US Banks Receiving More Subpoenas for AML, Transactional Data: Sources

By Valentina Pasquali

Several U.S. financial institutions over the past year have seen a substantial uptick in court orders to supply transactional data to federal investigators, four sources claimed at a recent industry event or in interviews with ACAMS

According to those sources, which include anti-money laundering officers, consultants and senior government officials, the higher number of subpoenas reportedly served by federal agencies such as the FBI and IRS on banks and other institutions in 2018 results at least in part from more regular engagement with the financial services industry.

“Subpoenas are getting much more robust,” Harold Crawford, managing director of AML consultancy Alvarez & Marsal in New York, said. “We are seeing a lot more ask of the institution and volumes are significantly up.”

Investigatory focus on potentially illicit transfers of cryptocurrency, cannabis-related payments and suspected financial crimes tied to activity near the U.S. border with Mexico have driven the trend, Crawford said at an Oct. 24 seminar hosted in Washington, D.C. by Marquette University.

Federal investigators typically issue subpoenas after reviewing suspicious activity reports or other regulatory filings to launch or advance cases.

Increased interactions, including at industry conferences, have enabled law enforcement and anti-money laundering staff to communicate more effectively and generate higher-quality leads, according to an East Coast-based AML manager for a large U.S. bank.

“Our subpoena intake overall has materially increased this year over the past and that’s a good thing,” said the manager, who asked not to be named.

Federal investigators have several options to communicate with compliance officers and tailor their subpoenas before issuing them, including section 314(a) of the Patriot Act and the Treasury Department-led Bank Secrecy Act Advisory Group, or BSAAG.

But over the past year the federal government has sought to enhance data sharing with the private sector beyond those mechanisms.

In December 2017, the Treasury Department’s Financial Crimes Enforcement Network and federal law enforcement agencies began more regularly briefing financial institutions on “priority illicit finance threats” and supplying them with more “targeted information.”

FinCEN Director Ken Blanco said in an Aug. 9 speech in Chicago that the bureau aims to use the same platform to exchange information on cryptocurrency-related transactions.

The FBI has redoubled efforts to apprise AML professionals of its top priorities and produce more targeted SARs, Jeffrey Cannon, chief of the bureau’s Terrorist Financing Operations Section, told attendees of the seminar in Washington, D.C. last month.

TFOS, which also meets with the largest U.S. financial institutions through a BSAAG-like consortium, began engaging last year in a “reverse see-something, say-something campaign,” providing AML staff with “unclassified identifying information” such as names, dates of birth or addresses pertaining to a certain “threat or threat actor.”

“If they find something suspicious they will file a SAR, and I can use that SAR to open a preliminary investigation and then get the information I need to establish a full-fledged investigation and issue a subpoena,” Cannon said. “Then I’m off to the races to disrupt.”

Federal investigators continue to seek additional avenues for interacting with financial institutions of all sizes.

“One of my goals in the next couple of years is to direct field offices to reach out more to local banks to get that connectivity,” Steven D’Antuono, chief of the FBI’s financial crimes section, said “I have my people looking at how we can generate more feedback on how BSA filings are being used and if they are leading to law enforcement actions.”

Topics : Anti-money laundering , Know Your Customer
Source: U.S.: Department of Justice , U.S.: Law Enforcement
Document Date: November 2, 2018