By Lester Joseph, Head, Global Financial Crimes Intelligence Group, Wells Fargo & Company
What for you are the benefits of attending a conference like the ‘Fraud & Financial Crime USA Congress’ and what can attendees expect to learn from your session?
The benefits of attending a conference are having the opportunity to listen to and speak with other people who are working in this area and learning from their experience. Those of us working in the financial industry are all facing the same problems, and it is helpful to see how others are addressing these problems. It is important that we work together to address issues like fraud and cybersecurity. In my sessions, I hope that we will be able to provide some insight into how to better share information and intelligence across financial institutions so that we may address these challenges more effectively.
How can risk professionals leverage global intelligence concepts to share information across the industry for mitigation of financial crime?
While it would be beneficial for risk professionals to share intelligence information on a regular basis, we are generally too busy with our own jobs and institutions to share information on a regular basis. That is why conferences like this one are so important. It gives us an opportunity to get away from our jobs for a few days so that we can share information with other people in our positions in an informal environment. We can really reflect on the risks we are facing rather than on the day-to-day tasks that we are constantly dealing with.
There are other opportunities as well. To their credit, government and law enforcement agencies are also providing forums for representatives from the financial community to exchange information about risks and trends. They recognize the importance of public-private partnership in mitigating these threats.
And, of course, we can also share information via mechanisms such as Section 314(b) of the USA PATRIOT ACT, but this provision is generally used on a tactical case-specific basis rather than for the sharing of trend information.
What is the key concern in regards to sharing information across institutions?
I think the key concern in regards to sharing information across institutions is the concern about the privacy of our customers. It is important that we respect and protect the privacy of our customers, and abide by the regulations that address this privacy. Banks tend to err on the side of caution with respect to sharing information about transactions and customers – even when the information to be shared may not infringe on customer privacy.
What are the challenges of criminals exploiting inability for banks to share information?
Sophisticated criminals are very knowledgeable about the policies, practices and procedures of financial institutions with respect to handling transactions and sharing information. They understand how banks work with respect to investigating cases, filing SARs and sharing information. That is why, for example, in money mule cases, they set up numerous accounts and move money from one institution to another very quickly. They understand that banks will identify the suspicious transactions and close the accounts, but by that time, the money will usually be long gone. Banks have to follow their procedures and regulations when they investigate cases, report suspicious transactions and share information. Criminals do not have to follow regulations and are able to move very quickly. This makes the job of the banks and law enforcement very challenging.
What do you see for the future of sharing information across companies in a permissible way?
I think both the financial industry and the government recognize the importance of working together and collectively to meet the challenges posed by money launderers. The government has been encouraging the use of information sharing provisions such as 314(b) and looking at reasons why it is not being used money. FinCEN has been very proactive in bringing financial institutions together to discuss common typologies and emerging threats. Other governments are also exploring new ways to promote information sharing among financial institutions. For example, in the UK, they have set up the Joint Money Laundering Intelligence Task Force. JMLIT is a partnership between law enforcement and the financial sector to exchange and analyze information relating to money laundering and wider economic threats. So, I think we will continue to make progress in the area of information sharing.
