Money-Laundering Update: Kevin Sullivan on Emerging Threats

Credit EligibleAs a BankInfoSecurity.com annual member, this content can be used toward your membership credits and transcript tracking. Click For More Info

Beware suspicious money entering the U.S. via politically exposed persons (PEPs). And be mindful of non-banking entities that are involved in illegal activities outside of current anti-money laundering (AML) regulations.

This is the advice from AML expert Kevin Sullivan, who offers insights on the newest money-laundering trends, including:

Sullivan is a former Investigator with the NY 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. Sullivan possesses a Masters in Economic Crime Management and is both a certified anti-money laundering specialist and certified anti-money laundering professional. He is also the director of AMLtrainer.com.

TOM FIELD: What are the latest money laundering trends and threats? Hi, this is Tom Field, Editorial Director with Information Security Media Group. I am talking today with our resident anti-money laundering expert, Kevin Sullivan.

Kevin, it is a pleasure to catch up with you again.

KEVIN SULLIVAN: Thank you, Tom. It is a pleasure to be here.

FIELD: It has been a while since we spoke. We spoke some last year about some of the trends that you were seeing, and you produced some webinars for us. What are you seeing now in early 2010 as the top money laundering trends?

Click to Get Updates on the Latest Information Security News

Company* Title* Email* Subscription Type: HTML Text Healthcare Enews General Healthcare Enews Blogs Enews Careers Enews Training Enews Webinars Enews Podcasts Enews White Papers Enews Government Enews General Government Enews Blogs Enews Careers Enews Training Enews Webinars Enews Podcasts Enews White Papers Enews Banking Enews General Banking Enews Blogs Enews Careers Enews Training Enews Webinars Enews Podcasts Enews White Papers Enews Credit Union Enews General Credit Union Enews Blogs Enews Careers Enews Training Enews Webinars Enews Podcasts Enews White Papers Enews Need Help?

SULLIVAN: Well, I think the latest area of concern is not necessarily anything that is new mechanically, however, there has been new light shed on a very old subject down in Washington, D.C. lately. "Politically Exposed Persons" (also known as PEPs) and their inner circles of power have managed to bring massive amounts of suspect money into the United States. There recently has been a Senate Subcommittee on investigations, led by Senator Carl Levin, that is currently finishing up with his investigation, and he will be releasing a report detailing the abuse of the U.S. financial system by the PEPs, or we could also call them corrupt foreign officials.

FIELD: So, what is it that our audience really ought to know about this, Kevin? Our audience has expanded, we talk to financial institutions, government agencies and healthcare organizations as well.

SULLIVAN: Well, I think they should be aware of the risks that they are at. Right now there are some glaring gaps in the Patriot Act that may be circumventing the effectiveness of the Bank Secrecy Act. We have lawyers, lobbyists, real estate and escrow agents that have assisted in disguising the existence of hundreds of millions of dollars that have been brought into the U.S. by these various PEPs, and they are usually from corrupt regimes. However, it should be noted that those professions are under no obligation to establish or maintain any type of AML program. However, these U.S. entities did nothing illegal per se, but they are at the forefront of an absolute black hole in our AML policies. And while the Senate investigation didn't just completely focus on those professions (such as the lawyers and lobbyists), they did note that they have no AML obligation, which probably needs to change. And there were some major financial institutions -- I don't feel the need to name them right now, but they are certainly in newspaper right now and you could find out if you want -- but these major institutions failed to identify PEPs, and/or they failed to clear up the fog that surrounds some quite dubious transactions that these PEPs completed.

FIELD: Well, it sounds like what you have always told me: As soon an organization builds a ten-foot wall the bad guys build an eleven-foot ladder.

SULLIVAN: That is what they do. That is their job. The bad guys' job is to figure out ways to circumvent what defense shields you have managed to establish.

FIELD: So Kevin, we have worried for years about financial institutions and their money laundering risk and the protections that they have in place to watch over customers. What types of organizations do you see most at risk now from what the bad guys are doing?