I believe that now is the time to adopt a strong proactive counter fraud strategy. I understand that the FCU often gets the short end of the budget stick on a normal basis, and now it might even be harder to squeeze a buck out of the coffers, however, now is not the time to cut back. The enemy is at the gate. If you let the enemy punch holes in your defensive shields they will go straight for the warp core and destroy the ship! Okay so I may be watching too many Star Trek reruns while implementing social distancing but I hope you get my point. Drop your guard and rest assured bad guys will take advantage and when the dust clears, the damage done might be quite significant. What will the impact of this pandemic be on our global economy and shouldn’t we be implementing economic safeguards now? The New York State Department of Financial Services is attempting to get ahead of the curve by requiring each regulated institution to detail their plan of institutional preparedness for the possible disruption of services. It’s always a good idea to be prepared for the worst.

Time For Proactive Compliance

Here’s my suggestion: I believe the most pressing issue for financial institutions will be maintaining an adequate qualified workforce. That being the case, financial institutions should consider calling in the reserves. The country has called in the national guard. The medical community has called in retired doctors, nurses, and other medical personnel. Medically, it has become an “all hands on deck” situation. Why should the financial community operate any differently? After all, we are talking about our economic health here. Instead of cutting back on employees either due to virus concerns or temporary slow down, shouldn’t we be asking how much of our remaining personnel could be quickly repositioned and trained to plug into some vulnerable and sensitive areas such as AML, fraud, and sanctions. When the enemy is charging, every available person grabs a gun and defends the line. The financial institution could also consider bringing in contract workers. Many financial institutions have had to use contract workers before, usually after some sort of regulatory review and/or action. Why not do it now? Consider the extraordinary measures we’re putting in place to slow that upward curve we’re seeing in the medical field. Shouldn’t we be putting extraordinary measures in place to prevent a similar upward curve of money laundering activity from occurring? Get the contract workers in, a proverbial AML SWAT team. They are experienced and can quickly plug the holes. Take aggressive counter fraud measures and head the bad guys off at the pass. This is a proactive move that may save a financial institution time, money, and reputation in the future. In this time when we’re coming together as a global community to address this pandemic we should have a similar response to proactively protecting the global economy.

Related Post



C-Notes Episode 1 – Why AML Efforts Matter
View the above video of the inaugural C-Notes podcast exploring the role of those working on the front lines of anti money laundering. Learn how the efforts of professionals implementing AML/BSA compliance programs helps to identify, investigate, and circumvent financial crimes and terrorist activities with retired State & Federal Investigator Kevin Sullivan, CAMS, President of The Anti Money Laundering (AML)Training Academy. This podcast reminds us how their work helps to safeguard each of our own doorsteps.


About the Author

Kevin Sullivan, CAMS, CCI is a retired New York State Police Investigator and Federal Agent who dedicated his career to AML and continues that work through his company, The AML Training Academy. Kevin coordinated AML investigations for the state of New York while being detailed to one of the worlds largest AML task forces, the NY High Intensity Financial Crime Area (HIFCA) El Dorado Task Force. He has helped develop and implement global AML guidelines and trained and advised all industries and government agencies requiring AML around the globe. He helped to write various certification programs for the Association of Certified Anti-Money Laundering Specialists’ (ACAMS) and was the co-founder and former chair of their inaugural chapter which was in NY. Follow Kevin or reserve a seat in one of his live webinars. Space is limited!

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