Taking Down Corrupt Advisors and Proliferators of WMDs

June 7, 2016

FinCEN recently presented its annual awards in recognition of law enforcement agencies that use the Bank Secrecy Act (BSA) reporting to support their criminal investigations. In addition to the vast criminal enterprises these agencies have shut down, it also highlights the important role reports filed by financial institutions play in the fight against crime. Take a look at these three noteworthy examples of BSA reports making a difference:

Abuse of Power by Financial Advisor: After several banks and casinos filed more than two dozen reports to FinCEN, the Internal Revenue Service-Criminal Investigation unit (IRS-CI) was able to identify a financial advisor who was taking advantage of an impaired adult to deplete their financial resources. Reports that were filed included excessive cash deposits to the financial advisor’s accounts, alleged misuse of a position of trust, and unusual increases in cash withdrawals from the victim’s accounts.

Information found in the reports led the financial advisor to plead guilty to federal charges of money laundering as well as wire and mail fraud. He was sentenced to several years of imprisonment and ordered to pay hundreds of thousands of dollars in restitution.

Weapons of Mass Destruction: The FBI NY Field Office (FBI NY) seized assets and millions from international proliferators of weapons of mass destruction (WMD) after they were tipped off by data supplied by FinCEN.

FBI NY uncovered 165 transactions from multiple institutions that the proliferators used to illegally funnel more than $8 million through the U.S. financial system. Based on the data from FinCEN reports, nearly $6.5 million was then seized from the criminals’ bank accounts, eight associated front companies were added to the Treasury’s Office of Foreign Assets Control, and nine China-based suppliers were added to Department of Commerce’s Entity List.

Seizing these assets has significantly affected the organization’s ability to obtain the materials needed to construct WMD.

Third-Party Money Laundering: Three government agencies joined forces in an investigation leveraging FinCEN data to dismantle an organized criminal enterprise involved in bank fraud, distribution of unlicensed drugs, and money laundering.

Reports filed by five different financial institutions provided investigators with a detailed list of 500 bank accounts controlled by more than 30 suspected individuals who established the accounts to launder millions of dollars. The reports also helped the government decipher the complex web of shell companies, false identities and additional bank accounts utilized by the organization.

In the end, the government seized more than $28.6 million from multiple bank accounts and more than $2.5 million of street-diverted pharmaceuticals, and also convicted 33 individuals for a variety of crimes.

With FinCEN increasing pressure and developing more regulations that require organizations to report more suspicious activities and transactions, it is not surprising that many compliance departments are overwhelmed. Feedback from our customers indicates that they need to continue evolving their AML compliance programs and leveraging our data analytics to identify complex scenarios and enhance the process of getting reports from remote branches/stores to compliance and then to the regulatory body.

About Andrew Simpson

Andrew Simpson (LinkedIn | Twitter) is Chief Operating Officer at CaseWare RCM and has more than 20 years of experience building businesses in the fields of information systems audit and security, data analytics, Anti-Money Laundering and forensics. He is a regular contributor to conferences and a recognized thought leader in financial crime management.

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