ACAMS Today had the opportunity to visit with Dennis M. Lormel, founder and president of DML Associates and to discuss terrorist financing and financial investigations.
DML Associates, LLC, is a full service investigative consultancy, where Lormel provides consulting services and training related to terrorist financing, money laundering, fraud, financial crimes and due diligence. For 28 years, he served as a special agent in the FBI and served as chief of the FBI Financial Crimes Program. There, he formulated, established and directed the FBI’s terrorist financing initiative following the terrorist attacks of September 11, 2001. For his visionary contributions, Lormel received numerous commendations and awards to include the Department of Justice, Criminal Division’s Award for Investigative Initiative and the Central Intelligence Agency’s George H. W. Bush Award for Excellence in Counterterrorism.
ACAMS Today: Terrorist financing is a threat to financial investigations, what can financial crimes prevention professionals do to mitigate this threat?
Dennis Lormel: Financial crimes prevention professionals should always be vigilant. With every investigation, they should ask themselves the question: “Is there more to this case than meets the eye?” In so doing, they should look through the fraud or other criminal activity, to determine if proceeds of the crime went to support terrorists. Terrorist funding sources continue to diminish making them rely more and more on criminal activity to raise funds. In addition, as part of their vigilance, financial crimes prevention professionals should study case typologies where terrorists engage in fraud and other criminal activity to raise and launder money.
AT: How does financial intelligence help in the fight against terrorist financing?
DL: Financial intelligence is critically important in the fight against terrorism. Financial records can be linked to terrorists. By following the flow of funds back to the point of origin and forward to terrorist operatives, a financial network and/or terrorist cell can be exposed to investigators. Law enforcement and intelligence agencies have recognized the significance of actionable financial intelligence in their efforts to disrupt and prevent terrorist activity. When coupled with human intelligence and signals intelligence (signal intelligence is information derived from electronic mechanisms such as telephones, the internet and wire taps), financial intelligence becomes that much more meaningful to investigators.
AT: How do you go about gathering financial intelligence as a compliance professional?
DL: Compliance professionals possess a wealth of financial intelligence. It resides in their institutions. Financial institutions serve as repositories of financial transactional information that provides intelligence to law enforcement. Compliance professionals should keep abreast of current developments in terrorism to search their institution for specific and targeted information. An example of this is when Osama Bin Laden was killed, he died in Abbottabad, Pakistan. Compliance professionals should have searched their institutional records for information identifiable with Abbottabad. This type of information would be extremely valuable to law enforcement.
AT: What are the areas of vulnerability in terrorist financing, and how can financial crimes prevention professionals exploit these areas?
DL: The two biggest vulnerabilities facing terrorists are finance and communications. Financial crimes prevention professionals can take both proactive and reactive measures to exploit the financial vulnerabilities of terrorists. Investigators can exploit financial information strategically, tactically and traditionally. Financial information can be exploited strategically by using it to identify current and emerging trends. Financial information can be exploited tactically by the targeted monitoring of specific financial activity to identify transactional activity in a real-time or near real-time manner. Financial information can be exploited through traditional means by analyzing transactional activity through the review of books and records to develop evidence.
AT: What steps can the public and private sectors take to increase communication with each other in the fight against terrorism?
DL: Public and private sector partnerships are essential. The public sector should provide the private sector with case typologies demonstrating how financial institutions are used by terrorists to facilitate the flow of funds. The how is important to compliance professionals. Conversely, the private sector should report suspicious activity to the public sector with an emphasis on why the activity is suspicious. The why is important to law enforcement. The best example of this type of information sharing is the human trafficking initiative where JPMorgan Chase has worked closely with Homeland Security Investigations (HSI) to share information and develop typologies. This has enabled JPMorgan Chase to identify patterns of financial activity from which they can conduct targeted transaction monitoring. In turn, HSI is provided with predication for criminal investigations.
AT: In your investigative experience what are some of the important lessons you have learned when dealing with terrorist financing cases?
DL: First and foremost, I learned at the outset, immediately after 9/11, how essential it was to partner with financial institutions. We formed working groups with financial institutions that enabled us to establish proactive and progressive investigative mechanisms that yielded great success. That success would not have been attainable without the involvement of the financial services sector. A second lesson learned had to do with vulnerability. We learned that as a country, we were susceptible to terrorist attacks and that our financial system was susceptible to exploitation by terrorists, as Osama Bin Laden boasted about shortly after 9/11. We also learned that finance, if exploited properly, was a major vulnerability to terrorists. A third lesson we learned was interrelated with the first two lessons. We learned what a valuable tool financial information is, and how it could be exploited to develop timely and actionable financial intelligence that we used, and the government continues to use, to disrupt and prevent terrorist activity.