Confidential Congratulations

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Feedback and “war stories” from successful suspicious activity report (SAR)-based investigations are an often sought topic for ACAMS articles, conferences, seminars and presentations. Although general validation of the value of anti-money laundering/Bank Secrecy Act (AML/BSA) programs are regularly touted by law enforcement representatives, specifics are rarely cited. Even if it was practical to give confidential congratulations, it is a consideration rarely recognized by those in the actual position to bestow them.

Your AML alert software culls a customer from out of the data stream. Your job in BSA/AML compliance is to review these types of anomalies and decide if it is worthy to file a SAR. All the identified indicators are consistent with your AML training and experiences and constitute near textbook examples of suspicious transactional activities. The kind of activities any regulator would consider a “no-brainer” for a SAR filing.

A couple of months later, somewhere at a SAR Review Team far away, that well-articulated, brief and concisely written SAR grabs the attention of an agent reviewing a recent download. The address also catches the agent’s attention. This is an area the agent is familiar with and where other “front” businesses have been found to be covering for illicit activities. The agent knows that the amounts outlined are inconsistent for legitimate businesses of this type. They are consistent with the illicit activities the agent suspects are behind it. The agent begins to smell smoke!

What the subpoena compliance people offer may make accounting sense, but it is not the evidence the agent knows the prosecutor will want

Subpoenas are requested and eventually are approved and sent out. For the next couple months the agent is regularly on the phone, though often playing “phone tag” with various entities at your financial institution. The agent was trying to get copies of the transactional documentations that actually constitute potential evidence. Over that time, various subpoena compliance people kept trying to convince the agent that the simple data processing printouts they have provided is all they have to offer. The agent well knows that these are not the documents that have evidential value. The agent needs those items (or at least good copies of) created or presented during the transactions in question. What the subpoena compliance people offer may make accounting sense, but it is not the evidence the agent knows the prosecutor will want. The agent is frustrated and eventually finds you in this quest.

You do your best to be helpful but you are not sure how to get what the agent is looking for. Frankly, you are not even certain what to look for. Although you understand that what was offered were not reproductions of what happened between the teller and the customer, your training never quite covered the small nuances of teller and customer interactions. Your next concern is that the videos the agent wants are held by another department you have little contact with or control over. You already know that such videos are normally only kept for 60 to 90 days. The SAR took 45 days to find its way to the agent. The subpoena was received about a month beyond that. You believe this request will be futile. Remarkably, after repeated messages, calls and emails between the agent and that department, a couple videos of these transactions are located and preserved.

The agent presses on and becomes certain these transactional activities are also something a teller or branch employee might find memorable. Prosecutors need witnesses like this. You again feel uncomfortable because your financial institution’s policy is very cautious about allowing tellers to be interviewed about official business. After another series of phone calls and email exchanges with the legal people, the interviews with the branch people are approved.

The agent interviews the teller and, as suspected, is most helpful to the agent’s inquiries. These transactions are unusual and the teller recalls them very clearly. The subject has even made some unwittingly culpable statements to the teller. Not quite yet a smoking gun, but certainly not exculpatory. The agent is somewhat relieved that this live witness is available. The investigation is progressing nicely.

Between the analyzed financial records, the videos and the teller interviews, the agent developed the clear probable cause needed to obtain search and seizure warrants and, hopefully, to recover the extra evidence to make a stronger case. The execution of such warrants would also provide the agent with the leverage and opportunity to interview the subject under optimum circumstances.

The agent provides the prosecutor with a well-articulated, brief and concise affidavit outlining the case, and the request for the warrants. The prosecutor instinctively knows this is a competent agent and a thorough investigation. The elements and evidence for an apparent straightforward prosecution seem to be there. Although the case is already “pretty good,” the prosecutor stresses to the agent that a productive interview with the subject is also going to be important.

The warrants are obtained and the agent assembles execution and search teams. The agent knows that various aspects of this enforcement plan will need to be delegated. If anything should go wrong in this plan the agent will be delegated the full responsibility of any and all failures. The agent’s entire reputation and credibility will be on the line again, as it has been before. The reputation and credibility of the SAR writer will never face such a test.

Thankfully all goes well. The warrants are safely executed, valuable evidence is collected and better yet, the subject is there and makes incriminating admissions. The agent did pause a bit over the “messy” way the assisting agents conducted their searches and left the place. Not as professionally handled as hoped, but no actual damage. Although an arrest could be made, the agent knows that the subject obtaining a defense attorney is the smoother, albeit less exciting, path to closure in the case. The agent advises the subject to seek an attorney. The prosecutor is pleased.

Within a few days a boisterous attorney is calling the prosecutor’s office professing the innocence of the client and this misunderstanding and possible miscarriage of justice. A proffer session for a formal discussion on the investigation is eventually agreed to. Of course this is “at the earliest possible opportunity,” as insisted by the defense attorney.

At the proffer session, the prosecutor meticulously lays out the case. The defense lawyer becomes more quiet and deflated as all preconceived viable defense plans crumble as each piece of evidence and the elements of the crime are presented. The attorney’s client was far from forthcoming during their initial consultation. The attorney now asks for indulgence and some time to speak more with the client. The prosecutor advises that a potential plea agreement will be drafted for the lawyer’s review in the next couple weeks. The defense attorney no longer wants to rush things.

During the next couple of weeks, the agent fields multiple calls and requests from the prosecutor. The financial documents are repeatedly scrutinized and various clarifications, additions and corrections are requested. Additional interviews and re-interviews are requested as new questions constantly and seemingly endlessly come up. Either an outright or a perceived urgency is part of every request. Nothing is normal about the working hours associated with accomplishing these tasks. The agent and prosecutors know that the better they prepare for a trial the better chance there will not be one. The agent also knows that the prosecutor’s demands may seem nonsensical at times but even the perception weakness with the case will be excessively exaggerated by the defense attorney. Each task is accomplished “forthwith.”

The case becomes rock solid; the defense attorney knows that. Neither side wants a trial at this point but both threaten the consequences of that possibility until a plea is formally agreed to.

On the scheduled day of the plea, the agent, prosecutor, the accused and the defense attorney appear in court. Things are amicable between all. After about an hour before a judge explains to the defendant all the rights, nuances and procedures in the acceptance of a plea such as this, the defendant utters that magic word “guilty” to the charges.

Although the case might be considered closed, the agent cannot mark it as such until the official sentencing a couple months down the road. There are also fines, forfeitures and processing to be finalized. The agent does breathe a sigh of relief. The press release of the conviction is printed in the local paper.

Confidential and congratulations do not work and play well together in AML

While you attribute your SAR for all this, the agent attributes dog-hearted persistence in navigating all the obstacles in putting the case together. Your financial institution contributed to those obstacles. However, the agent now looks back fondly on all those frustrations. The accolades from cohorts for a successful investigation somehow always seems to do that. You, along with the agent, now could get into criminal legal trouble to even mention or seek validation that the investigation had any relationship to a SAR. Not even a double secret thank you is allowed, nor has the agent considered this as a potential oversight. Confidential and congratulations do not work and play well together in AML. 

Steve Gurdak, CAMS, group supervisor, Northern Virginia Financial Initiative, Annandale, VA, USA, sgurdak@wb.hidta.org

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