This Week in AML

Live from ACAMS Las Vegas

This week Elliot and John come to you from the ACAMS Assembly in Las Vegas. They discuss some of the highlights from sessions at the conference and talk about why the work of the financial crime compliance community is so important.


Live from ACAMS Las Vegas - TRANSCRIPT

John Byrne: Elliot, we're in the same location for one of the few times this year. We're at the ACAMS, what they call the Assembly, 2023 in Las Vegas, giving you this quick snapshot for This Week in AML of some of the topics either we've heard discussed today or that are going on this week.

I'll start. I just finished what will probably be my last panel moderation at ACAMS on ransomware. And the panelists a diverse group of folks from the private and public sector. Really good information, but a couple of both takeaways and key issues that I took from that session. One is that the FBI talks extensively about how they work closely with victims, because many times, victims are reluctant to contact law enforcement when they have a ransomware attack. But law enforcement has said, and the FBI said specifically, that we will work closely with the victims. It's not something we're going to be doing in the media. We'll be quiet about it. We'll provide encryption services and other technologies that we've produced to help you deal with how to respond to the ransomware attack.

The FBI representative Brian Smith, said our view is, and the view of the US government in general is we don't want to see victims pay the ransom. Obviously we'll work with you if this occurs. We understand situations differ depending on the scope, the volume and the severity.

But I thought that was interesting. And then we had a panelist from the banking industry. Didn't take a different tack, but basically said, you have to be empathetic to your customer, basically stand in their shoes, their loss or potential loss of money and services and resources is probably the worst day of their professional lives, dealing with it, so to figure that out.

But he also said it's critical to contact law enforcement immediately. So those were a couple of takeaways. Oh, I guess the last thing I mentioned about ransomware is the FBI reps also said the SARs that get filed... Not that great. They could be a little more comprehensive. And it's probably because of the nascent stage of filing ransomware as far as to begin with.

Because I don't think it's been all that common. So that's probably part of it. But, interesting group of professionals that talked about that. And certainly I picked up a couple things. The Treasury representative harkened back to the FinCEN. There was two guidance documents issued on ransomware. And some of the work done by FATF on it. A lot out there and basically one of the key topics in the cyber part of AML that we heard this week.

Elliot Berman: As I think about what you said about the SARs one thing to consider when you're working on a SAR in a ransomware case is to be sure you have your cybersecurity folks involved in helping you gather all the information because there's a lot of things that they may be seeing that are of a technical nature that'll help law enforcement backtrack things to the extent they can. I would say that would be worthwhile.

Yesterday the regulatory roundtable was interesting. And one of the things that was highlighted by all of the regulators was the concept of banking as a service. If you've been in the industry for a while, you might also know it by a somewhat more pejorative name, Rent A Charter. This is where banks that have a charter enter into an agreement with a company that has a service they want to provide that really requires a bank to be behind it.

Whether that's a peer to peer payment network or many other things. And the regulators, are very concerned that the banking institutions who are involved in this really understand what's going on and have all the right controls in place. So they talked about the importance of quality legal contracts that really take care of all of the issues around it, making sure that the obligations are clearly allocated between the parties and that the carrying out those responsibilities, particularly the compliance responsibilities is tested on a regular basis. They also talked about the importance of the banking institution, having an adequate IT infrastructure to handle both transaction volume, but all the other activities that are going on.

And to the extent that the contract allocates compliance obligations to the third party client of the bank, understanding that may be what the contract says, but the regulators will always look at the bank as having the ultimate obligation to be sure that they're in compliance. They need to have mechanisms to be sure that their counterparty can actually carry out the obligations they take on.

The other concern they had was, they see many contracts where it's not clear who owns the customer. And so that's an important thing. And this is a revenue stream opportunity for many banks. There are many FinTechs out there who have great ideas for new products, and are looking for partners, because they need the banking system and the payment system to be able to carry those out.

So I thought that was interesting and something that we all should be paying attention to. I think another thing that you have to be thinking about if you're on the vendor side, rather than on the bank side, is understanding what your bank partner is going to need from you so that they can comfortably satisfy their internal audit and examination obligations. I think that's an important one to pay attention to.

We also heard from Assistant Treasury Secretary Elizabeth Rosenberg. I'll mention one thing. In talking about the various efforts that are going on at Treasury and the financial crime compliance cased gatekeepers came up as a matter of focus. Real Estate and investment advisors.

We heard from Director Gacki from FinCEN today. And she also spent time talking about gatekeepers, focusing particularly on real estate and asset managers. I think we're, that, that was a clear indication, hearing from two senior Treasury officials in this space, that that is a focus point. John, you and I have talked about that for many years, that those are soft spots, they were soft spots identified in the 2016 FATF review of the U. S. program and they continue to do that. And I can see you, because we're actually sitting next to each other, I can see you looking at another that you want to talk about.

John Byrne: Don't tell them how the sausage is made. Don't do that.

The Treasury Department has just announced that OFAC has designated 28 individuals and entities involved with the international proliferation of illicit drugs, including a China based network responsible for manufacturing fentanyl and a bunch of other drugs.

And those designated today have been involved in global trafficking of other drugs that are highly potent and often mixed with fentanyl. And Deputy Secretary Ademo said that they're taking this sweeping action today with law enforcement to disrupt this network. And obviously this is a consistent message that we've seen throughout the year, sadly, about these trafficking networks that do deal in fentanyl and other illicit drugs. I'd also point out that, besides OFAC, IRS CI was involved in this as well. So that, that just came out as we were preparing to have this conversation , it's on the Treasury website.

Elliot Berman: Another thing that happened here, which I know I alluded to a couple weeks ago, is that John received a Lifetime Achievement Award. from ACAMS, as well as Rick Small our friend and colleague who's at Truist and Dan Soto, our friend and colleague who's at Ally. And the three of them were recognized for the fact that they have been working in the industry for the good of the industry and the community for many years.

And much of what we all do in the industry today really goes back to ideas that they had and championed throughout the year. John congratulations, well deserved. We tried to get the president to recognize the day, but couldn't reach him.

John Byrne: Couldn't get a street named after me, huh?

Elliot Berman: Yeah. I could not get a street name worked on it, but unsuccessful.

John Byrne: I appreciate the honors I said this morning, and the key is, you and I share this, our community is not only connected, but we're passionate about what we do. It saves lives in some instances, but what we do matters, improves societies, and that's the public and private aspect of this.

And I also think the key here is we in the private sector need to be more and more vocal about our support for our law enforcement partners. Some of that was said from the stage in the past couple of days by others, we dealt with this insanity about potential. Shutdown, so we lost some government speakers.

That's not the big deal part of it. The big deal part of it is questions about defunding the FBI or attacking IRS CI agents. Those sorts of things just have to stop. And I think we have an obligation as AML professionals to stand up for our partners. That's another thing that keeps me moving in this space. I, I really enjoy being part of it as you do as well. And that's the key, is what we do matters. And we're all in this together.

Elliot Berman: Agreed. We have a a really good webinar coming up later this month on the 26th, I think it is that you're moderating a panel about sanctions, where we're going to take a look at it beyond the technical side, but the due diligence side, which is an important component.

John Byrne: And two, two real good presenters. So I'm real excited about that. And then it's already out. I think I mentioned it last week, but if I haven't, I'm going to say it again did a podcast with two folks from the Foley Foundation. There's a recent report, the fifth annual report on bringing Americans home. About the challenges with hostages traveling abroad, how it affects journalists and others. So I was able to speak to a couple of folks from the Foley Foundation about their work, which is fabulous.

There is a virtual 5K race they use as a fundraiser every October, and it'll be this year, it'll be October 14th, a Saturday, you can register you can donate online. And if you don't know the story, Jim Foley was a Marquette graduate photojournalist who was assassinated by ISIS in 2014, and his mother created this foundation. It's now filled with luminaries from around the globe, frankly, And they do excellent work, and whenever there's a hostage related situation, they are in there advocating with the White House, with the State Department, and all the other relevant folks.

It's not directly related to financial crime, but it's certainly related to national security, so if you get a chance, we'd ask you to take a listen to that as well.

Elliot Berman: Yes, and we'll have many more podcasts. We've identified some really interesting topics while we've been here at the conference, and some great folks we want to interview. So you'll be watching for that. And of course we'll be back next week

John Byrne: With another edition of This Week in AML.

Elliot Berman: That's right. All right, John.

John Byrne: All right. Take care.

Elliot Berman: You too. Bye bye.