AML Expert Says Banks Play Key Role in Catching Terrorist Financing

May 3, 2011

http://www.bankinfosecurity.com/podcasts.php?podcastID=1123

Kevin Sullivan spent months at Ground Zero after the 9/11 attacks on the World Trade Center. Now, post-Bin Laden, Sullivan says the 9/11 experience changed him both personally and professionally, and impacted how banking institutions view money laundering and BSA violations.

The death of Osama bin Laden led certain global markets, including the U.S., to quickly realize economic improvements. But political unrest in parts of the world where terrorism and sympathy for al-Qaeda are strong is likely to fuel long-term financial implications, the least of which relates to terrorists' efforts to launder money through legitimate banking channels.

Experts say banks should be vigilant in coming days and weeks as they review suspicious transactions for signs of money-laundering and violations to the Bank Secrecy Act .

Sullivan, an anti-money-laundering expert and former New York State police investigator, says banks and credit unions should be mindful to keep their Office of Foreign Assets Control programs and screenings up-to-date, especially as they relate to funds and transactions stemming from parts of Northern Africa, where al-Qaeda has support. Bin Laden's death, Sullivan says, has likely created an unexpected void to which terrorist groups will react. "I believe the potential leadership vacuum might cause some confusion and/or even a power struggle," he says. "However, due to the West's crackdown on terrorist financing, much of the funding of al-Qaeda has already been transferred to individual cells that are self-funded. It is unknown what consequences will develop, as the landscape is changing quickly," with social revolutions and political unrest.

"It will be interesting to see how things progress," Sullivan says.

Sullivan points to five patterns for which banks and credit unions should be on the lookout.

Increased activity in banking areas considered to be high-risk for terrorist activity.

Wire transfers to locations inconsistent with business activity.

High-value overseas transfers that originate in cash or are withdrawn in cash.

Transfers to or from unlicensed, unregistered or unincorporated business entities.

Sullivan also suggests banks keep their eyes on unusual or high-volume activity conducted via emerging channels, such as mobile. "This is the bottom line: Innovation equals opportunity," he says. "That is true of both the good guys and the bad guys. Money laundering is a moving target, and the bad guys will constantly be looking for new means and methods. New methods are always helpful to the bad guys, especially if the new method has no AML policies and procedures in place, there is no sharing of information with authorities, and the management is in denial that anything bad could ever happen to their system."

But Sullivan is quick to point out that the financial world is much wiser today than it was nearly a decade ago, when bin Laden launched the 9/11 attacks against the World Trade Center. In fact, Sullivan, who was serving on the New York State Police force when the WTC towers were hit, says banks today view the roles they play in curtailing terrorist funding much differently.

"I don't like to talk about it too much, as I consider myself very lucky to have avoided injury, with reference to the events of 9/11," he says. "But I will say that I will never forget the memory of being at Ground Zero every day for months and seeing the destruction and smelling the hideous odor that permeated in the air. Once I got back to doing the money-laundering thing, it was apparent that the rules of engagement had changed. There was more cooperation with the financial institutions and AML programs were now seriously and prominently on the map."

In this exclusive interview with Sullivan, just two days after news of bin Laden's death, Sullivan discusses:

How the events of 9/11 impacted SARs and BSA compliance;

Why banking institutions should be on guard for money-laundering and other suspicious activity over the course of the coming days and weeks;

Steps all banking institutions should take to ensure their AML efforts catch and track attempts to launder terrorist funding.

Sullivan is a former Investigator with the New York State Police and was the state investigations coordinator assigned to the NY HIFCA El Dorado Task Force in Manhattan. He has more than 20 years of police experience and holds a master's degree in economic crime management. He is a certified anti-money laundering specialist and anti-money laundering professional. He is also the director of AMLtrainer.com, am AML policy and training academy.