Shutting Down the Laudromat: An Interview with an AML Superhero

LETTER FROM THE PRESIDENT

James D. Ratley, CFE
ACFE President

Successful criminals often have a common problem. After they steal the cash, they can’t spend it. They must first wash it.

They search for discreet laundromats. But financial institutions — spurred by federal laws, loss of reputation and a heightened sense of ethics — are cracking down on crooks who want to make their cash squeaky clean.

Jennifer Shasky Calvery has been fighting money laundering and other crimes for years — first at the U.S. federal government and now as the Global Head of Financial Crime Compliance at HSBC Bank. Before joining HSBC in 2016, she was director of the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for four years after a 15-year career at the U.S. Department of Justice. She’ll be receiving the ACFE Cressey Award at the 28th Annual ACFE Global Fraud Conference.

“While I was at the Treasury Department, FinCEN analysts made major strides to enhance deployment of advanced analytics tools to make sense of the ocean-sized data they had at their disposal from SAR [Suspicious Activity Report] filings and other sources of information,” Calvery says in the cover article of the May/June issue of Fraud Magazine. “These tools were essential to FinCEN’s ability to mine data and spot trends, and I knew that I would also need to leverage these tools at an international bank like HSBC.”

Calvery believes that fraud fighters should seize the opportunity to strengthen money laundering information sharing between the public and private sectors.

However, she says that banks are constrained by what they can share with industry peers and to governments. And banks and governments are restricted in what they can exchange cross-border. Regardless, Calvery can act as a mediator among the players because of her anti-money laundering credentials.

“In my role ... at HSBC, I’m focused on deploying innovative solutions that increase the effectiveness and efficiency of our ability to detect, deter and combat financial crime,” says Calvery. “In jurisdictions around the world, governments are adopting ‘sandbox approaches,’ allowing industry latitude to be creative in finding internal solutions to address risks in a way that encourages innovation while providing appropriate safeguards.”

More power to Jennifer Shasky Calvery. I’m looking forward to hearing her keynote at the 28th Annual ACFE Global Fraud Conference, June 18-23 in Nashville. See you there!

Why Law Enforcement is Not to Blame for Fraud

GUEST BLOGGER

Martin Kenney
Managing Partner of Martin Kenney & Co., Solicitors

“Fraud is alive and well in Canada,” wrote Jessica Lewis of the Canadian law firm Bennett Jones LLP in Financier Worldwide magazine this month. “It is thriving and fraudsters are innovating,” she said. “The ongoing boom in white-collar crime is partly the result of Canada’s lack of a uniform regulatory system and ineffective law enforcement.”

I agree. There are regulatory frailties in Canada, particularly the absence of Ultimate Beneficial Ownership (UBO) identification during corporate registration. These regulatory anomalies and loopholes need to be addressed. But fraud is also on the increase globally.

Whenever austerity measures are put in place, fraudsters come to the fore to prey on the desperate and needy (not to mention the greedy). The U.K., for example, recorded a whopping 25 percent increase in 2016 for reported fraud in general, much of this fueled by banking and online scams.

Policing and austerity
As Lewis alludes, law enforcement in Canada does not come out well in these situations. Similarly in the U.K., The Guardian reported that “….the police have not been interested in investigating such cases even though the losses have been as much as £25,000.”

On the face of it, the police appear to be neglecting their roles as investigators and prosecutors of those committing such crimes. The U.K.’s Prime Minister (and then Home Secretary) Teresa May, said only last year, “Fraud shames our financial system.” But I don’t believe that criticizing the police for their perceived failings really touches on the root of this problem. It’s a much larger issue.

Most police forces across the Western world have borne the brunt of austerity measures imposed by their governments. The problem is that, as a consequence, they have inadequate resources and frontline policing must take priority. The U.K. has seen its fraud squads dismantled and specialist fraud investigators deployed elsewhere.

Investigating fraud is a highly specialized discipline, requiring significant training and ongoing courses designed to try to ensure that concerned detectives keep pace with a highly dynamic crime that is constantly evolving. In particular, fraud perpetrated by cyber criminals is extremely difficult to police. Not only does it require an added expertise that only few detectives possess, it also introduces cross-jurisdictional issues typically associated with this form of deception.

Cross-border fraud
Fraudsters are not stupid. They understand that if they are in Russia, the Ukraine or China (for example), then attacking victims in other countries, such as the U.K., Canada or the U.S., makes perfect sense. By inserting the buffer of international borders, there is little likelihood of Western law enforcement agencies receiving sufficient levels of cooperation required to bring the culprits to book (especially given the current political climate).

Sadly, there is little prospect of this status quo changing anytime soon. The political differences make for uneasy relationships between the law enforcement agencies concerned. This means that criminals operating out of the Eastern Hemisphere can effectively attack their Western victims online with impunity. If we add to the mix the realistic prospect of corruption and its impact on the overall scenario, it is obvious why Eastern bloc criminals are confident in their doubtful activities going unhindered. They can simply pay off local law enforcement officers (who should be apprehending them).

Law enforcement agencies (and police in particular) are being blamed for failures to investigate fraud. In an ideal world, police forces would be able to open a “new box of detectives” and deploy them as demand requires. Unfortunately, this is not the case. So until there is a reinvestment in the police, fraud will continue to grow and go unpunished.

Martin Kenney is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI and focused on multi-jurisdictional fraud and grand corruption cases. Mr. Kenney was recently selected as one of the Top 40 Thought Leaders of the Legal Profession in 2017 by Who's Who Legal International. He is the only fraud and asset recovery lawyer included in this list of thought leaders drawn from 16 different practice areas.

www.martinkenney.com |@MKSolicitors

Mentoring Young Professionals Gives CFE Purpose and Passion

MEMBER PROFILE

Chelsea Binns, Ph.D., CFE
Assistant Professor
St. John’s University 

Chelsea Binns, Ph.D., CFE, knew from a young age that she had the skills and perception to be a successful investigator, but her life as a CFE has allowed her to take on more roles than she ever expected. Out of all the roles she’s filled — investigator, fraud hotline operator, professor — her favorite has been mentoring young fraud fighters. Currently, she serves as the Vice President and Training Director for the ACFE’s New York Chapter, where she’s driven to help student members forge their own paths in exciting anti-fraud careers.

How long have you been involved in the anti-fraud profession and how did you become passionate about fighting fraud?
I was interested in the investigative field since I was a child. As a young person, I conducted many unofficial “investigations,” where I learned I had the qualities it took to be successful. But I started my official career as an investigator for the City of New York in 2003. There, I observed the realities of fraud and the harm it can cause its victims. I perceived the vast number of victims of fraud to include the city, its businesses and its private citizens. I recognized the tireless work and perseverance of city employees to prevent and detect fraud. This experience inspired me to continue the fight against fraud throughout my career.

What is your current role and what does it entail?
Currently, I’m an assistant professor at St. John’s University. I teach primarily in the Criminal Justice and Homeland Security undergraduate programs. As a licensed private investigator in the State of New York, I often teach investigative courses in the curriculum. I also teach courses related to fraud, leadership and the corporate security function. In those courses, I draw upon my experience working in an investigative capacity for the City and State of New York, Morgan Stanley and Citibank.

I also advise and serve as a mentor to many students. In this capacity, I have leveraged my relationship with the ACFE to benefit my students. For instance, I often extend opportunities for students to volunteer at ACFE training events, NYC Chapter training meetings and annual conferences. Several of my students have received employment opportunities from members as a result of their exposure to ACFE events.

What steps led you to your current position?
As I advanced in my career, I loved the idea of becoming a college professor. I always enjoyed and valued the training and mentorship aspects of my career. Thus, I gravitated toward a career opportunity that involved sharing my knowledge and experience to benefit like-minded students. I was equally interested in advancing research endeavors based on observations I made over the years.

To this end, I embarked on a doctorate program in Criminal Justice at the CUNY Graduate Center/John Jay College. It was a long road. I attended school at night while working full time during the day. It took me seven years to complete.

I’m very grateful for the opportunity that John Jay College provided me. They rarely accept part-time students. But my ability to have an investigative career in the private sector, while simultaneously attending school, greatly enhanced my educational experiences.

What is a memorable case or project that you have worked on, one that made you feel especially proud? 
When I worked for the city, I spent one day a week receiving telephone calls from citizens who wanted to report fraud, waste and abuse. I learned a lot from that experience. One key thing I took away is that tipsters can make a difference. We acted on all information that was received. If it pertained to something under our purview, we investigated it. If not, we referred the matter or the caller to the appropriate agency. I was proud to assist those callers. That experience made me appreciate the value of fraud hotlines.

Said experience inspired my first book, Fraud Hotlines: Design, Performance and Assessment, published by Taylor & Francis/CRC Press, which is due out this year.

What activities or hobbies do you like to do outside of work? 

Investigations are my passion, and I will often use my “spare time” to perform special research projects for select clients. I also enjoy international travel and outdoor activities, especially running, swimming, biking and tennis.

Read Chelsea's full profile in the Career Center on ACFE.com.