Share the Wealth of Knowledge

Ask any of my siblings about my job and the response will be "she works in a bank." My banking career has spanned almost three decades and has taken me from branch banking to consumer lending operations, from executive client relations to general compliance and anti-money laundering (AML) compliance.

I do not talk about my job much—even to friends. Some of the information that I interpret, disseminate and otherwise "handle" is downright scary—like terrorist financing and the prevalence of human trafficking. On a personal level, both topics are intimidating on their own but when you add the knowledge that it is happening within our own country, the knowledge takes on added dimensions. For those of us who have had the good fortune to work in AML surveillance, we know the work can be exciting and monotonous very often in the same hour! Yet, AML professionals are the perfect ambassadors for sharing knowledge learned on the job, from webinars and seminars to networking with industry experts.

Call to Action

There are numerous ways AML professionals can share knowledge to benefit their families, friends and society. A casual dinner conversation with family and friends is the perfect place to talk about your job. Undoubtedly some information is proprietary, so be very discriminating with the information you choose to share. However, much of the information on fraud, scams and schemes is public—but the public (including our friends and family) do not have the time or the inclination to seek out the knowledge. AML professionals have the opportunity to hand their expertise to their acquaintances on a silver platter.

Few outside of the AML field would be able to recognize an Advance Fee scheme1 or a Ponzi scheme2 subsequently, numerous people fall victim to these schemes every year. Many AML professionals can define, by rote, the indicators for these schemes. And those AML professionals that cannot recite the definitions at least know where to find the information. AML professionals should discuss the "red flags" of these schemes over a family dinner. Let your loved ones know that you are available to discuss potential non-mainstream investment matters or emails they have received from unknown individuals. Talk to them about lottery scams3, 419 scams4, phishing and pharming, and any other scams, schemes and frauds of which you are aware. Explain that requests for money up-front from a stranger (and sometimes even acquaintances—think "affinity fraud5") for an unusually large payoff later is a red flag for numerous scams (Nigerian, Lottery, Ponzi etc.).

Great Sources

If you or family members are not comfortable sharing financial information, encourage loved ones to seek out information from non-partisan sites such as the Federal Trade Commission (FTC). The FTC is just one governmental agency that educates consumers on unfair and deceptive practices.6 The Postal Inspector's7 office also believes that armed with the proper knowledge, potential victims can defend themselves against hard-sell tactics. Another excellent resource on current fraud schemes and fraud prevention is the Office of the Comptroller of the Currency web site8 fraud resources section.

In lieu of forwarding the chain email that no one really wants, send your friends and family an email that they'll really appreciate-one dedicated to protecting their identity, assets and/or future. Take a "hot topic" like a high-profile Ponzi scheme and drill it down into actionable items for your friends or family. If applicable, identify areas where the victim could have been more diligent in conducting background investigations. Or, identify some user-friendly sites with interesting information dedicated to consumer protection. FinCEN and the IRS both have case studies on their web sites that are both interesting and informative—even to those outside of the AML/fraud world. The sites listed are just two of the hundreds of sites available to arm the everyday citizen with knowledge to protect her from scammers and fraudsters. Take the time to determine which sites would be most beneficial to your recipients, overwhelming them with information might turn them off to reading any of the important information contained in the email.

Be the Source

As you are educating your family and friends, think about other areas in the community that might benefit from your knowledge. Schools and organizations serving the elderly will, in most cases, eagerly accept your request to speak. Elementary schools host Junior Achievement classes, middle schools host career days and high schools offer business and economics classes. Organizations serving the elderly often sponsor continuing education classes and money management courses. Be careful to limit the discussions to red flags and schemes to avoid. Do not fall into the trap of recommending specific investments or investment types unless you are licensed investment advisor.

Also, look at the protection that your financial institution can provide its customers and the communities. Consider training branch banking associates on red flags of advance fee schemes and elder abuse. Back-office staff, including check processors, could be trained to question large, out of character transactions. Needless to say, AML and fraud staff should be trained on red-flags for fraud and other illegal activity. Fraudsters are cunning and constantly honing their craft. AML and fraud professionals must remain vigilant and be able to spot the markers for various fraud types (mortgage, credit card, washed checks etc.). Consider having your financial institution host an after-hours training session. In addition to providing a much needed service to the community, it's a great opportunity to garner new customers and meet Community Re-investment Act (CRA) expectations.9

Typical victims?

Upon conducting research for this article, I was surprised to learn that many of the stereotypes of fraud victims are incorrect. Here is a quick quiz to test your knowledge on fraud and fraud victims:

  1. The typical telemarketer fraud victim is:
    1. elderly
    2. struggling financially
    3. high school educated
  2. The typical fraud is less likely to succeed when:
    1. the fraudster is under 50 years of age
    2. the initial contact is by telephone or mail
    3. the "investment" is for $100,000 or more
  3. A 1992 survey of telemarketing fraud found that one in three Americans reported having been cheated out of money through various deceptive means. How many victims reported the crime?
    1. fewer than one third
    2. two thirds
    3. 90%
  4. Check your answers:


  1. a — elderly. The elderly are specifically targeted by telemarketers because they are more likely to stay on the line for hard-sell pitches10 and "have a higher concentration of wealth than the general public.11
  2. b — Typical fraud is less likely to succeed if initial contact is by telephone or email. Victims who make personal contact with fraudsters are more likely to trust in a positive outcome.12
  3. a — Fewer than one third of Americans reported being cheated through telemarketing fraud in a 1992 survey. Even more alarmingly, only one third of people surveyed (victims and non-victims) believed they know how to determine if an offer is legitimate13 which further underscores the need for those of us privy to financial education information to share it with family, friends, schools and customers.

Inevitably, scammers prey on the vulnerable. Elder abuse14 is garnering recent press — much of it centering on taking financial advantage of the elderly. When scammers prey on an older adult, in addition to fraud and money laundering offenses, the scammer has committed elder abuse. The National Center on Elder Abuse (NCEA)15 defines elder abuse as "any knowing, intentional, or negligent act by a caregiver or any other person that causes harm or a serious risk of harm to a vulnerable adult." The NCEA defers to state laws and regulations to define specific elder abuse violations.

In February 2011, FinCEN issued guidance to financial institutions subject to Suspicious Activity Reporting (SAR) to include the term "elder financial exploitation" in the narrative when reporting suspected elder abuse. This included financial fraud and underscored that the potential victim must not be named as a suspect on the SAR form but information on the victim should be included in Part V (the narrative) portion.16

Recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act took the bold step of codifying the definition of vulnerable. "Elderly persons, persons who face language barriers, low-income persons and minorities"17 are among the groups specifically identified as "vulnerable" under Dodd-Frank Title XIV—Mortgage Reform and Anti-Predatory Lending Act.

Fraud + AML = FRAML

You may be thinking to yourself, why am I reading this in an AML-centric magazine? The answer to the question is actually comprised of multiple reasons. First, take a look at FinCEN's Suspicious Activity Report (SAR). Part III of the SAR form18 lists various frauds as predicate offenses to money laundering (e.g. credit card fraud, mortgage fraud, consumer and commercial loan frauds). Thinking logically, the scammers are in the scam for the money, more specifically, the profit. To fully enjoy the ill-gotten gains of the scam/fraud, the fraudster will place the funds, in some form, into the financial system. Sounds a bit like placement doesn't it?

Second, as AML guru John Byrne wrote in an article coauthored by Chris Swecker advocating the convergence of a financial institution's AML and anti-fraud programs, "Financial criminals do not operate in separate divisions, the way that large financial institutions have typically organized their AML and fraud prevention programs. AML professionals have an inherent need to understand fraud and fraud professionals will certainly benefit from understanding AML. Keeping pace with the external world through the convergence of fraud and AML programs within financial institutions will reduce risks and costs and help organizations to keep pace with the threats they may be facing."19

Third, one sure way to decrease the incidence of money laundering as a result of fraud schemes is to limit the number of potential fraud victims. The more people know, the more they can avoid becoming victims. Without victims, scams fail. It is that simple.

Though there may be certain areas where fraud and AML programs diverge, educating the public on ways to avoid becoming victims of fraud should not be one. We all need to share the valuable information we possess on fraud and scams, whether it be at home, at work or in the community. AML and fraud professionals should be encouraged to fight fraud/AML on the front-end as we continue to do our jobs on the back-end. At some point, the knowledge you share will save someone money and cause a fraudster one less victim. It really doesn't get any better than that!

Amy Wotapka, CRCM, CAMS, CFE, CIPP, FCRA, ASQ CQIA, requirements manager Corporate Compliance, Capital One, Richmond, VA, USA,

  2. December 2009 ACAMS Today — Beyond the Headlines: An Investigator's take on Ponzi schemes
  13. Ibid.
  17. Dodd-Frank Sec. 1443 a(4)(A)

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