Karen O’Brien, CAMS: The availability of funds can often make or break a case

Karen O'Brien currently owns Global Compliance Solutions, a company dedicated to assisting businesses with anti-money laundering compliance. She previously served as a police officer with the Toronto Police Service for 16 years, spending the last five years as a sergeant in the Fraud and Forgery Squad. She also spent two years investigating financial crimes in the Cayman Islands with the Royal Cayman Islands Police. She is also a Certified Anti-Money Laundering Specialist.

ACAMS Today: You spent over 16 years as an investigator. Could you tell us about your most memorable money laundering related investigation?

Karen O'Brien: The one that comes to mind was a case I was involved in the Cayman Islands. It wasn't the most successful, from a prosecution point of view, but from the victim's perspective it was successful because the funds were recovered and returned. It was a classic case of layering. The case involved a fraudulent wire transfer, whereby written wire instructions were delivered to the bank and forged from a company that was managed in the Cayman Islands. The money was transferred from the Cayman Islands to Atlanta, Georgia to Edinburgh, Scotland and then there was an attempt to send it further onto Dublin. Once the fraud was discovered, which conveniently occurred around Christmas — just between Christmas and the New Year — where most businesses and banks are on a slow down or closed for the holidays. I think it was strategically planned that way. I think the criminals thought, by the time we caught up with the funds, it would already be in Ireland or somewhere else. But we managed to catch-up with the funds in Scotland before the transfer to Ireland could be executed.

The case was memorable because the individual that tried to transfer the funds from Scotland to Ireland put down the wrong account number because he was drunk when he went into the bank. So, they sent it back.

Though we identified the individuals involved in the case, the government in the Cayman Islands chose not to extradite the individuals because the cost involved was too expensive. So, getting the money back was a success in some aspects. But the individuals were never prosecuted for their crimes.

AT: Is that often a problem?

KO: That people are drunk when they try to commit crimes?

AT: [Laughs]. What I wanted to ask: is the lack of funding usually an issue when investigating and prosecuting financial crimes?

KO: Yes, and it's not limited to the Cayman Islands. Money is an issue everywhere and you always hear in the news about how budgets are being cut. There was another case I was involved in were myself and a partner needed to go to Turks and Caicos for a credit card skimming investigation. It was quite a large case but the funds weren't there and the police service just couldn't afford to have the investigation continue. So funds are a big thing. Financial investigations can be very expensive, especially when they cross borders and most of them do these days.

AT: What are some things investigators can do to overcome the challenges involving cross-border investigations?

KO: The first thing we have to do is get the cooperation of the jurisdiction involved and that's usually not a problem. But there are certain protocols and certain red tape that have to be followed before things can get rolling. Often, you have to trust your investigation to others and hope it will be followed. There are different priorities for different jurisdictions, and with limited resources, jurisdictions can only do what is allocated by their budgets. It is a very difficult challenge. The cooperation is certainly there. There are memorandums of understanding in place that assist cross-border investigations. But that's not the issue. Again, it comes down to finances, resources and unfortunately sometimes you have to make a decision as to how far you're going to go with something. As in the case I previously described, getting the funds for the victim, under the circumstances, was the best we could do.

AT: You also previously investigated cases in offshore secrecy jurisdictions such as the Cayman Islands and Isle of Man. These regions have been under global scrutiny for bank secrecy practices. Are the risks associated with these jurisdictions exaggerated?

KO: Absolutely, I can't emphasize that enough. Over the years, there have been mechanisms put in place, such as tax information exchange agreements, the use of financial investigation memorandums of understanding and other tools that assist cross-border investigations. There is a great misunderstanding about what tools are available for information gathering in other jurisdictions.

AT: Can you list some current money laundering trends?

KO: I think one of the big ones we need to be concerned with is the use of offshore companies. We need to have legislation that requires the identification of beneficial owners and it needs to be more consistent across all jurisdictions. That was one of the recommendations of the revised FATF recommendations that came out last year. But it has yet to be harmonized across all jurisdictions, causing some disparities. Criminals are still using these companies to set-up bank accounts, to try to send money from jurisdiction-to-jurisdiction and they know that once it crosses the border the investigation becomes more challenging because of finances and resources.

Trade-based money laundering is another issue because the size of the industry worldwide is so vast. It's a very difficult industry to police and scrutinize as we would like to because it's just too big.

But trends we have to worry about are the ones we haven't identified yet, because if we know about it then the criminals know about it, which means they move onto something else.


AT: The money laundering risks of prepaid cards have been making headlines for years. Is there evidence to prove the cards are being exploited by criminals?

KO: Yes, there is. There was one particular case in Dubai in January 2010. There was an assignation of an individual with militant ties and it was found that 14 of the 26 suspects had used prepaid cards to pay for their hotel expenses and other things. That's just one example. The government and U.S. legislators wouldn't be so concerned about it if it wasn't a problem.

AT: What about virtual gaming, currencies, and Bitcoin?

KO: The investigators with the skills to investigate money laundering through virtual currencies or through the Internet are limited. It takes a certain skill set and a lot of jurisdictions don't even have regulations for e-currencies, despite it being an emerging trend. At the moment, this is a big concern. The United States has some good legislation regarding electronic currencies. But everyone is trying to play catch-up and it already existed before the legislation was in place.

AT: You currently work as a consultant. What are the biggest compliance challenges compliance officers struggle with on a day-to-day basis?

KO: The biggest thing is that compliance now goes beyond AML. It's evolved so much in the past 10 to 12 years and all the compliance officers I see and talk to have to do so much more now, and they are expected to do more with fewer resources. They also are expected to be regulatory experts in their own jurisdictions and experts about other jurisdictions. So the role of the compliance officer is evolving beyond a defined skill set.

AT: What should compliance officers do to combat those challenges? Should departments be merged to utilize resources?

KO: Departments are going to be merged to save money. There's nothing we can do about that. In some organizations it works and in others it doesn't. It depends on the structure of the organization. What is important is diversity and cross-training. The base of knowledge needs to be expanded; don't just have one experienced compliance officer that goes to all the conferences and all the training. There needs to be diverse training among staff members so that not just one person is the expert in everything. The compliance department has to work with the front of the house — the operations side of the business and the customer facing staff members. They have to work together as opposed to each other, since compliance is always seen as inhibiting business growth. It shouldn't be seen that way. They should work together to identify the risks and mitigate those risks rather than just turning business away.

AT: What's the single, most important thing a compliance officer can do to prevent money laundering?

KO: It is important do your job to the best of your ability. Quite honestly, money laundering is not going away. Criminals are going to commit crimes and they need to launder their money. But we have to do our part to manage the risks we can — managing our own office or company. That's all we can control so we need to manage those internal risks as best as possible.  

Interviewed by: Larissa Bernardes, ACAMS moneylaundering.com web editor, ACAMS, Miami, FL, USA, lbernardes@acams.org

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