• Law Enforcement Investigations
    Define a search warrant and describe how it is issued.

    A search warrant is a grant of permission from a court for a law enforcement agency to search certain designated premises and to seize specific categories of items or documents. Generally, the requesting agency is required to establish that probable cause exists to believe that evidence of a crime will be located. The warrant is authorized based on information contained in an affidavit submitted by a law enforcement officer.

  • Decision to Prosecute
    Identify the factors a prosecutor many consider when determining whether or not to bring a case against an institution involving money laundering-related charges.

    • The institution has a criminal history,
    • The institution has cooperated with the investigation,
    • The institution discovered and self-reported the money laundering-related issues,
    • The institution has had a comprehensive and effective AML program,
    • The institution has taken timely and effective remedial action,
    • There are civil remedies available that can serve as punishment, or
    • Deterring wrongdoing by others is needed and will be served by a prosecution.
  • Summonses and Subpoenas
    ABC Bank was served with a subpoena compelling the production of certain documents on a personal checking account. Describe the steps the bank should consider taking upon receipt of the subpoena.

    If an institution is served with a summons or subpoena compelling the production of certain documents, the institution should have its senior management and/or counsel review the summons or subpoena. If there are no grounds for contesting the summons or subpoena, the institution should take all appropriate measures to comply with the summons or subpoena on a timely and complete basis. Failure to do so can result in adverse action and penalties for the institution. Also, the financial institution should not notify the customer who is being investigated. If the government asks the bank to keep certain accounts open, such a request should be obtained in writing under proper letterhead and authority from the government.

  • Search Warrants
    ABC Bank was served with a search warrant. What next steps should the Bank consider?

    1. Call the financial institution’s in-house or outside counsel,
    2. Review the warrant to understand its scope,
    3. Ask for and obtain a copy of the warrant,
    4. Ask for a copy of the affidavit that supports the search warrant (the agents are not obligated to provide a copy of the affidavit, but, if a financial institution is allowed to see the affidavit, the financial institution can learn more about the purpose of the investigation),
    5. Remain present while the agents record an inventory of all items they seize and remove from the premises. Keep track of the records taken by the agents,
    6. Ask for a copy of law enforcement’s inventory of what they have seized, and
    7. Write down the names and agency affiliations of the agents who conduct the search.
  • Monitoring the Institution’s Response to a Law Enforcement Investigation
    How should a financial institution monitor the receipt of a subpoena, summons, or other government request?

    When an institution receives a subpoena, summons or other government request, the institution should do more than just produce the records or information being sought. Financial institutions should ensure that all grand jury subpoenas, as well as other information requests from government agencies, are reviewed by senior management, an investigations group or counsel to determine how best to respond to the inquiry and to determine if the inquiry or the underlying activity might pose a risk to the institution. In addition, the institution should maintain a centralized control over all requests and responses in order to ensure that the requests are responded to on a complete and timely basis and to establish a complete record of what is provided. This centralized record will also assist with regard to the institution’s own internal investigation.

  • Notice to Employees
    If a bank is under investigation by a government agency for possible money laundering, what steps should the Bank have for its employees follow?

    With regard to investigations conducted by the government, employees should be informed of the investigation and should be instructed not to produce corporate documents directly, but, rather, should inform senior management or counsel of all requests for documentation and should provide the documents to them for production. In that way, the institution will know what is being requested and what has been produced. In addition, the institution can determine what, if any, requests should be contested. The same procedure should be followed with regard to requests for employee interviews.

  • Internal Investigations
    Identify several situations that may require a financial institution to initiate an internal investigation?

    • A report of examination from the regulators,
    • Information from third parties, such as customers,
    • Information derived from surveillance or monitoring systems,
    • Information from employees or a company hotline,
    • Receipt of a governmental subpoena or search warrant,
    • Learning that government investigators are asking questions of institution employees, business associates, customers or even competitors, and
    • The filing of a civil lawsuit against the institution or a customer of the institution.
  • Internal Investigations
    What is the purpose of conducting an internal investigation?

    The purpose of the investigation will be to learn the nature and extent of any potential wrongdoing, to develop information sufficient to report – when necessary – to the authorities, to enable the institution to minimize its liability, and to stop any potential money laundering.

  • Closing the Account
    The checking account for XYZ Trading LTD, a company registered in the British Virgin Islands, was identified on a government subpoena issued to International Bank. The Bank has initiated an internal investigation on the account and its beneficial owners. What factors should the Bank consider on whether to close the account?

    Based on its internal investigation, the institution should make an independent determination as to whether to close the account in issue. Some of the factors that the institution should consider are as follows:

    • The legal basis for closing an account,
    • The institution’s stated policies and procedures for closing an account,
    • How serious is the underlying conduct. If the conduct is serious and rises to the level where the account would ordinarily be closed, then the institution should consider closing the account, or
    • As stated above, if law enforcement requests the institution to keep the account open, the institution should request that the investigator or prosecutor make that request in writing on proper government agency letterhead with the appropriate authorized signature.
  • Filing an STR
    If an institution decides to file an STR, what should they do as soon as possible?

    Notify the investigators or prosecutors.

  • The Importance of Gathering and Producing Documents
    What type of documents would a financial institution have that could assist a financial investigator in tracking money movements?

    A financial investigator’s main objective is to track the movement of money, whether through a bank, broker-dealer, money services business or casino. For example, banks maintain signature cards, which are collected at the opening of an account, account statements, deposit tickets, checks and withdrawal items and credit and debit memorandums. Banks also keep records on loans, cashier’s checks, certified checks, traveler’s checks and money orders. They exchange currency, cash third-party checks, and conduct wire transfers, as do most money services businesses. Banks also keep safe-deposit boxes and issue credit cards.

  • Interviewing Employees
    Why is it important to interview knowledgeable employees as soon as practical?

    When performing an internal investigation, it is important to secure and review all relevant documentation and to interview all knowledgeable employees. It is important to interview these employees as soon as practicable so that their memories are the freshest and so that they can direct management or counsel to relevant documents and people on a timely basis.

  • Dissemination of a Written Report by Counsel
    What steps should the institution take to ensure a written report on the internal investigation retains the attorney-client privilege?

    If counsel for the institution prepares a written report of an investigation, the institution should take steps to not inadvertently waive the attorney-client privilege by distributing the report to persons who should not receive it. Every page of the report should contain a statement that it is confidential and is subject to the attorney-client privilege and work-product privilege. Copies of the report should be numbered, and a list of persons who are given copies to read should be maintained. After a set period of time, all copies should be returned. Persons obtaining the report should be instructed not to make notes on their copies. All copies should be maintained in a file separate from regular institution files in a further effort to maintain the highest level of protection.

  • Mutual Legal Assistance Treaties
    What are the steps commonly taken to obtain mutual legal assistance?

    1. The central authority of the requesting country sends a “commission rogatoire” (letter rogatory, or letter of request) to the central authority of the other country. The letter includes the information sought, the nature of the request, the criminal charges in the requesting country and the legal provision under which the request is made,
    2. The central authority that receives the request sends it to a local financial investigator to find out if the information is available,
    3. An investigator from the requesting country then visits the country where the information is sought, and accompanies the local investigator during visits or when statements are taken,
    4. The investigator asks the central authority for permission to remove the evidence to the requesting country,
    5. The central authority sends the evidence to the requesting central authority, thereby satisfying the request for mutual legal assistance, and 6. Local witnesses may need to attend court hearings in the requesting country.
  • AML Cooperation Between Countries
    Identify the three gateways that assist with the AML cooperation between countries.

    • Mutual Legal Assistance Treaties,
    • Financial Intelligence Units, and
    • The Supervisory Channel.
  • FATF Recommendations on Cooperation Between Countries
    Recommendations 36-40 from FATF’s 40 Recommendations pertain specifically to the international aspects of money laundering and terrorist financing investigations. What are Recommendations 36-40?

    Recommendations 36-40 deal with mutual legal assistance treaties, extradition, confiscation of assets and mechanisms to exchange information internationally.