Unifying the Fraud Fight

New Association Targets Fundamentals of Financial Crime
Unifying the Fraud Fight

In late 2011, Charles Intriago founded the Association of Certified Financial Crime Specialists, a group dedicated to addressing and attacking financial crime.

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Intriago, a former federal prosecutor of financial crimes and founder of the Association of Certified Anti-Money Laundering Specialists, says his newest association is focused on tackling financial crime from a very basic perspective.

"Every single financial crime has certain common elements," Intriago says. "They all involve a financial institution. They all involve money-laundering. They all could result in tax evasion. ... We say it's time to break down the silos and to break down the splintered approach and combine efforts; converge them. And that's what ACFCS is all about."

It's rare to find fraud that involves just one type of financial crime, Intriago says. Most schemes, however, are inappropriately siloed, because the channels and detection mechanisms financial institutions, banking regulators and others rely on to identify crime are siloed themselves.

"In every one of these incidents, you'll have examples and instances of multiple financial crimes performed under one little umbrella," Intriago says. "So, ACFCS is designed to attack that broadly, uniformly and away from the siloed approach."

During this interview, Intriago discusses :

  • What ACFCS is and how it's working to train and certify a new kind of financial-fraud-fighting specialist;
  • Why financial crimes, whether intentionally committed by banking executives or simply missed by existing fraud-detection systems, require a more unified approach for detection; and
  • How the financial-services industry and governmental regulators need to combine their fraud-fighting efforts.

In December 2011, Intriago formed the ACFCS, a member organization for private and public-sector professionals in various disciplines whose responsibilities include detecting, prosecuting and combating financial crime throughout the world. In addition to the ACFCS, Intriago is the founder of the Association of Certified e-Discovery Specialists, the Money Laundering Alert and the Association of Certified Anti-Money Laundering Specialists in 2001, the world's leading credentialing body for money laundering control professionals. CAMS certification is held by more than 10,000 public and private sector professionals in 140 countries.

Intriago served for five years as chief counsel to the Legal and Monetary Affairs Subcommittee of the U.S. House Government Operations Committee, which oversaw the Department of Justice, the Treasury Department, the Securities and Exchange Commission, the Federal Reserve, the Federal Bureau of Investigation and the Internal Revenue Service. He also served as Assistant U.S. Attorney in Miami. As Special Counsel on Organized Crime of Florida, he also wrote the Florida Statewide Grand Jury law.

SCB Order

TRACY KITTEN: The order filed by the New York Department of Financial Services against Standard Chartered Bank is unique. In fact, it's one of the first times that a state regulator has taken steps to cite a federally regulated institution for violations linked to the Bank Secrecy Act. What can you tell us about the violations mentioned in the order and the settlement the bank reached with the state last week?

CHARLES INTRIAGO: It was a comprehensive order that was issued by the Department of Financial Services of the State of New York under Benjamin Lawsky, a formal federal prosecutor, and 46 pages of detailed information including some pretty salty e-mails that were exchanged by executives at Standard Chartered, and the violations that were listed in the order are a number of state violations about bookkeeping and record keeping, and they included one federal violation that in several respects may make state requirements. It imposed a $340 million penalty on the institution and it's a somewhat unique action by the state regulators.

Opinion on Settlement

KITTEN: Do you think that settlement amount was justified and fair?

INTRIAGO: Absolutely it was fair. Keep in mind that the people of the State of New York, of all states, have every right to have their laws and their regulations enforced, particularly in that state as we approach the eleventh anniversary of 9/11. They have every right to have their laws and regulations enforced as vigorously as possible by their own state regulators and their own authorities, especially where the transactions are believed to be of a nature that fosters and promotes possible terrorist activities by rogue nations such as Iran. The $340 million penalty in the overall scheme of things for this bank, Standard Chartered, is peanuts. Last year, this bank reported in 2011 a profit of $6.78 billion, with a "b." The previous year was a little less. In 2010, they reported a profit of $6.12 billions. So in either year, the $340 million dollars that the New York Department of Financial Services imposed on this bank is less than five percent of one year's profit.

By the way, if you want to look at it from another standpoint, they were accused and they admitted to conducting 60,000 illegal transactions for a total of $250 billion over a decade. They lied to regulators. In fact, in one year about how many transactions they had conducted. That means that the average transaction was about $4.1 million each. If you were to assess a three-percent figure to the profit that the bank made on each of those transactions - and we don't know what that is because that hasn't been disclosed - they made a profit of about $7.5 billion on these 60,000 transactions. The penalty imposed by Mr. Lawsky's department is less than five percent of that profit number.

I've heard a lot of crying and moaning and groaning about how a state regulator is stepping in where federal agencies need to be acting, but Mr. Lawsky was fully within his rights in pursuing this aggressively. And Sen. Carl Levin of Michigan, the Chairman of the Senate Permanent Subcommittee on Investigations, said a few days ago after the settlement was announced that it takes this type of action by a regulator to get banks to toe the line and not endless debate and discussion about how much a penalty should be. What Sen. Levin said is that we need regulators with backbone.

State vs. Federal Regulation: Setting the Example

KITTEN: As you've noted, there have been critics who have said that the state's actions were out-of-line and that the state department should have waited for federal regulators to complete their investigation into these alleged BSA violations before stepping in. But what precedent has this New York regulator set and what does it mean for other institutions?

INTRIAGO: We at the Association of Certified Financial Crime Specialists [ACFCS] are based in Miami, for example; a large state, the fourth largest in the nation, that also issues licenses and charters for financial institutions to operate here in our state, just like the people of the State of New York gave Standard Chartered its license. In this international state, which is viewed as a gateway to Latin America, etc., where there's a lot of corruption, a lot of illegal activity just like in New York, for example, I would expect the people of our state to look at our state regulators whose salaries we pay to enforce our regulation. The federal agencies have had a recent history of being asleep at the switch and the state agencies have all the right in the world to pursue their own remedies under their laws and regulations.

But the most important thing about what the state agencies are doing and what the federal agencies do when you talk about just imposing a monetary penalty is that, if it's as small as this one is, $340 million in the overall scheme of things doesn't deter them from repeating what they did. They're going to look at it as the cost of doing business. "Well, it's only five percent of our last year's profit." The only deterrent is not only a significant dent in profit, but also prison terms. Start sending them away for five, ten years in the federal penitentiary and you're going to see some changes in the culture of these financial institutions.

KITTEN: That's something that I did want to ask about because in this particular instance, and in other instances that we've seen, it really is a cultural issue. Do you see banks working to change some of that cultural perspective where BSA compliance is concerned?

INTRIAGO: No. The lure of profits is too big and the risk of getting caught is too small.


KITTEN: In late 2011, you founded a new association that's dedicated to addressing and attacking financial crime. How do SCB's alleged BSA violations touch on some of the issues this new association addresses?

INTRIAGO: The Association of Certified Financial Crime Specialists is based on the very logical notion that every single financial crime has certain common elements. They all involve a financial institution. They all involve money laundering. They all could result in tax evasion. The big ones usually involve multiple countries, as you can see from SCB and HSBC, so that we play into the hands of the financial criminal, whether it is some banker who's breaking the law to surreptitiously pass on money to Iranian agencies, or whether it's Bernie Madoff. We play into the hands of those people by splintering our efforts and having an association for fraud, or certification, a certification or an association for money laundering or for corruption, etc.

So, we say it's time to break down the silos and to break down the splintered approach and combine efforts; converge them. And that's what ACFCS is all about. In the SCB's case, there are several financial crimes involved in what they did: the money laundering, the sanctions violations which are also covered by the association, the BCA violations, and who knows there may be some corruption involved. In every one of these incidents, you'll have examples and instances of multiple financial crimes performed under one little umbrella. So ACFCS is designed to attack that broadly, uniformly and away from the siloed approach.

AML Expertise

KITTEN: What can you tell us about your experience in the AML area, and how will some of that experience be folded into the role you play at ACFCS?

INTRIAGO: Our experience is extensive. When other folks took over ACAMS after we sold it, when I left them in early 2008 we had reached 140 countries with our certification. Those were different times then. ... The entire financial sector, including broker dealers, insurance companies and the rest, all deal with the money laundering issue and that's part of financial crime, so the experience that we accumulated back in those days fits right into the overall financial crime approach, and in fact the certification that we're building now, money laundering and fraud expertise leads to expertise in the overall financial crime field, so that experience we have works very well in this new broader, more logical approach to financial crime.

KITTEN: What's the mission of this new association and why did you feel that the timing for founding this association was right?

INTRIAGO: There's a pretty broad movement worldwide right now and even in the federal agencies they're now converging their units. The financial institutions are also converging because it makes sense. Why have a unit for money laundering, a unit for fraud, a unit for global anti-corruption/FCPA, a unit for sanctions, a unit for compliance, a unit for this and a unit for that? It doesn't make any sense, plus it costs a heck of a lot. Why not put them under one roof and thereby enhance collaboration, information sharing and sharing of skills? That's the approach that we take for the public and private sector working in banks, broker-dealers and insurance companies, plus the government regulators and enforcement agents and prosecutors. Come on into this big tent that we built. We're here to enhance your knowledge, enhance your skills and certify those who can pass a rigorous certification program.

KITTEN: Before we close, what final thoughts would you like to share about the certification program that you've mentioned and how can interested members of our audience get more information?

INTRIAGO: They can visit our website at ACFCS.org, or call our customer service department at (786) 517-2701. Our certification will be like the anti-money laundering certification that we built 11 years ago. Candidates will have to pass questions that are administered at secure proctor testing centers offered around the world through our psychometric company that we hire. We expect the passing rate to be somewhere in the neighborhood of about 70 percent.

About the Author

Tracy Kitten

Tracy Kitten

Former Director of Global Events Content and Executive Editor, BankInfoSecurity & CUInfoSecurity

Kitten was director of global events content and an executive editor at ISMG. A veteran journalist with more than 20 years of experience, she covered the financial sector for over 10 years. Before joining Information Security Media Group in 2010, she covered the financial self-service industry as the senior editor of ATMmarketplace, part of Networld Media. Kitten has been a regular speaker at domestic and international conferences, and was the keynote at ATMIA's U.S. and Canadian conferences in 2009. She has been quoted by CNN.com, ABC News, Bankrate.com and MSN Money.

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