TRADECRAFT 101 PART THIRTEEN; HOW MONEY LAUNDERERS EMPLOY ADVANCED TECHNOLOGY TO OUTWIT COMPLIANCE OFFICERS

 

Ladies and gentlemen in compliance, know your enemy; under no circumstances are you to underestimate him or her, if you want to catch laundrymen in the act, in real-time, to protect your bank from regulatory fines and penalties, as well as the negative press that comes from details about how your bank failed to catch the narcotics trafficking money laundering of a newly-indicted kingpin. 

Laundrymen, like their criminal clients, usually have bottomless budgets to devote to emerging technology. Back in the old "Miami Vice" period of the 1980s and 1990s, by clients used email before most of the public even knew what it was. Money launderers, many of whom are attorneys, are completely familiar with the ability of Federal law enforcement agencies to obtain court permission to tap telephones, and obtain the records of targets, regarding whom they communicate with, and when.

Please note that Charles Intriago, back when his conferences, sponsored by Money Laundering Alert, were the most popular annual AML event, had to screen applicants for his events, as some appeared to be individuals and companies possibly bent upon using information designed to assist compliance officers for a much darker purpose. 

My clients also went totally paperless, acquiring the earliest personal computers from electronic stores, storing their incriminating data, rather than leaving notes about financial transactions to be found by law enforcement during searches of residences, offices, warehouses and storage facilities.

When I served time in a Federal prison, in the very early 1990s, for a RICO conviction, one of the most popular inmate courses, at the minimum security institution populated by white-collar defendants and those convicted of drug offenses, was the class that taught computer literacy. what do you think these defendants, most of whom had short sentences, planned to do with that knowledge? Many of them would be later returning to prison for crimes committed after their release from their first case. Those laundrymen who were not rearrested now have two decades plus of experience. How much do your compliance officers possess? I assume much less. 

You must assume, given the history, that the money launderers:

(1) Know exactly what AML/CFT platforms you are running in your compliance department; most vendors openly publishdetals about new clients that have acquired their products, or list the names of major banks that have their software, as a marketing strategy to get new business. Do the  money launderers who target your bank also have those assets, having secured the through conspirators abroad? You bet.

(2) Given that money launderers usually anticipate their opponents, assume that they road-test their tradecraft intentions by their version of your transaction monitoring operations, and adjusting accordingly, when their own software indicates that they will be detected, and possibly intercepted, if conducting specific methods and techniques.

(3) Be painfully aware that they know the extend of training and experience of your compliance department, when your senior people are away at conferences, or on vacation or holiday, and short on staff, and act accordingly, when it comes to executing advanced tradecraft. They may even be looking for your personal weaknesses, with an eye to corrupting a vulnerable staff member, to get even further into your tech secrets, or to breaching what you believe to be secure compliance communications.

(4) Take it as a given that they have their own IT people, who are much better paid than your junior staff who handle those responsibilities. Those individuals are often light-years ahead of your own IT, acquiring versions as yet unreleased technology to invade your systems, or to defeat your AML capability.

To summarize, assume the worst when it comes to the ability of money launderers, and their clients, to adapt cutting edge advances in technology, including but not limited to compliance tools, specifically to match, and even defeat, your anti-money countermeasures, especially at the transaction monitoring stage. Appreciate that, somewhere, there is an opponent working against the goals of your compliance department, and they have a better toolbox than you have, to beat you, every day; govern yourself accordingly.