FORUM: Tackling fraud and money laundering within financial institutions

July 2017  |  SPECIAL REPORT: WHITE-COLLAR CRIME

Financier Worldwide Magazine

July 2017 Issue


FW moderates a discussion on tackling fraud and money laundering within financial institutions between Mike Martinez at Associated Foreign Exchange Inc. (AFEX), Simon Wong at Deutsche Bank AG, Clare Lipworth at Hogan Lovells International LLP, Seetha Ramachandran at Schulte Roth & Zabel LLP, and Kevin Petrasic at White & Case LLP.

FW: Could you provide an insight into the growing fraud and money laundering risks facing financial institutions (FIs) in today’s business world?

Martinez: The possibility of being used to facilitate money laundering or fraud continues to be a real risk for FIs. Moreover, the threat is likely to grow as FIs look to add new products and services that create additional channels, with the potential for them to be exploited to move illicit funds. FIs must accurately assess their exposure and put effective controls in place to mitigate their risk. The consequences of failing to do so are evident in a continued string of enforcement actions, including the December 2016 $215m penalty against a China-based FI with a New York branch for anti-money laundering (AML) failures that include ignoring direct warnings from its chief compliance officer. Similarly, a failure to assess vulnerabilities to cyber-enabled crime can lead to substantial repercussions as demonstrated by the February 2016, $81m Bangladesh Bank heist.

Petrasic: Clearly, financial institutions are facing unprecedented risks arising from both fraud and money laundering activities with regard to more sophisticated and complex cyber and similar attack. It is appropriate that we group together fraud and money laundering given that money laundering poses every bit as much risk – and perhaps more – to an institution’s ongoing operations as does fraud. Threats from both areas require significant and continuing vigilance to monitor for the constantly evolving and more sophisticated ways that fraudsters and money launderers are deploying to access financial institution systems. And the threat is not just an operational threat; it is very much a regulatory and compliance threat that institutions must take very seriously given the potential reputational risk that could occur by failing adequately to address regulatory and compliance issues and concerns.

Lipworth: Globalisation, the proliferation of banking channels, rising transaction volumes and accelerated technological advancements have all introduced opportunities for financial crime. The nature of their business and regulatory design have positioned FIs as the first line of defence against money laundering, terrorist financing and an expanding array of other illegal activity. Because of its size and complexity, the UK banking sector is more exposed to criminality than banking sectors in many other countries.

Wong: Over the last few years, the penalties for failing to comply with money laundering regulations have increased significantly. Fraud and money laundering schemes are becoming more complex, and the total values laundered on cases have increased, making it harder for FIs to detect complex money laundering schemes. FIs that may have access to only very limited information by which to identify schemes may then be exposed to regulatory, financial, operational and reputational risk if anti-financial crime programmes are not performed properly.

Ramachandran: Most financial institutions are well aware of the obligation to ‘Know Your Customer’ (KYC) – it is the cornerstone of any effective AML programme. But as fraud and money laundering risks grow, financial institutions need to make sure that they not only know who their customers are, but that they know their customers’ businesses. They need to understand the kind of business that customer is engaged in to fully appreciate what events or transactions are red flags for suspicious activity. Financial institutions also need to constantly re-evaluate what information they get from customers – regulators expect financial institutions to be proactive and thoughtful in their approach to managing fraud and money laundering risks. In today’s environment, you cannot rely on a static, boilerplate checklist to KYC.

The regulatory environment for financial institutions to address issues involving fraud and money laundering is extremely fraught with risk.
— Kevin Petrasic

FW: How is the regulatory environment influencing the way FIs tackle fraud and money laundering? What kinds of penalties might they suffer in the event of non-compliance?

Lipworth: Over the past 15 years, FIs have had to grapple with a wide range of financial crime-related regulation, including measures to address bribery and corruption, money laundering and terrorist financing, and the enforcement of financial sanctions. All of this has created a challenging compliance burden. 2017 will be no exception. In the UK, we have new money laundering regulations coming online imminently, followed by revised Joint Money Laundering Steering Group (JMLSG) guidelines and all of the new measures under the Criminal Finances Act, which are expected to come into force in the early autumn. A key focus here for FIs will be the new, strict liability, corporate offences of ‘failing to prevent facilitation of tax evasion’. These new offences, which carry unlimited fines for corporates, will bite where an individual or entity associated with the FI helps a taxpayer to evade UK or foreign tax. As with the corporate Bribery Act offence, comfort will be found in having implemented appropriate prevention procedures.

Ramachandran: The regulatory environment and the financial risk of penalties have transformed the way financial institutions deal with fraud and money laundering. Financial institutions have always been at risk for fraud and money laundering – this is not new. The Bank Secrecy Act (BSA), which requires financial institutions to comply with various recordkeeping requirements, was enacted in 1970, long before today’s risks of terrorist financing were fully known, and even before money laundering became a federal crime, in 1986. But it was a little-used statute that was virtually unknown to criminal prosecutors. Regulators almost never imposed penalties under the BSA. But now, we are in a new era. There is aggressive criminal enforcement of the BSA by DOJ and increasingly, civil AML enforcement by other agencies, like the SEC or FINRA. We are even seeing the Financial Crimes Enforcement Network (FinCEN), which has the power to impose civil monetary penalties, turn to the civil enforcement arm of the Department of Justice to litigate the validity of those penalties. In this regulatory environment, it is not enough to comply with the recordkeeping requirements of the BSA. Banks are being deputised – and the government expects financial institutions to almost function as an arm of law enforcement – to affirmatively identify and prevent wrongdoing.

Wong: In recent years, regulators have had an increased mandate against FIs as far as their AML programmes are concerned. Many FIs have made AML a top priority due to the high dollar fines imposed by regulators for non-compliance. Business units are taking the risk of money laundering seriously when they venture into new products, services and geographies because fines can potentially erode into profits. Penalties not only come in monetary form, but also via reputational damage which can impede opportunities to expand a business.

Petrasic: The regulatory environment for financial institutions to address issues involving fraud and money laundering is extremely fraught with risk. Failing to impose a compliance programme that adequately addresses the risks imposed by fraud and money laundering activities places an institution in a very precarious position, including the potential for significant civil money penalties for failure to have a robust compliance programme that is commensurate with the risks and exposure of a financial institution to fraud and money laundering activities. Thus, the regulatory environment raises the bar because of regulatory and compliance risks, and reputational risks, that are presented when an institution has not implemented an appropriately calibrated fraud and anti-money laundering programme relative to its risk exposure in these areas.

Martinez: The threat of high-profile enforcement actions looms large for FIs. They continue to witness the regular frequency of highly publicised penalties against FIs for lapses in AML and fraud prevention controls. The struggle to proactively address shortcomings highlights the challenge faced by FIs in tackling the continued regulatory focus on money laundering and, its precursor, fraud in the name of deterring the flow of illicit funds through the financial system. The continued regulatory attention has led to increasing compliance costs for FIs. However, as costs rise, FIs are exploring increased automation, machine learning and artificial intelligence to continue the battle against money laundering and fraud while controlling costs. Noncompliance comes at a heavy cost. Fines can be absorbed, particularly by the largest FIs, however, the reputational damage can be long lasting and help to deter recruitment of the qualified personnel needed to address the root cause of compliance failures.

Regulators almost never imposed penalties under the BSA. But now, we are in a new era.
— Seetha Ramachandran

FW: Have any recent, high-profile cases exemplified the challenges for FIs in identifying instances of fraud and money laundering within their organisation?

Ramachandran: Recent AML enforcement cases against money service businesses show how challenging AML compliance can be when the organisation includes agents all over the world. These cases demonstrate that you are not only deemed responsible for the agents’ conduct, you are held responsible for identifying and rooting out agents’ conduct. Other recent AML cases against US banks have focused on AML deficiencies at overseas branches or subsidiaries. These cases suggest that as financial institutions expand, particularly in other countries, they still need to consider the AML implications under US law.

Martinez: Three recent enforcement actions highlight the challenges FIs face. The first is an approximately £73m fine brought against a UK-based FI by the Financial Conduct Authority (FCA), as a result of the institution circumventing its own controls to accommodate clients that were known to be politically exposed persons in an effort to win their business. The second is a $185m fine imposed on a US-based FI for instituting a sales driven culture that led to the unauthorised creation of more than 2 million accounts. The third is a $7m fine against a privately owned US-based FI triggered by their leadership team actively barring compliance staff from monitoring for suspicious activity within transactions that benefitted entities controlled by members of that same leadership team.

Petrasic: There are a number of recent money laundering cases involving financial institutions that underscore exactly how vulnerable an institution may be to operational issues as well as prosecution for alleged money laundering activities; and the constant barrage of cyber attacks underscores that the problem is growing. There are number of significant challenges for a financial institution, such as ownership and accountability for addressing fraud and money laundering issues, clear policies and procedures addressing both areas, and periodic employee training. It is important to maintain an ongoing dialogue with financial institution senior officers, as well as board members, to ensure there are clearly stated expectations set forth by the board and senior management regarding the handling of fraud and money laundering issues. Finally, there are much greater challenges on the use and sharing of data, including when and where to share cyber threat intelligence with competitors.

Wong: The Russian Laundromat was an organised money laundering scheme that involved numerous banks, shell and legitimate companies, along with corrupt judges. Many banks fail to detect money laundering schemes due to limitations as to the data they can access, with many transactions looking legitimate. Therefore, lacking the data to draw a complete picture is a challenge for many banks, especially in the correspondent banking business where access to the client data of the correspondent bank is not available. It is extremely challenging to be able to identify the few bad transactions that are buried among a sea of others, especially if they have been specifically designed to deter detection.

Lipworth: In relation to AML – recent FCA enforcement cases have focused on inadequate performance of customer due diligence (CDD) and enhanced due diligence (EDD), particularly in relation to ultra high-net-worth (UHNW) clients and politically exposed persons (PEPs), deficient transaction monitoring and poor AML IT infrastructure. The challenge for FIs is how best to analyse and utilise KYC and know your client’s business (KYCB) information, particularly in relation to customers that have multiple touch points with the organisation, across more than one business unit and several jurisdictions. Recent cases make it clear that regulators expect institutions to have a consolidated picture of client relationships and transactions, regardless of the limitations presented by legacy IT systems.

The key to developing and applying adequate controls is building knowledge about the risks themselves and the business areas which they impact.
— Claire Lipworth

FW: With whom within an FI should responsibility for tackling fraud and money laundering reside?

Petrasic: Ultimately, the chief risk officer is accountable for fraud and money laundering risk; however, there typically are other individuals who may have a specific degree of accountability for one or both of these issues. These individuals include an institution’s BSA officer, chief compliance officer, and chief information security officer. While all of these individuals may have responsibility for addressing fraud and money laundering issues, senior management and, ultimately, the board of directors are responsible for overseeing a financial institution’s anti-fraud and anti-money laundering programmes. It is important that the financial institution ensures that there is accountability at the top with respect to its anti-fraud and anti-money laundering programmes.

Wong: Tackling fraud and money laundering should be part of the culture within an FI and everyone who works in an FI has that responsibility. For example, frontline customer facing units need to be aware and take the responsibility for detecting fraud and money laundering as the first line of defence. Anti-financial crime compliance units are accountable as the second line of defence, to set controls to detect fraud and money laundering, but also to provide an effective oversight of the financial risks that a business may be taking when it expands its products and services. Essentially, everyone within FIs should be made aware and hold responsibility for helping to tackle fraud and money laundering. Many complex money laundering schemes have insiders within an organisation, so it is crucial to educate employees in the detection of abnormal financial transaction behaviour.

Lipworth: Ultimate responsibility sits with senior management and the board. Local responsibility often sits in separate teams, between which there is little coordination or cooperation. Not only do these teams focus on discrete parts of the problem, but they also often hold different perspectives. This fragmented approach risks the organisational response being incomplete, and this can leave the institution exposed. The ideal would be a centralised effort which would approach financial crime as a lifecycle comprising four stages – compliance, prevention and detection, investigation and remediation, followed by monitoring and testing. It is also important for organisations to have an overarching financial crime strategy, which involves gaining a deeper knowledge of customers and markets and to enhance their awareness of emerging threats such as those posed by vir­tual currencies and new channels and technolo­gies.

Martinez: Every employee within an FI plays a part in protecting the institution. A robust training programme is key in helping employees at all levels understand and take ownership of the role they play. Accountability cannot simply sit within the compliance function of an FI. Frontline employees, often the first with the opportunity to detect potential red flags, play a crucial, but easily forgotten, role in mitigating fraud and money laundering risk. Similarly, the audit function serves a key role in identifying gaps in controls put in place to deter financial crime. Tone from the top is an absolute must in setting the expectation that all employees take an active role in safeguarding the FI from fraud and money laundering risk.

Ramachandran: Responsibility for these matters typically rests with the chief compliance officer (CCO) or another designated AML officer. But as many recent enforcement cases demonstrate, the CCO or the AML officer is only as effective as the information he or she receives. And that information can come from virtually anywhere within the institution. Even where the CCO or the AML officer does not get the relevant information to identify risks, through no fault of her own, she can face individual liability. For these reasons, it is especially important to train employees at all levels in how to identify red flags and elevate them where necessary. Under the BSA, financial institutions are required to have a training programme as one of the four pillars of an AML programme. But to be effective that training needs to be tailored to what the employee’s specific role is, and the red flags that the employee is likely to see, based on his or her vantage point.

FW: What steps should FIs take when rolling out or enhancing anti-fraud and money laundering controls, policies and procedures across their organisation? How effective are whistleblower hotlines in this regard?

Wong: Start off by defining the risk appetite and policies against fraud and money laundering. Based on the risk tolerance policy, conduct risk and control assessments to identify gaps. Assess these gaps and prioritise improvements where the gaps pose the highest risk, supporting these analyses using data analytics. When applying controls, promote the fact that they are there to help protect the bank and reduce legal and regulatory costs, rather than impede business. Whistleblower hotlines are one of the many effective methods to deter against fraud and money laundering, especially if it is an inside job. Whistleblowing enables employees to safely and anonymously report any abnormal behaviour that they see. Whistleblower hotlines should always be accompanied by employee conduct training programmes to help promote awareness.

Lipworth: The key to developing and applying adequate con­trols is building knowledge about the risks themselves and the business areas which they impact. Regular risk assessment should be based on the organisation’s size, channels, geographies, customer types and product and service complex­ity. By mapping risks against internal procedures and controls, FIs can assess their effectiveness in mitigating risks and fine-tune them accordingly. The rolling out of a new compliance programme should begin with setting the tone at the top of the organisation and continue by working towards buy-in from stakeholders, having a clear and effective communications programme and allowing sufficient resources for staff training. Whistleblowing mechanisms need senior management commitment if they are to be successful and even the best designed whistleblowing arrangements will not be effective unless they can be embedded within the wider culture of the organisation.

Martinez: FIs need to first accurately identify their level of money laundering and fraud risk based on their mix or products, services, clients and geographic reach. With inherent risks identified, along with likelihood and impact, FIs can work to take inventory of the controls in place to mitigate the identified risks. If the remaining residual risk, after considering current controls, exceeds an FI’s risk tolerance, it can look to formulate new policies and procedures to further decrease risk. However, consideration should be given to the commercial impact of newly introduced controls with the goal of balancing the benefits against the potential drag created by potentially cumbersome, and manual, workflow additions that now need to be executed. A great example of adding a control with minimal drag is the introduction of a tip hotline.

Petrasic: Among the most important issues are ensuring that the new policies and procedures are clearly stated and understood by employees, including with appropriate training for impacted employees, and that there are mechanisms in place to track compliance with new policies and procedures. Whistleblower hotlines are certainly one tool available to a financial institution to monitor compliance with new policies and procedures; however, there are various other important considerations that should be considered in monitoring programme operations and controls. These include open and accessible policies and procedures that allow for effectively monitoring compliance with existing and new policies and procedures.

Many complex money laundering schemes have insiders within an organisation, so it is crucial to educate employees in the detection of abnormal financial transaction behaviour.
— Simon Wong

FW: In what ways is technology – including tools that analyse data – helping FIs to better understand their customers and employees, and therefore reducing opportunities for fraud and money laundering to take place?

Martinez: FIs have a wealth of data at their disposal. The tools available for FIs to manipulate data to extract insight have grown as well. As a starting point, anti-money laundering and fraud units can look to data analytics tools already in use by different groups, including internal audit, within their institution to explore the benefit of applying these tools to anti-money laundering and fraud detection. Data quality and accessibility will need to be a consideration for those FIs that do look to expand their use of data analysis tools. Poor data quality caused by system migrations, acquisitions, or poor data governance can create challenges and lack of confidence in tools dependent on accurate and consistent data. Similarly, data found in formats not easily extractable for use within analysis tools will also require attention. Notwithstanding these challenges, the use of data analysis tools to draw attention to exceptions, trends and risk areas can be great additions to FIs looking for flexible tools to help them better combat their financial crime risk.

Wong: Cost effective Big Data technology helps FIs to procure all relevant data for data network analytics. Improvements to entity resolution and network analysis tools with the support of the Big Data environment also helps identify entities that are trying to conceal their identity by using multiple identities. In addition, Big Data storage technologies and more available data points mean that FIs can apply machine learning to explore and correlate data to detect hidden patterns and relationships more effectively. Furthermore, fast and scalable data visual analytic tools provide users with the opportunity to gain quicker insights and create new hypotheses more quickly.

Petrasic: There are numerous technology-based solutions that have emerged in recent years in this space. These include FinTech and RegTech offerings that can significantly facilitate anti-fraud and anti-money laundering compliance monitoring activities. While reducing the opportunities for fraud and money laundering activities, many of these tools have the potential for significant capabilities that far exceed simple compliance and monitoring functions. The collection, compilation and use of customer and employee data sources is a significant enhancement that will help institutions to better understand their anti-fraud and anti-money laundering risks, as well as the overall operation and effectiveness of their compliance and risk management programmes.

Lipworth: Banks manage and monitor vast quantities of data from a diverse set of sources. The challenge is how to extract useful information and insights from this data to assist in combatting financial crime. New data integration platforms allow FIs to enhance information credibility by integrating disparate data sources. This, combined with behavioural analytics, such as out of pattern analysis – comparing customer activity with peer group behaviour and the customer’s own past behaviour, helping to identify outlying transactions – and data visualisation techniques – which look for patterns and identify inconsistencies – is helping banks to analyse risks and prevent financial crime. Distributed Ledger Technology (DLT) like blockchain also has the potential to offer firms a more efficient, and ultimately cost effective, way of meeting AML compliance requirements.

A balanced approach between risk mitigating and commercially viable controls is an essential part of any red flag system.
— Mike Martinez

FW: What overall advice can you offer to FIs on building internal structures that can help analyse employee and customer behaviour and identify suspicious trends? What are the essential components of an effective red flag system for fraud and money laundering activity?

Ramachandran: There is no one-size fits all advice. To be effective, a risk-based AML programme needs to be tailored to your specific institution and your customers. KYC not only means know who your customer is – it means know their business. Understanding what the expected activity is for that customer is the key to identifying patterns of suspicious activity. You need to know what your customers do to properly monitor their transactions. You cannot rely on a boilerplate list of red flags to identify suspicious activity.

Martinez: I would provide two pieces of advice to FIs seeking to put systems in place to identify suspicious activity. The first is to start with an accurate assessment of your risk exposure so that you are able to target the most effective monitoring methods. The second is to focus on your data. Poor data quality has the ability to derail the most sophisticated of monitoring systems and can create the need to implement tedious manual processes. Regulators, beginning with the state of New York, have begun to codify regulatory expectations on the integrity and completeness of the data used within anti-money laundering systems. A balanced approach between risk mitigating and commercially viable controls is an essential part of any red flag system.

Lipworth: Tackling financial crime is about embedding an effective culture coupled with a robust compliance framework. The regulatory requirements placed on FIs are onerous and the judgement required in applying these, based on a firm’s business activities, is complex. This means that there cannot be a one-size-fits-all approach but instead the approach needs to be proportional and risk-based. The Financial Action Task Force – the inter-governmental body which sets AML standards – has indicated that its focus is shifting away from whether organisations can demonstrate compliance with AML requirements, to whether the AML arrangements in place are effective. This means that regular testing of AML, and indeed of all anti-financial crime systems, is important and should take the form of a risk-based audit. An independent assessment can provide assurance to the board and senior management about the effectiveness of the design and operation of existing compliance programmes. Using an external firm means that the FI can leverage the knowledge and best practice gleaned from the firm having worked with other FIs, and this can be a valuable source of benchmarking information, as part of a continuous improvement cycle.

Petrasic: The FinTech and RegTech programmes currently being developed both internally and by third-party service providers will be able to significantly streamline financial institution anti-fraud and anti-money laundering programmes. Traditional red flags systems, including monitoring employee email activity, unusual account activities and similar pattern recognition programmes, will continue to be relied upon for fraud and money laundering prevention. That said, effective employee training continues to be among the most effective investments for institutions to reduce the incidence of fraud and money laundering activities. Another extremely important element is periodic testing and having a programme that is updated, as appropriate, in a timely manner to be able to identify and prevent new and emerging risks and trends.

Wong: Ensure that all data can be accessed and aggregated into a centralised location in order for trending and behavioural analysis to be conducted. Also, engage data privacy and information security teams early to ensure proper policies, controls and approvals are in place. Systems can only be as effective as they are intended to be if you have the proper people calibrating them. Furthermore, ensure that those calibrating the detection programme understand fraud and money laundering behaviour. An agile, iterative approach will quickly identify gaps and help mitigate and prioritise controls faster.

FW: What is the outlook for fraud and money laundering in the months and years to come? Are the risks only set to increase – and are FIs well-placed to respond with prevention strategies?

Lipworth: Evolving criminal methodologies is the biggest single emerging risk. The question is whether FIs can enhance their compliance programmes and harness new technologies to meet those risks, particularly where they have multiple systems across various jurisdictions. AML compliance is a top priority for the UK’s FCA which will have better access to information about individual firms and sectors via the new annual Financial Crime Data Return which came into effect in December 2016. Ultimately, it remains far easier for regulators to take action against FIs for deficient systems and controls than it is for them to chase down individual bad actors. For FIs, protection lies in asking difficult questions, regularly auditing compliance programmes and being confident that staff really understand these programmes and what they are trying to achieve. Of course, it is also essential for FIs to investigate all high-risk scenarios, learn lessons from these investigations and also from the reasons behind the large and very public fines levied on their peers.

Ramachandran: There is always going to be fraud and money laundering – you cannot prevent it. But you can prevent your institution from becoming a victim of fraud or being unwittingly used to launder money. It is important to look beyond the letter of the law, and instead look at what others are doing in your industry, and make sure you meet or exceed the industry standard. The best prevention strategies are not about technical compliance with the regulations – they come from studying what others in your industry are doing, and having a top of the line compliance programme that comports with the best practices in your industry. This is why, for example, entities that are not yet required to have an AML programme – like hedge funds – typically do have an AML programme. While you cannot stop crime, you also do not want to be the weak link in the system that criminals are going to take advantage of.

Petrasic: The risks will continue to increase. However, new and emerging tools in the FinTech and RegTech space are showing significant promise in reducing these risks. A particularly important area or issue is the development of solutions that rely on artificial intelligence to enable the programme to evolve and adapt based on new information, as well as information and analyses the algorithm itself develops. A key issue for all institutions is cyber security readiness and preparedness. Equally important is the willingness of institutions to share threat and solution information in dealing with cyber security issues, as well as more traditional fraud and money laundering prevention programmes.

Martinez: Fraud and money laundering risk will continue to evolve as criminals look to develop new ways to exploit weaknesses in the ability of FIs to prevent facilitating financial crime. Similarly, criminals will continue to use established methods of laundering money that have proven effective and difficult for FIs to stamp out, such as trade-based money laundering. An expanding focus on the role that shell and shelf companies play in facilitating both fraud and money laundering, as highlighted by the Panama Papers, can be expected as well. FIs will also face an increased risk of cyber-enabled crime as part of fraud and money laundering attempts, with the FCA recently communicating a spike in reported cyber attacks against firms under its supervision. These attacks climbed to 75 in the first three quarters of 2016 against only six reported attacks in the previous two years combined, with underreporting very likely. Those FIs that take a proactive approach to shoring up their vulnerabilities will be better suited to meet the evolving risk than those that are happy to be reactive.

Wong: The increase in the complexity of financial crime schemes alongside the penalties for failing to detect money laundering is posing an increasing risk to FIs. Currently, many organisations are struggling to find an effective approach to detect money laundering and financial crime. That said, methods to detect and prevent financial crime have been improving, with increasing collaboration between crime agencies, regulators and banks – sharing data, red flags, typology, knowledge and intelligence – leading to more effective financial crime investigation. Leveraging new and improved technologies to help detect network and behaviour also helps FIs to identify the hidden relationships and behaviours that many complex money laundering schemes use. Getting employees to be more aware and responsible for detecting financial crime – and providing them with the tools to report such crime – are among the many ways in which FIs can mitigate the risk of financial crime. In my opinion, FIs are still not fully equipped to deter and detect financial crime, however, I believe that we are improving and moving in the right direction.

 

Mike Martinez is the global investigations manager of Associated Foreign Exchange Inc. (AFEX), a global payment and risk management solution provider. Mr Martinez is responsible for safeguarding the institution against its money laundering and fraud risk including overseeing its transaction monitoring and fraud detection programmes. Prior to joining AFEX, he spent over five years as a regulatory examiner where he led and participated in the examination of financial institutions. He can be contacted on +1 (818) 728 3868 or by email: mmartinez@afex.com.

Simon Wong is a director at Deutsche Bank AG based in London. In his current role he leads the designing of solution strategy for anti-financial crime unit and investigation, setting the global standards on anti-financial crime (AFC) model management and leading the tuning and optimisation efforts of the investigation process. He can be contacted on +44 (0)20 7547 5675 or by email: simon-c.wong@db.com.

Claire Lipworth is a partner in the London office of Hogan Lovells where she specialises in financial crime. She began her career at Peters & Peters, where she was a partner from 1999 to 2009, before joining the Financial Conduct Authority (FCA) where she served as chief criminal counsel. She can be contacted on +44 (0)20 7296 2982 or by email: claire.lipworth@hoganlovells.com.

Seetha Ramachandran focuses her practice on anti-money laundering and OFAC compliance, regulatory investigations and enforcement actions, white-collar criminal defence, and criminal and civil forfeiture matters. She has represented companies and individuals in criminal and regulatory investigations by the DOJ, New York Attorney General, CFTC and SEC, as well as conducted internal investigations. She has also advised a range of companies on AML and OFAC compliance, as well as other regulatory issues. She can be contacted on +1 (212) 756 2588 or by email: seetha.ramachandran@srz.com.

Kevin Petrasic is a banking partner in the Washington, DC office of White & Case LLP, and head of the firm’s Global Financial Institutions Advisory practice. He has extensive experience with bank regulatory, transactional, bank insolvency, compliance, supervisory, enforcement, legislative, and policy issues and matters. His practice includes matters involving cyber security, virtual currencies and online banking, payment networks and advising on the regulatory risks arising from the development of innovative uses of financial technology (FinTech) and related issues. He can be contacted on +1 (202) 626 3671 or by email: kevin.petrasic@whitecase.com.

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