A lookback at departing FinCEN leader’s legacy, Shasky Calvery

As the director of the country’s financial intelligence unit reportedly departs for a new position at a foreign bank battered by compliance issues, the US government loses an innovator and invigorator that made the bureau leaner, meaner and more relevant.

The news dropping this week that Jennifer Shasky Calvery is leaving the US Treasury’s Financial Crimes Enforcement Network (FinCEN), reportedly for a senior financial crime compliance position at HSBC, puts an immediate spotlight on what will be considered the legacy she has crafted since September 2012, in some cases achieving goals never done before.

Under her leadership, FinCEN bolstered its beleaguered policy-making division – a sore spot that played a key role in the ousting of her predecessor, increased the nimbleness and aggressiveness of its penalty division, acting more quickly on recommendations from other agencies or on its own and raised from obscurity untapped powers to garner more intelligence and insight on illicit financial flows through the use of geographic targeting orders (GTOs).

Shasky Calvery “took an institution that had teeth, but actually used the teeth that it had in a way I thought was more effective,” said Paul Pelletier, a member of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo in Washington, DC. “She helped FinCEN realize its true potential. It is sad she is leaving because there is so much more to accomplish.”

“Our leadership team has only begun to tap the potential of FinCEN’s dedicated staff and its deep pool of data and resources,” said Shasky Calvery in a statement. “I hope that we have enhanced the agency’s solid foundation so that FinCEN can best perform its mission for years into the future.”

Jennifer Shasky Calvery’s Legacy: A FinCEN Scorecard

Jennifer Shasky Calvery pic

  1. Delta Group: Early on, Shasky Calvery pushed for FinCEN to share more data on trends and SAR findings through the 314(a) program, typically used to query banks about entities, and the Delta Group, a sub-realm of the Bank Secrecy Act Advisory Group. The Delta Group was specifically created to bolster the understanding of how regulations would affect banks.
  1. Survey of powers: One of her first orders of business was during an audit of FinCEN’s powers and seeing what authorities the bureau had that were unused or underutilized. That lead to the conclusion of being more aggressive in terms of using GTOs, Patriot Action Section 311 designations and considering issuing penalties of its own against banks and casinos, not just in conjunction with other regulators and agencies.
  1. 311: Shasky Calvery used this power, dubbed finding an entity is a “primary money laundering concern” nearly a half-dozen times, though in some cases the finding was lately rescinded or in one case, has resulted in a series legal challenges.
  1. GTOs: In January, FinCEN expanded its use of a powerful tool to snare more information on the secretive buyers of luxury real estate in two of the country’s hottest markets, a first for the bureau following similar orders targeting armored car companies, wholesale clothing and electronics trade. In that order, FinCEN stated it has issued a GTO temporarily requiring certain U.S. title insurance companies to identify the natural person, or “beneficial owners,” behind companies paying “all cash” for high-end residential real estate in Manhattan and Miami-Dade Country, Florida.
  1. Penalty division: Under Shasky Calvery, FinCEN’s penalty division flourished and also improved its working relationship with the IRS AML, division, which examines many sectors that don’t have a federal functional regulator and sends those penalty recommendations to FinCEN. That has resulted in FinCEN’s largest ever penalties against casinos, not shying away from household name operations. Overall, under her, the bureau has levied more than two dozen penalties against banks and other entities, and six against casinos, compared with only one penalty against a casino in the prior four-year period, and that a small tribal operation.
  1. Improved policy making arm: In June 2015, FinCEN announced it would be releasing a bevy of new proposed, resurrected and finalized rules to better gird the country against criminal and terror threats. Those included tying a bow on its proposal to require financial institutions to capture beneficial ownership information, re-releasing an initiative to require banks and money remitters to get more details on cross-border wires, and grafting anti-money laundering (AML) obligations to several parts of the investment sector, among other actions. FinCEN under Shasky has issued proposed or finalized AML rules for investment advisers, crowdfunding portals, virtual currency exchanges, non-bank residential mortgage lenders, along with issuing guidance on banking marijuana businesses, the risk of agents working at money services businesses and customer identification duties in the prepaid sector involving banks.
  1. National risk assessments: The timing of those announcements also coincided with the release of two key interagency reports on financial crime that highlighted the country’s overall risks and vulnerabilities to money laundering and terrorist financing, key aims of FinCEN, which helped to produce the National Money Laundering Risk Assessment and a sister publication, the National Terrorist Financing Risk Assessment.

Never lost her prosecutorial mindset

Prior to FinCEN, she headed the US Department of Justice’s Asset Forfeiture and Money Laundering Section (AFMLS). My sources recently told me she was even in the running to hold the top spot for IRS criminal investigations, a position now held by Richard Weber, who headed AFMLS prior to Shasky Calvery.

In all, she is known to be a strong-willed leader with a strong sense of justice who doesn’t play politics or reward people for simply being somewhere for a long time. She never lost her prosecutorial mindset and surrounded herself with likeminded and single-minded colleagues.

That caused some friction at FinCEN from longtime staffers, but also re-energized the bureau, propelling it to key achievements never seen before along with garnering a new respect and relevancy across the financial crime and compliance spectrum.

In an announcement, FinCEN stated Shaskly Calvery “negotiated and signed unprecedented international agreements to help ensure that transnational criminals have fewer safe places to hide.”

As well, she has also spearheaded efforts to make optimum use of FinCEN’s data and technology, making great strides in using software “business rules” to filter and sort FinCEN data in order to more rapidly provide accurate financial intelligence to law enforcement and international partners, particularly to combat terrorist threats such as ISIL, according to FinCEN.

Shasky Calvery helped move the agency to all-digital filing and secure the database of millions of AML filings under FinCEN, rather than the IRS, a major accomplishment that “helped make the data more accessible and made it possible for them to do all kinds of analysis,” said Robert Rowe, vice president and associate chief counsel for the American Bankers Association, the industry’s main lobbying group. “Her legacy is overall positive.”

‘Exceeded expectations’ at FinCEN

Further, under her leadership, the bureau organized its enforcement actions “around themes of individual responsibility, institutional acknowledgement and admission of misdeeds, and the development of compliance cultures that value integrity over profit,” according to FinCEN.

“FinCEN has so much to offer in the fight against terrorism, against international financial crime, and against drug trafficking and financial fraud here at home,” Shasky Calvery said in a statement. “Serving as FinCEN’s director has been an honor and a privilege and I will apply the lessons learned here to my every future endeavor.”

Overall, Shasky Calvery “exceeded expectations for the job,” Pelletier said. “She did everything starkly different than her predecessors. She used FinCEN the way it was intended to be used,” including powers and tools by Congress that were unused or underutilized. “She leaves a legacy that will be hard to fill.”