AML & Fraud Information Sharing Sean OMalley Money Laundering - - PowerPoint PPT Presentation

AML & Fraud Information Sharing

Sean O’Malley

Money Laundering and Information Sharing

• Magnitude of Money Laundering
• Suspicious Activity Report (SAR) filings
• Information Sharing Mechanisms
• Challenges and Possible Solutions

The global magnitude of Money Laundering

How much Money Laundering occurs each year, as a percentage of Global GDP

• Less than 2%
• Between 2% and 5%
• Between 5% and 10%
• Between 10% and 20%

The global magnitude of Money Laundering

According to the United Nations published research, the correct answer is:

• Between 2% and 5%

Bonus Question: How large is Global GDP?

The global magnitude of Money Laundering

In 2017 Global GDP was estimated at a value of just over US$80 trillion. That means that the US$ value of Money Laundering is estimated between $1.6 trillion and $4.0 trillion dollar per year

Identifying Suspicious Activity

Suspicious Activity is typically identified in one of two ways:

• Transaction Monitoring conducted in the Second Line of

Defense

• Scenario- based Transaction Monitoring
• Unusual Activity Report completed by the First Line of

Defense and researched by the Second Line of Defense

Reporting Suspicious Activity

When do Suspicious Activity Reports (SARs) get filed and what happens after they’re filed? SARs are filed in the following circumstances:

• Suspect is identified and amount is over $5k
• Amount is over $25k (regardless of potential suspect)
• Cash Transaction Report (CTR) is filed
• Insider Abuse

Suspicious Activity Reports are shared with the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department

Information Sharing - Suspicious Activity

FinCEN shares information with financial institutions through the 314(a) provision of the USA PATRIOT Act of 2001

• 37,000 contacts at 16,000 financial institutions

Financial Institutions have the ability to share information with each other through the 314(b) provision of the USA PATRIOT Act of 2001 Financial Services Information Sharing and Analysis Center (FS-ISAC) formed in 1999 is the global financial industry’s resource for cyber and physical threat intelligence analysis and sharing (nearly 7,000 members)

Limitations to Global Information Sharing

Data Privacy Laws in several jurisdictions present roadblocks to information sharing about Money Laundering

• General Data Protection Regulation (GDPR)
• Over 100 countries globally have some sort of data

protection legislation or regulation in place

Challenges to Identifying Money Launderers

Examples of Money Laundering

• Identity Theft
• Funnel Accounts
• Structured Cash Deposits to avoid Cash Transaction

Reporting (CTR)

Possible Solutions to Increase Information Sharing in the pursuit of Money Launderers

Secure information sharing mechanisms

• Fraud – External and Internal Fraud information shared via

the Operational Risk Data Exchange (ORX) and the American Banking Association (ABA)

• Possible industry information sharing consortium for money

laundering

• Fin Tech based solutions

Possible Solutions to Increase Information Sharing in the pursuit of Money Launderers

Secure information sharing mechanisms

• Fraud – External and Internal Fraud information shared via

the Operational Risk Data Exchange (ORX) and the American Banking Association (ABA)

• Possible industry information sharing consortium for money

laundering

• Fin Tech Solutions

QUESTIONS