On October 3, 2019, the ACAMS New York Chapter hosted a panel discussion sponsored by Case Western Reserve University Law School’s Financial Integrity Institute on New AML Typologies.
The panel included (from left to right), David B. Chenkin (Managing Partner of Zeichner Ellman & Krause LLP), Dennis M. Lormel (Founder & President of DML Associates, LLC), Pawneet Abramowski (Founder & Principal of PARC Solutions, LLC), and moderator John MacKessy (Director & Global Head of AML at Blackrock, Inc.).
The panel began with a discussion about what exactly a typology is, how they are created, and what they attempt to accomplish. The panelists provided different viewpoints, but generally agreed that a typology is a cluster of real-world behaviors indicative of a certain activity (in the AML world, illicit activities) that is represented by some measurable indicators. From an AML point of view, these indicators are typically sourced from the nexus to financial markets and consist of the types of transactions occurring and where they are going to/coming from. The panel stressed the importance of taking a scientific approach to creating typologies and leveraging a 360 view through collaboration with SMEs from within institutions as well the intelligence/law enforcement communities.
The panelists then went on to discuss some of the key sources of information that should be considered when constructing a new typology. Sources discussed included charging documents from court cases, such as affidavits and indictments; congressional investigations; negative news media; non-governmental bodies such as FATF or Wolfsberg; reports/summaries on real life cases, e.g. banks that have received regulatory findings, confessions from former criminals or victims.
From there the discussion turned toward how institutions can utilize this information, as well as the tools and data sources within their own organizations to craft specific and actionable typologies. The panelists urged comparing the public and internal information on actual criminal activity to an institutions’ own compliance program to determine where controls failed. This point was taken further by highlighting the example of utilizing data on previously filed SARs to asses why and how the activity was suspicious and how it can be better identified going forward. The importance of public/private partnerships was also stressed as a key factor for developing new typologies to ensure there is adequate coverage of new and emerging trends.
The panelists concluded with examples of new and existing typologies that are seeing a resurgence. Those highlighted relate to correspondent banking, TBML (Letters of Credit), business email compromise, cryptocurrencies, microfinancing and gatekeepers. The panel also noted that some of the biggest problems from 10-20 years ago are still issues we face today, though the underlying activity may have shifted over time. The Superbowl was discussed as an example of an event that has always generated ancillary criminal activity and drives drastically increased cases of human trafficking and child exploitation. However, the typologies being used to identify these activities have evolved over time, e.g. law enforcement and banks are now looking at the use of Uber and Lyft to move trafficking victims around the event, multiple hotel bookings across the immediate vicinity and event the use of cryptocurrencies.
The event concluded with a brief presentation by Shawn Polonet (pictured above) from the El Dorado Task Force who discussed some of the partnership and collaboration that occurs across law enforcement units to gather and pool intel and resources to work cases. Shawn also highlighted the training and outreach that is occurring through the Cornerstone program and the partnership that has fostered between the public and private sector.