COMPLIANCE OFFICERS TOTALLY MISSED THIS SERIAL FRAUDSTER

Sometimes, being an effective compliance officer means that when you observe something that seems just a little bit out of the ordinary, you immediately take the time to make it your business to examine it, to rule out whether a financial crime is being facilitated through your bank, or to your bank. That's what compliance is all about, cutting through what you later determine is intentional camouflage, to get to the truth, which can often mean criminal activity, cleverly disguised as legitimate business. It's the little things that you spot.

In a recent South Florida case, JONATHAN GHERTLER, a known fraudster, was able to pull off a significant fraud against a company, by employing impersonation skills to trick corporate executives into paying hundreds of thousands of dollars for a bogus investigation purportedly inquiring into whether certain senior corporate executives had illicit relationships with the late pedophile Jeffrey Epstein.The fraudster even successfully impersonated the company's general counsel through emails, using the commonly used fraudster trick of sending emails with a slightly altered name spelling. He also impersonated the billionaire founder of the company. He even tried to trick investigating law enforcement agents,which I consider the height of arrogance. A career criminal, with a dark past,his technique was highly successful at first.

What bothers me about the case is that a sharp compliance officer should have realized that, under most circumstances, hefty payments to individuals supposed to be professionals do not go to credit union accounts, but to accounts at commercial banks. That red flag should have tripped a compliance officer's internal alarm to check out the payees on all this money, where he or she would have immediately questioned the bona fides of the recipients.Other not so obvious red flags of fraud existed in the transactions, but they were missed.

Of course, if platforms employing artificial intelligence had been in service, the inconsistencies would have been picked up early on, and more than a million dollars in fraudulent expenses caught in the act.We know compliance officers are overworked and often far too busy in spot something minor, but the lesson here is that AI programs, if in operation, can catch the small things that go right over the heads of compliance officers each and every day, and which can really make the difference between stopping financial crime, and missing it totally.