U.S. prosecutor asks anti-money laundering pros for help, offers some in return

Reuters/Manhattan district attorney prosecutor Vance

Employees at financial institutions can protect their firms better by including the details of why they think a transaction is fishy when preparing suspicious activity reports, Manhattan District Attorney Cyrus R. Vance Jr. told compliance professionals on Monday.

The reports, or SARs, can also help fight a wide range of crimes – not just narcotics or terrorism-related – if employees add key details, Vance said at the Association of Certified Anti–Money-laundering Specialists’ inaugural anti-money laundering, ( AML) risk management conference. 

“My first request is that you train your workforce not just to be vigilant in spotting and reporting suspicious transactions, but to be thorough, even verbose, in reporting all of the information that made them suspicious,” Vance told the ACAMS event attendees.

The Manhattan DA’s office can help financial services employees be more effective in meeting their firm’s legal and regulatory obligations, Vance added.

“There are a host of very practical suggestions that my staff can help you with, from routinely recording what business the customer purports to be in, to recording account numbers without dashes or other punctuation that might frustrate an automated search. The key is to see a SAR not just as a way to fulfill a reporting duty,but as a powerful tool that can launch an investigation and prevent a fraud or other serious crime before it can be committed,” Vance said.

Vance urged AML professionals with concerns about questionable activity to call his staff’s hotline – 212-335-FINT (3468) –even if the information may not trigger the requirement to file a SAR.
In asking the attendees for their help, particularly to ensure that employees put more time and attention into preparing SARs, Vance suggested that senior management may not fully appreciate the value of AML professionals because it’s easy to take their success – less fraud and laundering – for granted.

“Compliance is like housework. No one notices it unless it is not being done,” Vance said.
The DA’s office, which has long been a global leader in fighting illicit transactions, is working hard to maintain its edge by, for example, cross-training investigators on analyzing SARs as well as criminal reports on financial crime, Vance said.

The office is also taking “an integrated approach to financial crime investigations”by working with the Internal Revenue Service, the Federal Bureau of Investigation and the Secret Service, in addition to federal prosecutors and federal and state regulatory agencies, Vance added.

Firms can adapt techniques the New York Police Department used to dramatically cut the city’s crime rate to manage their AML risks, Vance added: “Prevention and cooperation are better and more cost-effective than [after-the-fact]enforcement.”

These techniques include imposing accountability at every stage of the AML process, offering incentives against and alternatives to low-level violators, analyzing patterns, capturing and sharing information, and putting an AML professional’s perspective into practice, Vance said.

The DA’s office and its law-enforcement partners also use these techniques to investigate illicit transactions, Vance noted. He said foreign banks have forfeited some $3 billion to resolve probes into the “stripping” of transfer instructions from the banks’ business records and documents.

Some observers said one of the cases, against Standard Chartered, seemed to contradict the value Vance said law enforcement officials put on inter-agency cooperation. Without saying whether the decision by the New York Department of Financial Services to go forward before its partners was an anomaly or a trend,Vance said cooperation generally makes sense because it can maximize the power and authority of the law enforcement agencies’ work. Standard Chartered paid $340 million to settle with the New York agency – and $327 million more to settle with other regulators after several months of industry criticisms that the state acted unilaterally and hastily.

Vance suggested that firms be open about their compliance procedures and systems if they are being investigated. “Transparency is crucial to assess the ability of banks to put their controls in place.”

In the end, despite the sanctions that will be imposed on transgressors, “prosecuting banks will protect banks, because they do not want to be used to funnel illicit payments,” Vance said.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus (http://accelus.thomsonreuters.com/) . Compliance Complete (http://accelus.thomsonreuters.com/solutions/regulatory-intelligence/compliance-complete/) provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter at: http://twitter.com/GRC_Accelus )