Convergence: Embracing change in AML/ATF

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BY ROBERT A. GOLDFINGER

My first day of attending the conference brought me back to the first day of my career in law enforcement. I was a recruit attending the police academy. The chief of police was addressing the recruits and made a statement that has applied throughout the decades in my private and public sector careers. The chief said "the only thing permanent here is change."

This year's conference was an extension of that statement. New Topics, new thought leaders, new attendees and most importantly new views into the anti-money laundering (AML) world.

If there is one word to best explain the "new," the word would be convergence. Consolidation of financial institutions resulting from the impact of the global financial crisis has resulted in the merging of job functions, descriptions and obligations. The emergence of "bad guy" tactics and practices has blurred the lines that have traditionally separated the silos of fraud, compliance, auditing, AML and ATF. To use a Las Vegas term, regardless of our job descriptions, now we are "all in."

The panel discussion: Keeping Current with Regulatory and Oversight Trends to Ensure Your Institution Remains Compliant offered practical, real-world insights. The presentation pointed out that expectation of being compl ant with regulations has not changed despite the combining of functions resulting fromconsolidation or acquisition. In some instances convergence has caused slippage in compliance which resulted from new duties having been assigned to Bank Secrecy Act officers. Functions also have changed as a result of modifications in risk and product offerings. Competing internal needs in the reconfigured organizations have people performing duties that they have not been required to do in the past. A significant organizational challenge that was mentioned was the creation of a viable plan to converge overlapping technology capabilities in order to meet the new and emerging regulatory challenges. Other challenges mentioned:

  • The need to ensure that there was universal knowledge across the enterprise staff about KYC, CIP from the past, present and future information systems.
  • The information is valid, accessible and deployed for regulatory compliance and appropriate staff is in place to meet the regulatory mandates.

The seminar workshop: Designing a Bank Training Program on a Limited Budget tackled similar issues by addressing the questions of how to ensure that training programs are on target, assessing and deciding what the universal knowledge needs are and having proper educational timelines in place to avoid knowledge gaps while not wasting valuable resources. The conference also gave attendees the opportunity to expand their knowledge on non-traditional subjects that in the past may have not been viewed as AML centric. These sessions included but were not limited to:

  • Optimizing Money Laundering Controlsto Detect Tax Evasion
  • Implementing and Maintaining an Effective Identity Theft Prevention Program
  • Risks Posed by Hedge Funds and Other Investment Vehicles
  • Preventing Financial Crime Through Top Quality Suspicious Activity Detection and Reporting
  • Compliance with the Unlawful Internet Gambling Enforcement Act
  • Optimizing Compliance through the Integration of AML and Fraud Prevention
  • Improving the Detection and Reporting of Suspicious Trade-based Transactions For an enhanced international perspective the conference had an expanded program format that included a concentration on international issues. Those presentations included sessions pertaining to:
  • Preparing for changes to Swift Messaging Standards
  • Targeting Money Laundering and Terrorist Financing in Asia
  • Combating Money Laundering and Terrorist Financing in the Middle East and North Africa
  • Responding to Caribbean Money Laundering Challenges

The luncheon keynote address was given by Jamal El-Hindi, associate director for regulatory policy at FinCEN. His remarks concentrated on the continuing need and appreciation of the work that is done by AML professionals in the battle against illegal activity. El-Hindi, like other speakers at the conference, also made himself accessible to conference attendees. I was having a hallway discussion with an AML executive from one of the largest banks in the world and he excused himself from our discussion, to have a conversation with El-Hindi who was speaking to conference attendees nearby. Opportunities to interact with industry leaders are a trademark of the ACAMS conference. Later that same day I attended the round table discussion on beneficial ownership. I sat next to El-Hindi and had side conversations with him as the discussion took place. The roundtable was facilitated by former ACAMS award winner Hank Grant and David Chenkin. Intricate corporate and trust structure ownership topics were debated. The roundtable interactions were once again a great example of the vast amount of experience and expertise that the attendees bring to conference. I am always amazed by the examples, real world cases and solutions that conference attendees bring. Additionally, roundtables are the best place to meet fellow specialists from around the world, exchange business cards and extend your personal worldwide network!

Some of the most well attended sessions concentrated on the issues of cooperation between law enforcement, financial institutions and regulators. To say that the discussions were lively and had differing points of view expressed is an understatement. In the workshop: Creating Win/Win relationships between Law Enforcement and Financial Institutions a diverse international audience was exposed to insightful views from audience members, Defense Lawyer and facilitator David Chenkin, prosecutor Meryl Lutsky and law enforcement commander Jim Cox. Frustrations on all sides were exposed with points being identified on how to find common ground by understanding the goals, priorities and the need for communication. The concept of "early and often" interactions emerged as a theme that should be considered by all parties. The panel acknowledged that limitations on some cooperation exist by the nature of conflicting interests.

Another presentation pertaining to financial institutions and law enforcement included the closing general session: Keeping Current on the Latest Criminal Schemes. This discussion rounded out opinion and offered an expanded peek into the salient topic areas of mortgage fraud, identity theft and electronic communication channel fraud. Dan Wager, Chair of NY HIFCA explained current and emerging issues that relate to efficiently completing SARs. He also pointed out that criminals use accounts that are opened by students and by temporary visitors to the United States.

Current issues about Money Services Businesses (MSBs) were discussed in two sessions. MSB industry gurus Jeff Sklar and Mike McDonald facilitated a discussion on Deciphering the BSA/AML Examination Manual. Anthony Rodriquez from RIA led a discussion about MSB agents. He offered best practice tips on training and on- boarding of the MSB agent. The training tips outlined were: BSA basics, KYC, suspicious activity/ red flags, structured transactions, proper data entry and acceptable identification documents, record keeping and reportable transactions, record retention and contacting the compliance department.

During the conference, I also had the opportunity to have a one-on-one discussion with David Schiffer who is the CEO of Safe Banking Systems (SBS). SBS sponsored a breakfast presentation detailing a case study published in the New York Times describing how the deployment of collective entity resolution technology lead to the identification of six individuals who were identified as national security risks via the deployment of SBS technology during the testing of the FAA Airmen Registry database. SBS ran tests on the FAA database against publically available iduals. More information about this technology can be found at www.safe-banking.com. On another note, ACAMS Chapter activity is thriving and growing. All of the following worldwide chapters were represented at the meeting. I encourage all ACAMS members to become involved with their regional chapter.

  • New York
  • Australasian
  • South Florida
  • Nigeria
  • U.S. Capital
  • Southern California

Upcoming Chapters

  • Carolina
  • Singapore
  • Cayman Islands

Nearly 700 participants from around the shared knowledge, skills and experience about the global battle against money laundering and terrorist financing. I learned that traditional areas of concern are converging with other worldwide battles against other financial crimes. I left the conference with numerous deliverables empowering me to meet these challenges head-on and have continued professional success and personal growth.

See you all next year!

Robert A. Goldfinger CAMS CFS Cmdr.

CID (retired)director of Fraud/AML Market

PEGASYSTEMS, Cambridge, MA USA Rob.

Goldfinger@pega.com