Kevin Sullivan Anti–Money Laundering in a Nutshell Awareness and Compliance for Financial Personnel and Business Kevin Sullivan Any source code or other supplementary materials referenced by the author in this text is available to readers at www.apress.com . For detailed information about how to locate your book’s source code, go to www.apress.com/source- code/ . ISBN 978-1-4302-6160-5 e-ISBN 978-1-4302-6161-2 DOI 10.1007/978-1-4302-6161-2 © Apress 2015 Anti–Money Laundering in a Nutshell: Awareness and Compliance for Financial Personnel and Business Managing Director: Welmoed Spahr Acquisitions Editor: Robert Hutchinson Developmental Editor: Douglas Pundick Editorial Board: Steve Anglin, Mark Beckner, Gary Cornell, Louise Corrigan, James DeWolf, Jonathan Gennick, Robert Hutchinson, Celestin Suresh John, Michelle Lowman, James Markham, Susan McDermott, Matthew Moodie, Jeffrey Pepper, Douglas Pundick, Ben Renow-Clarke, Gwenan Spearing, Matt Wade, Steve Weiss Coordinating Editor: Rita Fernando Copy Editor: Kim Wimpsett Compositor: SPi Global Indexer: SPi Global Cover Designer: Friedhelm Steinen-Broo For information on translations, please e-mail [email protected], or visit www.apress.com . 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Introduction Many readers of this book may be involved with a financial institution as part of an anti–money laundering (AML) program or government agency investigating money laundering. As far as financial institution AML programs, I have found that many of these programs do a great job covering the basics; however, sometimes they lack in the area of truly explaining why the employee does the specific job assigned. Sure, AML employees have learned to click this box and select that radio button—a sort of “if this, then that” programing for AML personnel. I have often enjoyed seeing that “light bulb” moment when I have explained to AML employees the reasons why they click this button and select that box. It helps to know a little about the nomenclature of money laundering, what happened before a financial institution became involved, and how it came to be that they have this incident report or alert currently sitting in front of them. You should have at least a rudimentary understand what the bad guys did, how they did it, and why they did it that way. You should be clear on how that particular activity gave rise to an alert coming across the desk of an AML employee in some small credit union in Smallville, USA, or a big-boy bank in Manhattan. Further, understanding what happens after a financial institution completes its mission and information is handed off will make your notation of that information substantially more thorough and complete. The other side of that coin stands law enforcement agencies and personnel who understand wire taps, subpoenas, and pick-ups yet may have little experience in how a financial institution operates. Knowing the ins and outs of the Bank Secrecy Act and how AML programs are applied could be a huge asset to law enforcement. It is a major asset for law enforcement to be familiar with the methods of filtering, documentation, and record keeping at a financial institution. That leads into another important factor: the dynamics between the three major players on Team Good Guy. The players are the financial institutions, the regulators, and law enforcement. They each have various responsibilities and perspectives. At times, they have been at odds with each other. However, from my perspective, the dynamics have gotten much better over the last few years with the introduction of the FFIEC manual, FinCEN’s new reporting forms, and more communication across the board between the financial institutions, regulators, and law enforcement. If 9/11 is the day that changed everything, then we have come a long way in a relatively short period of time to bring all these various money-laundering fighters together and zero in on the best way to fight the battle. With this book I hope to deliver to you some insight into various money- laundering methods and an awareness of the AML process. You are now part of a law enforcement money-laundering ride-a-long. I include real stories where I can and offer my opinion based on my education and experience. Acknowledgments To the entire staff at Apress, who originally were looking to do a mountaineering book on substantial climbs but dialed a wrong number and got me. I thought they said financial crimes, and here we are. To the mountain climber stuck on the side of Everest reading a book on money laundering and wondering how the heck this helps him. Seriously, though, the folks at Apress have been great, and I thank you all. Apress Business: The Unbiased Source of Business Information Apress business books provide essential information and practical advice, each written for practitioners by recognized experts. 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