Posted by Brian Monroe -
The event also had some incredible visual representations of the deep and detailed lessons learned, with artists on several panels converging words and pictures into fincrime-fueled multimedia masterpieces. The piece above is from the “A Day in the Life of a Money Launderer” session.
The skinny:
- What does the next generation of fincrime fighter look like? These professionals will be compliance champions, working shoulder-to-shoulder with law enforcement at all levels, focused on the latest actions of threat actor groups and attuned more closely to rising and receding risks – rather than fretting over regulatory minutiae.
- Those are just some of the takeaways of ACFCS’ Future of Fincrime Skills virtual event, which saw nearly 6,000 current and former compliance officers, regulators, investigators and technology and consulting thought leaders come together to tackle the biggest challenges in the compliance space – including the investigative toolkit needed for success.
- Some other examples: how to be more effective – at the individual and institution level – and bridge the divide between rules, resources and results. One common theme was the need to share more data in the public/private sectors and a “terrifying” realization that fraudsters have online groups dedicated to wringing every last dollar from victims.
By Brian Monroe
bmonroe@acfcs.org
February 18, 2022
Looking into the future, the financial crime fighter of tomorrow will look very different from today, armed with a broader set of skills – punching back with the heart of a curious, courageous investigator and the mind of an intelligence-driven, data-clad scientist seer.
The theme of the event was a boxing match. Appropriate, as these fighters will need to dance like a butterfly, easily cornering the disciplines of anti-money laundering, fraud and cyber defense, and sting like a bee – more accurately like an angry hornet, taking an aggressive, proactive approach to crush illicit finance.
These professionals will be compliance champions, working shoulder-to-shoulder with law enforcement at all levels, allies and partners more focused on the actions and reactions of threat actor groups, adroit and attuned to rising and receding risks – rather than dreading missed minutiae, fearing the regulatory reaper.
Those are just some of the takeaways of ACFCS’ Future of Fincrime Skills event, which saw nearly 6,000 current and former compliance officers, regulators, investigators and technology and consulting thought leaders come together to tackle the biggest challenges in the compliance space.
Some examples: how to be more effective – at the individual and institution level – and bridge the divide between rules, resources and results.
One common theme was the need to share more data in the public/private sectors and a “terrifying” realization that fraudsters have online groups dedicated to wringing every last dollar from victims.
The event also saw record attendance in several sessions, including tips to better wield open-source intelligence and another stocked with federal regulatory officials detailing tactics to better analyze, investigate, and write-up and file suspicious activity reports (SARs).
In short, don’t be too narrow in your narrative. Keep descriptions concise and precise, relevant and intelligent, with an eye toward uncovering the underlying crime, like human trafficking or corruption, and supporting those assertions.
These were messages not lost on listeners. These sessions topped out at more than 1,300 attendees each.
So what did attendees have to say? Here are some responses in their own words:
- This is by far the best virtual conference I have ever attended! Session are great and the entertainment 100%.
- What a fantastic (and terrifying) session.
- Excellent presentation. Thank you for sharing your expertise and knowledge.
- Fantastic presentation! Thank you!!! Can’t wait to train my team on this.
- ACFCS conferences are timely, insightful, practical – and fun! Keep up the great work!
Here is a snaphsot of a panel on what the future of fincrime investigations may look like, including the skills needed to thrive and survive.
The bad guys are working together against you, so fight back with stronger public-private partnerships
More than a thousand people attended our opening, kickoff session: “The Present and Future of FinCrime Investigations,” which covered a broad gamut of topics, from investigative skillsets to the vital importance of sharing knowledge on new and emerging tactics.
Speakers also touched on how trends in information sharing, particularly historically secretive government agencies, and gun-shy banks, have changed.
“We need public private partnerships,” said Don Fort, Director of Investigations at Kostelanetz and Fink and the former head of IRS-CI.
“Maybe 10 or 15 years ago, there were a lot of law enforcement agencies operating in silos,” he said. “They were asking a lot from financial institutions, but not giving a lot. But the need to have these partnerships and share typologies is all the more important now.”
One of the reasons is that if both sides are communicating regularly and openly, they can also more quickly identify, act and react when a new scheme comes to light.
“When it comes to new criminal activity, sometimes law enforcement sees it first, sometimes someone on the frontline of a bank sees it first,” Fort said.
Part and parcel of the skillset and toolkit of the investigator of the future is to be able to follow the money in the real and virtual worlds by better getting to know the various forms of finance, such as Bitcoin and other crypto coins.
“We are rapidly hurdling to a completely digital society,” he said, noting that a decade ago, criminals jumping from the fiat to the digital world would stymie investigations.
But now, with federal investigative agencies creating specialized units to better link individuals back to their virtual transactions – and an entire cottage sector doing the same on the private side, like Chainalysis and others – criminal groups laundering funds from crypto hacks and other schemes and scams are finding it much harder to hide.
So that begs the question: as an analyst or investigator in a bank, how do I strengthen my knowledge and skills and connect with top thought leaders in the public and private sectors – particularly law enforcement to be exposed to their challenges and needs – to learn from their experience and see through their eyes?
“The first start is this conference,” said Marcy Forman, the Managing Director of Global Financial Crime Investigations and Intelligence Head at Citi, who also has more than 30 years of government investigations experience at the U.S. Customs Service and Department of Homeland Security.
As well, Forman was the Independent Monitor for the judicial settlement involving Western Union and the State of Arizona.
“Broaden your network,” she said. “This conference is an opportunity to network and to reach out to the various participants in the various industries, whether that is law enforcement or whether that is financial institutions or non-financial institutions and there are many social sites in which to do that as an analyst.”
Depending on the size of the institution, a rank-and-file AML or fraud analyst looking to grow their investigative acumen may have some incredible resources available in-house, Forman said.
“Many banks now are hiring former law enforcement folks to integrate with those with banking experience,” she said. “This is important to have that entire picture.”
Coming from law enforcement, “we came with one view,” Forman said, hewing toward a mindset where everything is more suspicious.
“But you need to have a balanced view because there may be reasons for certain transactions that may seem unusual for law enforcement, but when you dig a little further, they make sense.”
Stronger investigative skills needed as AML teams shift to ‘effective’ programs
AML and fraud teams being able to see through the eyes of law enforcement has taken on even more importance with recent updates to U.S. countercrime defenses – giving the world a glimpse of the fincrime compliance field over the horizon.
So what does the future of financial crime and compliance look like?
Banks will craft “effective” compliance teams generating “highly useful” and “relevant” intelligence for investigators in focused, shifting defined “priority areas.”
These more targeted programs would ensconce both broad generators of illicit income, like corruption and cyber-enabled fraud, but also be direct responses to what international threat actor groups are doing on the ground – in the real and virtual worlds.
Those are just some of updated objectives from the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) detailed in the release of its formal list of national anti-money laundering and countering the financing of terrorism (AML/CFT) priorities last year.
The priorities are a collection of longstanding red flags and tricky transactional tells for a cabal of illicit entities, like organized criminal groups and other rising risks, like record ransomware attacks and crypto-powered paydays.
The FinCEN priorities: a reframed framework to fight financial crime
The FinCEN priorities, likely familiar chestnuts to large, international banks, are still given more weight and attention being defined as clear, countrywide priorities – and not buried in government or watchdog reports.
FinCEN’s stated AML priorities are:
- corruption;
- cybercrime, including relevant cybersecurity and virtual currency considerations;
- foreign and domestic terrorist financing;
- fraud;
- transnational criminal organization activity;
- drug trafficking organization activity;
- human trafficking and human smuggling; and
- proliferation financing
The widely-watched and highly anticipated AML priorities are the first concrete update to implement the U.S. Anti-Money Laundering Act (AML Act) – the most significant upgrade to the country’s fincrime framework since the 2001 U.S.A. Patriot Act.
The AMLA itself is a groundbreaking rebuilding of all areas of the U.S. AML regime, designed to crack open beneficial barriers, broaden public-private information sharing, foster innovation and tinkering with technologies toward the overarching goal of effectiveness.
Roughly coinciding with the release of FinCEN’s AML priorities, the Wolfsberg Group issued a mission-driven missive detailing what compliance program effectiveness would look like, a welcome model to add hard edges to the esoteric idea of “effectiveness.”
In short, the Wolfsberg metrics of effectiveness include:
- Are you compliant with local AML laws, cognizant of global standards?
- Are you producing highly useful information to law enforcement, guided by national AML priorities?
- Do you have a reasonable compliance program that reviews internal and external threats, gaps and vulnerabilities and adjusts based on rising or receding risks and law enforcement input?
Want to think like an investigator? Put in for a transfer – of skills that is
But in order to better support law enforcement under the AMLA – and be inline with international standards pushing effectiveness at the country level, such as more assets forfeited and complex laundering cases crushed – AML analysts need to become better investigators.
How do you do that?
One tactic: realize that there are a host of “transferrable skills” used by federal investigators right now that can be interwoven into AML team dynamics.
Which ones?
Internally developing and sharpening the knowledge and skills employed by investigative agencies the world over in the arenas of gathering facts, writing, reporting and girding and supporting conclusions.
What should AML analysts be focusing on?
“The ability to collect facts. Be inquisitive. Put those facts together. Draw a sound conclusion and be able to support your findings,” Forman said. “That is what a good skilled analyst should be able to perform.”
But the foundational bedrock of such efforts is that analysts need to be curious.
“You need to be thinking outside the box,” she said. “What makes sense? What doesn’t make sense? Collect your facts, draw a sound conclusion.”
But those efforts will be in vain if the analyst can’t communicate case details in a clear, crisp manner.
“You need to have good writing skills, but not write too much,” Forman said. “It is easier to write ‘War and Peace’ than a short summary” but bank teams must always remember law enforcement SAR reviewers are “using the details to lead a new investigation or enhance an ongoing investigation.”
That means a delicate balancing act to between brevity, clarity and paying attention to detail.
One tip many large banks use is to add a secondary line of defense for internal SAR review teams to “take a step back” and get a subject matter expert to review filings in their wheelhouse ensure federal investigators are getting everything they need.
Graphic courtesy of McKinsey. To read the full story, click here.
Don’t douse reports with a flagon of jargon, acrimonious acronyms
Bank AML teams also must be cognizant that various investigative groups have defined areas of expertise, so don’t clutter up SARs with jargon, acronyms and terms only used in the insular universe of the compliance zealot.
Even so, to better communicate internally and with law enforcement teams, compliance analysts should broaden and deepen their understanding of areas they are weak or unfamiliar, like crypto, cyber-enabled fraud and other areas, Fort said.
When he was at IRS-CI, even investigative teams focusing on just money laundering and fraud had to have a basic understanding of other areas, like cybercrime and virtual value.
“Everyone needs to have some basic understanding” of the newer areas criminal groups are flocking to launder ill-gotten proceeds, he said. “You may think you don’t need to know anything about it. But you will bury your head in the sand and miss transactions that later you find out you needed to know about.”
In that same vein, beyond just garnering a general understanding of new and upcoming areas, try to specialize in an area that is rapidly evolving to “hone your skills and career. Don’t just sit back and wait for your bank and agency to give you training.”
*This story has been updated.