By Brian Monroe
January 27, 2021
Day Two of ACFCS’ Back to the Future of Fincrime Virtual Summit saw registrations soar past 4,200, with professionals across the spectrum of financial crime attending nearly a dozen general sessions and breakout roundtables on a broad array of current, relevant and vexing topics, touching on technology, the need for human expertise and continued calls for convergence.
Top minds from the financial crime and compliance field offered insight, guidance and tips on historical and emerging threat vectors, including the billions of dollars in fraud tied to the U.S. government’s Paycheck Protection Program, the nuanced transaction trails of human traffickers, the power and promise of AI and the risks, rancor and resources needed to bolster crypto compliance.
The second day of the conference built on a powerful Day One where attendees learned to better understand the nexus between crypto value and terror groups, upcoming changes to the U.S. financial crime compliance and sanctions regimes, keys to breaking down corporate opacity barriers, cyberattack and defense strategies and more.
Here are some Day Two snapshots:
Pandemic of Scams – Fighting Unemployment Fraud and Preparing for the Next Wave
During COVID lockdowns, national and state governments pumped money into economic relief programs with remarkable speed, and fraudsters moved nearly as fast to exploit the same programs for breathtaking ill-gotten gains.
In the US, state unemployment programs were hit with fraud on a vast scale, with billions of estimated losses tied to domestic grifters and international organized crime groups.
This epidemic of fraud has major implications for financial institutions, which have been faced with stopping false claims, collaborating with law enforcement, and even returning fraudulent funds.
As part of the CARES Act passed by Congress in March 2020, it created a system where more than half a trillion dollars was earmarked for small businesses under the Paycheck Protection Program (PPP), where banks were charged with doling out loans to businesses that could be morphed into grants if the business kept or rehired employees.
The onus was on speed to prop up a foundering economy, with banks given little incentive to engage in deep AML due diligence or think about countering fraud – until after the fact.
As a result, government watchdogs estimated the billions of dollars went to fraudsters through sham PPP loans and scams tied to unemployment assistance siphoned away by illicit groups diverting funds from individuals already hanging on by a financial thread.
Even with the exotic and creative ways scammers stole billions of dollars from the U.S. government tied to pandemic relief plans, they are typically all examples of the “fraud triangle,” said Jim Richards, the former head of AML at Wells Fargo.
So what are the three pieces of the classic fraud triangle?
“Opportunity, pressure and rationalization,” he said. “When those elements come together, they form the classic fraud triangle.”