A member’s perspective on the evolution of compliance

I was enjoying an iced tea at my favorite Irish bar the other day experiencing flash-backs of how all of this money laundering stuff (a legal term) came to be.  I thought that some of you may have an interest in one guy’s historical perspective of the current state of compliance.

In 1979 South Florida was in the midst of the infamous Miami Vice era.  Bags and boxes of drug cash were being carted into banks and deposited into non-interest bearing checking accounts.  When banks were asked about customer transaction reports (CTRs), the common response was “we don’t file no stinking CTRs”.  As a matter of fact, many banks did not have blank CTRs and openly admitted not knowing such forms or requirements existed.  A few did file CTRs on large cash transactions, but in the names of cartoon characters and dead Hollywood actors.  One bank openly stated to me “we file all CTRs as required”.  I asked them how they did that, since we had no record of this institution filing CTRs and the response was “we file them right here in that file cabinet”.  Of course, the “compliance officer” at that time was the person who screwed up the previous week and was sentenced to one week as compliance officer.

Well, with accounts ranging from $250 to $500 million dollars per year in cash deposits and no Bank Secrecy Act (BSA) compliance even considered, there were cases and careers to be made. During the next several years, Operation Greenback was extraordinarily successful. 

By 1982, the success of BSA investigations led to the launching of the Organized Crime Drug Enforcement Task Force program and Congressional hearings on the financial magnitude of organized criminal activity.  This always amazed me since financial investigations have a long history in the U.S. for being successful against the Mafia (just ask Al Capone).  The result was the passage of the Money Laundering Control Act of 1986 implementing the first national money laundering law in the world.

The investigative concept of Operation Greenback was adopted nationwide with great success.  In the mid-1980’s I met a couple of young fellows, one from the ABA (John Byrne), one from the Federal Reserve (Rick Small) and a freelancer (Phil Gay) at the American Banker’s Association Graduate Compliance School at the University of Oklahoma.  During the next several years, the role of banks in dealing with drug money became an important element in compliance training programs. 

By 1990, banks throughout the U.S. reached an all time high for compliance and the global perspective on money laundering was in full swing with the launching of the Financial Action Task Force (FATF) and the famous 40 recommendations.

Many countries followed the 1986 Money Laundering Control Act and the FATF Recommendations with compliance and AML laws, rules and regulations of their own.  Australia became the first country to form what is now called a Financial Intelligence Unit (AUSTRAC).  Financial Crimes Enforcement Network (FinCEN) came later.

Then the horrific events of September 11, 2001 brought about an entirely new universe of anti-money laundering initiatives. Terrorist financing was the new undefined term everyone had to deal with.  Charities never before on anyone’s radar screen, suddenly became high risk.

We saw the rapid passage of the USA Patriot Act, implementation of new special recommendations by the FATF and nations previously relaxed in their approach to AML regimes, pass proceeds of crime legislation and create active Financial Intelligence Units (FIUs).

Financial institutions sought experienced compliance officers, but they were far and few between.  The compliance function was now a hot-button.

Insurance companies, money services businesses, jewelers and an expanding array of financial and non-financial trades and businesses were pulled into the AML whirlwind.

International fraud schemes, staggering financial levels of official corruption and other organized criminal activities began to fall to money laundering and proceeds of crime statutes around the world.

Banks and non-bank financial institutions were struck with extraordinary fines, penalties and lawsuits.  There appears to be no end in sight.

This brings us up to date and it is time for a refill (iced tea, of course).

Contributed by:
Mike McDonald, CAMS
Michael McDonald & Associates, Inc.
www.mma-moneylaundering.com

ACAMS events around the world

On June 14th, ACAMS held a successful cocktail reception in Australia. Out of the many in attendance ACAMS chose six attendees who were awarded free registration to the ACAMS 6th Annual International Money Laundering Conference & Exhibition.

Congratulations to:

Nigel Binns
Training and Liaison Officer
AUSTRAC
West Chatswood, Australia

Philip Byers
Senior Manager
PricewaterhouseCoopers
Sydney Australia

Dean Crowle
Director
CAMCO
Auckland, New Zealand

Alison Deitz
Partner
Deacons
Sydney, Australia

Tim Roberts
AML Project Coordination Manager
St. George Bank Limited
Sydney, Australia

Gregory W. Smith
Vice President
Capgemini
Sydney, Australia

South Florida Chapter

On June 21, ACAMS held a cocktail reception at its Miami, Florida office. Establishing a South Florida Chapter for local anti-money laundering (AML) professionals was the first item on the agenda. AML professionals from different sectors gathered to participate, support and assist in establishing this local chapter. Read three different perspectives on the events that transpired that evening.

A new chapter for South Florida

There were hors d’oeuvres, drinks, friends and acquaintances. An opportunity to reconnect, to network and to discuss recent events– all enjoyed with a view of burgeoning downtown Miami. However, this was not a strictly social event; this marked the launching of the South Florida chapter of the Association of Certified Anti-Money Laundering Specialists

ACAMS’ executive director Gregory Calpakis and AML pioneer Charles Intriago lead the meeting, discussing the growth of anti-money laundering efforts, the establishment and the phenomenal growth of ACAMS. The attendees then had an opportunity to introduce themselves. There were AML representatives from banks and credit unions, money services businesses, insurance, law offices, consultants, law enforcement agencies and government agencies. The group was comprised of a wide array of experience and perspectives, across all aspects in the anti-money laundering field.

Rick Wichmann, CIPP, Privacy Office
Assurant Solutions / Assurant Specialty PropertyManager
OFAC and Anti-Money Laundering Compliance,
Richard.Wichmann@assurant.com

T-Minus Two and Counting…

South Florida AML professionals will launch the second ACAMS chapter in the United States. A diverse group of industry professionals joined together at ACAMS' headquarters in Miami, Florida on June 21st to begin the official formation of the South Florida ACAMS chapter. Confirming a demand for a local AML forum, this chapter is a milestone for the professionals in attendance.

AML expert and pioneer, Charles Intriago, kicked off the event with humorous stories and insightful knowledge about the growing AML profession and ACAMS. He then opened the floor for introductions and sign-ups for an executive board. The event was well attended by attorneys, consultants, compliance personnel, law enforcement and government officials. Each attendee had a unique AML background, which will prove to be invaluable when the new chapter begins to host educational and networking programs.

With wine and stories flowing at the launch, new acquaintances soon felt like old friends. The new chapter should build a strong local coalition of AML professionals and enlighten members with shared experiences, tips and strategies on regional, national and international AML issues. The future looks bright for the new chapter and its members here in its birthplace of South Florida.

Karen A. Benson, CAMS
Attorney
Jorden Burt LLP
kea@jordenusa.com

Good fortune smiles upon South Florida

On June 21, 2007, I had the good fortune of attending the event held at the ACAMS’ office in Miami, Florida. During my 30 years in federal law enforcement I have had numerous contacts in the financial community and I have always wondered why there wasn’t an organization serving the needs of both law enforcement and the private financial sectors in the anti-money laundering efforts.

At the event I was able to meet Mr. Intriago, and network with ACAMS members and other members of the financial community. I must commend Mr. Intriago for having established ACAMS. The organization is a very important tool in the ever-expanding battle against domestic and international money laundering.

It is that depth of experience and different perspectives that will make a South Florida ACAMS chapter so valuable. The chapter will provide a venue to share findings and learn from one another, and an opportunity to play an even greater role in the South Florida AML community.

The meeting ended with an opportunity to sign up, signifying interest in the executive board positions of the new chapter (and, there appeared to be a good deal of interest). Messieurs Calpakis and Intriago stated that the goal was for the board to be representative of the breadth of industries and issues involved in AML across South Florida.

This is just the beginning…

Pedro Doimeadios
Special Agent
Department of Homeland Security
Pedro.Doimeadios@dhs.gov

Carol Tanjutco, CAMS
CPA-Lawyer
Director, AML Global Compliance Inc.

Anti-money laundering (AML) compliance is a very exciting new career that proves to be the most promising undertaking for lawyers and CPAs seeking transition in their careers. The prospect of climbing to the top of the corporate hierarchy is awaiting those with 5 years or more of related experience. We only need to know where to start. Joining ACAMS, gave me a whole new world of opportunities. The CAMS certification is not just another star to a general’s rank; it is that one transnational credential that traverses all territorial jurisdictions. Amazingly, the possibilities are endless whether you are a career employee, or decide to be a consultant trotting the globe.

I moved to the United States in 2002 and I left a lucrative litigation career in an economy where connections or "chamber practice" was the unwritten secret of success in private practice. Undeniably, thriving in this culture is easy after attending the same law school where the scions of the powerful are honed to become the next political appointees. The good news is that by having this kind of experience in my country, this gave me a deeper appreciation and understanding when confronting similar situations involving Politically Exposed Persons (PEPs).

Developing countries have turned out to be geniuses in IT and telecommunication advancements that are recognized by the International Monetary Fund (IMF). For example, the recent indictment of E-gold accounts only led to the conversion of the E-gold accounts to E-bullion, in euros. The threat to the developed world is very real; hence networking with the experts from these countries is indispensable. This is why I am very grateful to ACAMS for spearheading a Listserv forum where we have access to brainstorming sessions via email. The voluntary sharing of information by AML professionals is unparalleled. I discovered resources from the other side of the globe which I would have never learned unless I had attended international conferences.

When I was appointed as the legal and compliance director of a 32-branch money services business (MSB) in New York, I had face-to-face contact with state and federal law enforcement agents. It basically mirrored my former job in investigative securities litigation, accounting fraud and prosecuting white-collar criminals. Except that this time, involvement in seizing the roots of high-intensity financial crimes meant so much more than just court action. It is like putting familiar faces to victims of human trafficking. To me, analyzing financial transactions and suspicious activities is not hard to understand being both a CPA and a lawyer; however, continuing education and support from ACAMS gives me more teeth and confidence in dealing with new developments.

Moving forward, as an incoming board member of the New York Chapter of ACAMS, I envision polishing my expertise in AML practice. The educational outreach programs available to members will benefit not only newcomers but all of us who will be present during meetings. As I am no stranger to organizing and moderating AML conferences, I am taking another step forward while working with the rest of the board members to propose topics and invite resource speakers who will best serve our interests, in the furtherance of our careers.

Carol Tanjutco, CAMS
CPA-Lawyer
Director, AML Global Compliance Inc.

Jennifer R. Rines
Bank Secrecy Act Officer

For me, joining ACAMS has opened up the entire industry. From the Annual ACAMS Conference, to the ACAMS Online Discussion Group (Listserv), I have found a wealth of top-quality information including strategies and feedback from professionals at every level of operation. This has not only increased and improved my own individual knowledge, but it has also greatly benefited my anti-money laundering (AML) team and AML program for my institution.

My first introduction to the ACAMS community was through its well-known CAMS certification.  From there I went to the ACAMS Annual Conference; from my perspective, these annual meetings are ‘the’ industry standard, and are a ‘must’ for every industry professional. I have found that the exposure to some of the most influential minds and entities of our profession has provided insight that is hard to put a price on.

Beyond the Panel discussions, which feature many of the industry’s current and upcoming topics, I would have to say that one of my favorite forums at these conferences is the “Round Table” discussion groups. Collecting professionals from uniquely different areas of the industry with different levels of experience creates a give and take atmosphere in a casual setting that brings out a broad spectrum of interests and everyday experiences. The value of this kind of environment cannot be overstated. Having a conversation with multi-million dollar-institution professional with a small bank operator brings clarity to the vast number of scenarios and unique problem solving situations we all face everyday.

Another wonderful advantage about the ACAMS community is having access to the collective knowledge base through the web-based Listserv. Time and again, I have been able to glean valuable information and insight from the community at large. This “virtual roundtable” serves many valuable functions that I have come to rely on everyday.

I can test strategies by using the Listserv forum as a sounding board before committing to critical implementation of policy. The feedback is always instrumental in gaining both a broader and specific perspective of my proposals. Also, finding answers to tough and elusive questions becomes so much easier when I can float a “blanket” and general questions to the Listserv and get thought provoking responses that help me better refine my own analysis and understanding.

Personally, some of the most rewarding experiences on the Listserv forum have occurred when I can both challenge the community and also contribute to the industry by sharing my own scenarios and questions. The Listserv can lend personal validation while also improving my own problem solving skills. It has become a part of how I do my job.

So I can say from experience that ACAMS has served me well. Since joining, I have felt like I am part of the industry in a very professional and personal context. ACAMS both serves as a portal to the industry’s collective knowledge and also puts tools at my disposal which make my job easier, more efficient and personally rewarding. Only through ACAMS could I achieve this type of synergy with other industry professionals.

Jennifer R. Rines
Bank Secrecy Act Officer
Sanibel Captiva Community Bank
And Community Bank of Cape Coral

K.D. Mehra, CAMS
Director of Compliance Services

In late 2001, I started working as head of the BSA/AML compliance department for US operations of an international bank, which was at that time slapped with a hefty fine and placed under a consent order. This inspired me to start setting things right within the organization - beginning with policies, procedures, identification and implementation of AML software. In addition to training all staff, performing spot checks and testing to ensure compliance with the newly formulated and implemented policy and procedures of the bank. However, every time I spoke with a new examiner, a regulator or a third party, I had to tell them about my background and experience in an effort to make them comfortable about my AML knowledge and expertise. In 2004, I took the Certified Anti-Money Laundering Specialist (CAMS) examination. Once I received my CAMS credential, it made it easier for me to establish myself as a knowledgeable AML professional. More than two years after getting the CAMS credential, I can say this is quickly becoming the industry standard as a required professional qualification for a BSA Officer. The CAMS credential definitely helped me in getting my present job.

For many years now, in order to stay current with upcoming matters in the AML field, I have been attending BSA/AML seminars and conferences including three-day events. I had just received my CAMS credential when I attended an annual AML conference – moneylaundering.com and Money Laundering Alert 12th International Conference and Exhibition - in Hollywood, Florida for the first time in March 2005. Trust me it was an experience in itself. That was the best conference attended by me thus far. That conference provided a plethora of information, views from regulators and experts, practical advice, answers to complex AML issues all in one place.  This conference was of the highest quality, and provided tremendous networking opportunities.

This year’s conference started with a real life sting operation regarding the ease of setting up ‘paper’ corporations. This brought into focus the risks facing the banks who at times struggle to identify the purpose, activity, beneficial owners and controlling officials of the corporations in order to ensure a meaningful monitoring of these accounts. The details of the ‘paper corporation’ became the backdrop for discussion for the first panel.

The conference, as expected, helped me clearly understand the hot topics and issues facing different financial institutions - banks, insurance companies, broker dealers, Money Service Businesses, etc. The conference provided an excellent opportunity for getting to know first hand (in conference and during networking) the different industries’ perspectives and also those of the related regulators. This is critical for me in my current role, where I am a key player in the compliance and internal auditing services of my firm and work with my team in enhancing the audit programs and in providing training relevant to all these industries.

One of the most interesting things for me at the conference was the opportunity to discuss and to better understand the challenges facing the insurance industry in its efforts at implementing a robust AML program.  Insurance industries were mandated to have AML programs in May 2006. With many banks taking years to come up with an effective AML program; it is not surprising that many insurance companies are struggling in this matter.

The insight gained by me during the conference has greatly helped me in effectively assisting my insurance clients in addressing these challenges efficiently.

The increase in the number of attendees with the CAMS credential at the conference, and my interactions with them, confirm that CAMS is a must for everyone in the AML field. The conference is nothing short of a “must attend” for any AML professional, regulator, consultant, auditor or senior official from financial institutions. To anyone who is interested in enhancing their AML skills, finding out the best practices, learning from the experience of others, getting clarifications about their doubts, questions, listening to industry experts and regulators this is the event - the best AML conference.

K.D. Mehra, CAMS
Director of Compliance Services
Accume Partners
80 Broad Street
34th Floor
New York, NY 10004