PRACTICAL SOLUTIONS
institutions share the mutual responsibility
to safeguard our financial system and their
customers from fraud and money laundering.
One way to accomplish this is to develop
crime problem specific partnerships. In doing
so, law enforcement should develop case
typologies specific to the crime problem and
how the finances of the criminal activity flow
through financial institutions. By sharing
these case typologies and trend analysis
information with the private sector, law
enforcement will enable the private sector to
more effectively and efficiently identify and
report suspicious activity. By doing so, both
sides benefit. Law enforcement develops
evidence to support criminal prosecutions
and/or, asset forfeiture and recovery. Financial institutions in turn will reduce institutional risk.
There is a great example of a public-private
partnership that is crime problem specific
and typologies driven. It was initiated by
JPMorgan Chase (JPMC) under the leadership of William Langford. In 2009, JPMC
Corporate AML founded a team dedicated
to identifying and assessing immediate and
strategic risks to JPMC. This outstanding
team enthusiastically developed an issuebased approach by which they identified
specific crime problems that presented
them with significant risk. In 2010, JPMC
identified human trafficking as a significant
crime problem and a vehicle for institutional risk. Overall, the project developed
typology based surveillance models and
investigator training to better enable the
identification of potential human trafficking. JPMC’s team of dedicated compliance and investigative professionals
meticulously developed typologies which
enabled them to identify transactional
activity associated with human trafficking.
The next step was to develop active channels for coordination with relevant law
enforcement agencies, especially those
specifically focused on human trafficking.
William and his team formed an outstanding
working partnership with Immigration and
Customs Enforcement (ICE), who have
a dedicated group of agents assigned to
investigate human trafficking. Through two
way information sharing, JPMC was able
to identify additional typologies while ICE
was able to develop evidence to sustain
criminal prosecutions.
Human trafficking is a heinous crime
problem. The meaningful partnership formed
by JPMC and ICE has begun to grow. In
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September 2010, during the annual ACAMS
Conference, ACAMS executive vice president John Byrne hosted an informal, off the
record meeting between law enforcement
and members of the ACAMS Advisory Board
to discuss how ACAMS could facilitate partnerships between law enforcement and the
financial services sector. Among some promising takeaways from that meeting came a
subsequent meeting in Washington, D.C.,
between Byrne, advisory board chairman
Rick Small, board member William Langford
and senior executives at ICE. One of the
topics was human trafficking.
The industry needs to be
less predictable in
transactional monitoring
and more targeted
and proactive
Because of the devastating impact of this
crime problem on its victims, ACAMS has
formed a Human Trafficking Task Force,
which Langford will chair. This initiative will
provide a platform for the public-private partnership started by JPMC with ICE to grow
and become more sustainable. In furtherance
of this effort, on January 13, 2011, ACAMS
hosted a free webinar training session on
human trafficking. Byrne served as moderator along with ICE agent Angie Salazar,
who provided a compelling training session.
Education and training promote awareness,
which frequently leads to action.
In establishing the issues based approach,
JPMC did not settle for a traditional or reactive transaction monitoring framework.
Langford and his team took an innovative
and proactive approach to dealing with challenging crime problems. It should be noted
that JPMC is not alone in developing innovative approaches to identifying and reporting
suspicious activity. JPMC represents but one
example of how certain financial institutions
are gravitating toward the use of more proactive mechanisms.
Innovation
Langford’s team conducted extensive
research to develop typologies. They relied
ACAMS TODAY | MARCH–MAY 2011 | ACAMS.ORG
on data mining and proactive targeted model
development. By being proactive and focused,
JPMC more effectively and efficiently identified suspicious activity consistent with
human trafficking. The methodology developed by JPMC should serve as a model for
future transaction monitoring models.
The industry needs to be less predictable in
transactional monitoring and more targeted
and proactive. There needs to be a balance
between traditional reactive transaction
monitoring and crime problem specific
proactive targeted monitoring. A balanced
approach between reactive and proactive
monitoring would keep the bad guys off
balance in their efforts to exploit areas of
risk vulnerability.
A challenge going forward with this approach
is incentive. The incentive for JPMC was
doing the right thing. In terms of tangible
incentives for financial institutions to implement similar typologies and methodologies,
there is little. This is where the regulators
could be a factor. If there was a regulatory
incentive to develop crime problem specific
monitoring typologies and proactive techniques, the more financial institutions would
be inclined to develop programs similar to
JPMC’s. This would significantly increase the
generation of more consequential susp