During the winter holiday season, I spent some time in Mexico City.
As hoped, the museums, the architecture and the archeological sites had the desired effect of “resetting” my outlook on the world. I learned a lot and, as a longtime New Yorker, was struck anew by how all of us inhabiting North America, and by extension Central and South America—and in fact the entire world—are deeply interconnected.
It was not all museums and historic sites: thanks to an amazing company run by a group of women who love their city, I got the chance to take the “Eat Like a Local” tour.1
And then, there was lucha libre, the highly choreographed Mexican tradition of masked wrestlers who—several times a week in the Arena México—reenact the struggle of good versus evil.
You can tell the bad guys from the good because the bad luchadores (wrestlers) cheat to win and try to dishonor their opponents by unmasking them. Boisterous heckling and booing from the audience further confirms who are the bad guys.
At the 5:00 p.m. family show on Sunday, the good guys won—except for one tag team. The loss, in part the result of bad referee calls made willfully or in error, enraged the audience. It also added a note of realism, since outside the arena, good guys do not win all the matches.
Anyone fighting financial crime knows that. But the advent of cybercrime has compounded the losses as law enforcement and government struggle to keep ahead of cascading cybercrime.
Twenty-five years ago, what is now the Association of Certified Anti-Money Laundering Specialists’ (ACAMS) launched its ACAMS moneylaundering.com 1st Annual International AML and Anti-Financial Crime Conference and we will commemorate that event in Hollywood, Florida on April 20-22, keenly aware that financial crime has only become more complex.
Unlike the luchadores, it has never been easy to identify the bad guys and the advent of cybercrime has made it tougher—individuals, transnational organized crime and hostile nation states guilty of a wide array of hacks and fraud operate in the shadows and are difficult to locate let alone bring to justice.
Cybercrime in general is increasing, takes more time to resolve and costs victims more, according to an Accenture study.2
Scams involving cryptocurrency reached $8.8 billion last year and crypto-transactions associated with criminal activity totaled $11.5 billion, according to a Chainalysis report.3
During the “Bridging Digital Divides: Fintech/Regtech and Public Policy Bottlenecks” panel at ACAMS Anti-Financial Crime and Public Policy Conference in Washington, D.C., at least two speakers made it clear that financial institutions (FIs) and government are overwhelmed by the tech revolution.
A little more than 62% of respondents to an audience polling question said they believed financial regulators are behind in oversight of fintech and regtech developments in the face of overwhelming change, and while 32% said they were catching up, no one said they were ably handling oversight.
Respondents were evenly split over whether the fintech/regtech revolution presented opportunities for stemming financial crime or just created new challenges, but 23% said it was a net negative since criminals were always one step ahead of law enforcement.
Despite the alarm, there is no going back. The innovations and those who would exploit them are unleashed and much of the data that makes us vulnerable to cybercrime and robs us of privacy, has already been created and collected.
It is just a matter of who will own and connect the information.
Christopher Wylie’s book subtitled Cambridge Analytica and the Plot to Break America4 recounts how psychological operations (PSYOPS), which are techniques developed by government intelligence agencies to destabilize hostile governments, were used to first radicalize and then catalyze a subset of people with racist and sexist tropes in order to affect the 2016 U.S. presidential election.
The effort was based on harnessing an incredible amount of data from Facebook, which gave Cambridge Analytica granular knowledge of individuals in key parts of the U.S. Wylie recounts contacting these voters from a call center in London, literally able to see their houses online and more aware of their fears and biases than the voters themselves.
The book does not describe a dystopian future scenario, it describes where we were four years ago; threats from cyberhackers and the collection of our private data has only grown since then.
To identify the bad guys and ultimately catch them, democratic governments, FIs and technology companies will have to work together. At least on fintech and regtech issues, a channel needs to exist for a less adversarial relationship than has characterized oversight of FIs for compliance with the Bank Secrecy Act (BSA).
Count on the government regulators, FIs and nongovernmental organizations that meet in Hollywood for the 25th anniversary of our conference to be thinking not just about the past, but the next 25 years and, since we will also be discussing the fact the BSA simultaneously turns 50, the next 50 years as well.
- “Eat Like a Local Mexico City Food Safaris,” Eat Like a Local Mexico, https://eatlikealocal.com.mx/
- “Ninth Annual Cost of Cybercrime Study,” Accenture, March 6, 2019, https://www.accenture.com/us-en/insights/security/cost-cybercrime-study
- “The Chainalysis Crypto Crime Report is Here. Download to Learn Why 2019 Was the Year of the Ponzi Scheme.” Chainanalysis, January 29, 2020, https://blog.chainalysis.com/reports/cryptocurrency-crime-2020-report
- I’ve used the subtitle for Wylie’s book because the title contains an obscenity. Various news publications have made a similar decision.