Banks on the frontlines of sharpening AML, fighting fraud
Back to Day Three of the summit, federal law enforcement speakers also detailed how organized crime rings are increasingly turning to money mule networks, often recruited unwittingly from those newly unemployed or scammed on social media.
But they also noted that informed bank AML and fraud teams, even tellers, can help stop customers from being duped.
“Sometimes a warning from a bank helps stop some of this, particularly if it’s a longtime customer. If a bank says to a customer, ‘It’s not just wrong, it could be a criminal action.’ That can help. When there is a fraud scheme, and there is an intervention, in about 50 percent of the time,” the person will not go through with the transaction and they will report the scheme to the authorities, said one panelist.
As well attendees got a glimpse of the future of financial crime compliance rules in the United States with new rules wending their way through the U.S. Treasury and powerful Congressional updates under the just passed Anti-Money Laundering Act (AMLA), what many are calling a “once in a generation” event.
The AMLA Act is centered around creating richer and more relevant intelligence by fincrime compliance teams, more ammunition and funding for the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) to analyze and closing the loop with stronger public-private information sharing partnerships.
The initiatives are part and parcel of parallel efforts to finally remove the longstanding stumbling block of impenetrable beneficial ownership structures, a magnet to criminal groups of all stripes, from terror financiers to corrupt oily oligarchs.
The AML updates to the NDAA are not happening in isolation.
They are part of a multipronged approach by the U.S. government to strengthen fincrime compliance countermeasures, shift the needle toward “effectiveness” and create richer and more relevant intelligence to law enforcement.
In all, the U.S. Treasury is engaging in a broad overhaul of the country’s financial crime compliance defenses, shifting more toward creating “effective and reasonably designed” programs that produce filings with a “high degree of usefulness” to law enforcement – even though the term has no “consistent definition” in current rules, according to a September notice.
FinCEN is also querying stakeholders to determine if they could better manage risks, resources and threat actors if the bureau created national AML priorities – a similar refrain as in the NDAA – a herculean effort informed by other national illicit finance, proliferation and terror risk assessments.
Part and parcel of the proposal would also be to more concretely graft a longstanding compliance best practice and federal regulatory exam flashpoint into formal rules: the AML risk assessment, according to the advanced notice of proposed rulemaking (ANPR).
To read the full notice in the Federal Register, click here.
In U.S., a ‘new dawn’ for AML compliance programs, effectiveness
Under the update, FinCEN’s bi-annual “Strategic Anti-Money Laundering Priorities” would inform the now formalized financial institution risk assessments, with the logic being banks would better be able to align technology and investigator resources to address rising risks, criminal threat tactics and law enforcement intelligence needs.
The updates are informed by overarching efforts by global watchdog and private sector groups to prioritize “effectiveness” over technical compliance, at both the country, law enforcement and financial institutions levels, including the Paris-based Financial Action Task Force (FATF), the Wolfsberg Group, the Egmont Group of Financial Intelligence Units (FIUs) and others.
“This is really a new dawn in terms of collaboration between banks, regulators and law enforcement,” said one panelist. “It really is a three-legged stool. All three of these entities need to work together and participate in this process to make it work. The AMLA does a tremendous job of recognizing that fact. We are all working together and collaborating toward this common goal of preventing terror financing and other illicit finance.”