COMPLIANCE
In the national security sector , intelligence is integral to every facet of decisionmaking , strategy formulation and threat mitigation
completely miss the magnitude of each of those risks in our institutions , making it challenging to know how to tune our controls and surveillance , furthering the cat-and-mouse game instead of finding the endgame to these shared risks . As an industry , we need to raise the bar on the collection , use and programmatic incorporation of intelligence .
With respect to digital assets , there is an increased level of precision in the financial intelligence available . Crypto brings inherent risks , but it also brings the promise of greater intelligence that compliance professionals can leverage to make more accurate and timely decisions to detect and prevent illicit finance . The transparency and vast amounts of blockchain data , coupled with opensource intelligence and a threat-hunter mindset , collectively build a rich intelligence picture of the criminals ’ and terrorists ’ economic activity that targets our society and financial systems .
In the national security sector , intelligence is integral to every facet of decision-making , strategy formulation and threat mitigation . Former United States Director of National Intelligence Dennis Blair once testified that , “ Nothing is more important to national security and the making and conduct of good policy than timely , accurate , and relevant intelligence .” 5 So too it should be said with AFC and illicit finance , where timely , accurate and relevant intelligence can drive more effective investigations that lead to actionable intelligence for law enforcement ( LE ), as well as more effective control decisions to better tailor your AML program to the exact risks your institution faces .
For instance , with blockchain intelligence , we can say a good deal of things about Hamas and their crypto funding operations . 6 We can also assess how effective OFAC ’ s Tornado Cash sanctions designation was by observing the precise amount of flows and decreases in volume since OFAC ’ s action . When criminal laundering patterns shift from one asset to another , we can tell you when that shift started , in what proportion , and where it may be going next . We can tell you the preferred asset and blockchain of bad actors at this moment . When a darknet marketplace gets shut down by coordinated international LE efforts , we can tell you what emerging marketplaces are filling their place and how quickly they are moving . As nation-state cybercriminals and money launderers switch tactics to evade detection , we can see what new patterns and venues they use to find new chokepoints for their operations .
Now , we do not mean to suggest that greater intelligence is the panacea to stopping events like brutal terrorism . Knowing the approximate funding amounts Hamas was receiving in crypto did not prevent the attacks . But there is little doubt that accurate and timely intelligence needs to play an increasingly larger role in the arsenal and toolkit of every compliance officer looking to stop criminal and terrorist networks . The role of intelligence in risk assessments , surveillance design , investigative leads and feedback loops has historically been underutilized . Intelligence-driven compliance controls will make it harder , costlier and riskier for groups like Hamas to move money and exploit our institutions , and blockchain intelligence is beginning to lay the groundwork for that future vision .
Thomas Armstrong , TRM Labs , head of Compliance Advisory , San Francisco , CA , USA , tom @ trmlabs . com ,
1
“ Report by the Task Force on Intelligence Activities of the Commission on Organization of the Executive Branch of the Government ,” United States Department of State , May 1955 , https :// history . state . gov / historical documents / frus1950-55Intel / d220
2
Aaron Boxerman , “ What We Know About the Death Toll in Israel From the Hamas-Led Attacks ,” The New York Times , November 12 , 2023 , https :// www . nytimes . com / 2023 / 11 / 12 / world / middleeast / israel-death-toll-hamasattack . html
3
Katie Bo Lillis , Zachary Cohen , Alex Marquardt , et al ., “ US intelligence warned of the potential for violence days before Hamas attack ,” CNN , October 13 , 2023 , https :// www . cnn . com / 2023 / 10 / 13 / politics / us-intelligencewarnings-potential-gaza-clash-days-beforeattack / index . html
4
Ibid .
5
“ Statement of Dennis C . Blair before The Senate Select Committee on Intelligence United States Senate , January 22 , 2009 ,” Director of National Intelligence , January 22 , 2009 , https :// www . dni . gov / files / documents / Newsroom / Testimonies / 20090122 _ testimony . pdf
6
“ In Wake of Attack on Israel , Understanding How Hamas Uses Crypto ,” TRM Labs , October 10 , 2023 , https :// www . trmlabs . com / post / in-wake-of-attack-on-israelunderstanding-how-hamas-uses-crypto
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