Last week, ACAMS held our 11th Annual AML & Financial Crime (Europe) Conference in London. With a focus on the hot topics challenging us all, attendees also discussed the unfolding FIFA** scandal and the indictment of former Congressman Dennis Hastert for, among other things, structuring cash transactions to avoid reporting under the Bank Secrecy Act (BSA).
It is amazing that so many news stories, with a financial aspect, have some connection to money-laundering related issues.
Understanding the BSA/AML world
A caveat, however, for AML professionals, is not to assume that the media fully understands AML laws, regulations, policy, or indeed, the whole BSA/AML compliance environment.
The stories about former Representative Hastert are a case in point.
All AML professionals know that the cash transaction reporting (CTR) requirements in the U.S. are for cash “over” $10,000 in or out of an account. I can’t tell you how many media stories referenced the CTR requirements as “$10,000 or over.”
Is it a big deal? No, I suppose not—except that it makes you wonder, how many other aspects of reporting on this case or the law is wrong?
Other stories crowed over the apparent irony of Hastert violating a law created under the 2001 USA PATRIOT Act. The only problem with the “irony” is that that point is wrong.
The PATRIOT Act did impose a number of things—customer identification, information sharing, and reporting for non-banks—but CTRs have been a requirement since the 1970s. I suppose the narrative was just too good to pass up just for the sake of factual accuracy.
Again, makes you wonder.
Soccer scandal will drive more scrutiny
For the still emerging scandal, the international football (soccer in the US) association FIFA has seen a number of its executives and members facing charges related to fraud, corruption, bribery, and, potentially, money laundering . [For a brief view of where we stand today, read the account that Dennis Lormel (former head of the FBI’s Terrorism Financing Operations Section) drafted for ACAMS Today.]
For AML professionals, the FIFA scandal will undoubtedly result in additional areas of focus and vigilance going forward. What may or may not have been a previous responsibility will shake out during these investigations. Regardless, bribery and corruption are surely subjects for compliance and legal professionals to add to their AML requirements.
Hot topics in Europe (and elsewhere)
Terrorist financing has been an AML area of concern since 9/11 but the expansion of terror groups and new methods of money movement is a constant concern for those of us charged with compliance, detection, and reporting.
One sadly new problem area is how to identify foreign fighters. Our conference heard from several experts that offered recommendations regarding the financial footprints of these disturbed individuals that are heading for the Middle East to join groups such as ISIS. These types of sessions are so important—but everyone must note that as soon as we get these tips, they are subject to change.
The session presenters recommended being cognizant of the following potential red flags:
• Frequent domestic or intra-EU travel activities.
• Abnormal payment activity at transportation hubs.
• Airline/bus tickets with an obvious connection to Turkey. (Note: Within one day of this session, another presenter said that Italy has taken place of Turkey);
• Garment and equipment purchases in shops specializing in outdoor and “survival” sports, or, in general, military supplies.
• Client inquiries about the availability of ATM withdrawal limits in Turkey, Lebanon, and Jordan.
A final note on this session: Another panelist cautioned the audience that even with the valuable information regarding certain geographic areas, financial institutions should not automatically “de-risk” all clients that transact business in those areas.
Returning to the corruption theme from the FIFA case and other activities, several presenters homed in on “anti-corruption touch points” such as :
• Dealing with country regulators.
• Obtaining business licenses.
• Dealing with tax authorities.
• Government-owned companies and officials.
Finally, these experts warned that firms usually fall short of having strong anti-bribery responses due to poor or inadequate policies, training and monitoring. The consensus is that the best anti-bribery and corruption framework is monitoring.
Reputational risk—preview of the next blog
A staple of most conferences are sessions on enforcement and regulatory themes. Most, if not all, panelists make sure to mention that one clear outcome of these actions is the harm they cause on an institution’s reputation risk. For example, there will be damage based on the association with controversial clients or sectors.
But is that true?
Stay tuned for more on this very interesting concept.
* “A Day in the Life”—The Beatles from 1967’s “Sgt. Pepper’s Lonely Heart’s Club Band.”
** Fédération Internationale de Football Association (English: International Federation of Association Football)