Director Relies on Networking to Stop Fraud Before It's Too Late

MEMBER PROFILE

Grace Corbett, CFE, BSA
Compliance Specialist and Director of Risk Management
Sun East Federal Credit Union

Grace Corbett, CFE, enjoys her job heading up the various fraud investigations and audits for Sun East Federal Credit Union and ensuring compliance with the Bank Secrecy Act (BSA). But she knows that to do her job well, and in the most efficient manner, she needs a good network of fellow anti-fraud professionals. With new challenges like phishing schemes constantly plaguing her credit union and others, she knows every second counts in a fraud investigation when she's trying to protect the credit union and its assets.

Describe your job function (a day in the life of):
I currently oversee the BSA compliance, fraud investigations and audits [for Sun East Federal Credit Union]. Each day can bring on new challenges. It is rare that I have two days that are identical. I have a small team under me that is dedicated to making sure that the credit union is compliant in writing loans, opening accounts and many other areas within its operations. My team and I also conduct all of the fraud investigations. I work with local, state and federal law enforcement agencies. If an investigation makes it to the prosecution, I also attend court as a witness. Not only do I oversee those areas, I conduct branch cash audits and work closely with senior tellers on hot fraud topics to make sure they are aware of current trends.

How important is networking to you as an anti-fraud professional?
Networking is key. It allows you to share experiences, both good and bad, with other anti-fraud professionals. Networking allows you to provide others with tips on conducting an investigation or just running a situation by someone. They may have already conducted an investigation relevant to your current case and they may be willing to help you. Most people are willing to share their successes and failures. Without networking skills, you can add many hours to your investigation. Knowing that you can pick up your phone and reach out to someone is all a part of the game.

What is your personal motto?
Enjoy every moment life gives you, for you never know when it may be your last.

Read the rest of Grace's profile here in the ACFE Career Center.

Fool Me Once, Shame on You; Fool Me Twice…

GUEST BLOGGER

Sheila Keefe, CFE, CPA
Principal, BDR Advisors LLC

Lousy Tone at the Top Breeds Fraud

Pamrapo Savings Bank of New Jersey first made headlines last March when pleading guilty to conspiracy to commit Bank Secrecy Act (BSA) violations and forfeiting $5 million. Pamrapo admitted it had willfully violated the BSA to avoid the expenses associated with compliance (those pesky compliance expenses). It concealed its customers’ illegal or suspicious activities by failing to file Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs) and willfully failed to maintain adequate anti-money laundering programs.

Per Assistant Attorney General Lanny A. Breuer, DOJ Criminal Division, “This case is a good example of how disregarding reporting and compliance can turn into a crime. [The] guilty plea by Pamrapo Savings Bank should remind financial institutions, large and small across the country, of the high price they will pay for ignoring the law.” Read the full article here.

Well, perhaps the DOJ enforcement action did remind other financial institutions of the importance of ethical business practices, but unfortunately for Pamrapo Savings Bank, the lessons were quickly forgotten. Within a year of the DOJ settlement, a Pamrapo Savings Bank affiliate, Pamrapo Service Corporation, was in the news when a former managing director embezzled more than $600,000 in commissions and was convicted of 33 counts of mail fraud.

Lousy tone-at-the-top was definitely the culprit with the Pamrapo Service Corporation embezzlement, with the ill-gotten gains in the form of ‘commissions’ approved by the bank founder and fraud perpetrator’s father. The ‘commission’ compensation arrangement was developed when the son went to the father seeking additional income in response to a pay cut.  The ‘commissions’ were deemed fraudulent because: (a) the commissions represented a change in accounting treatment for ongoing business activities for which the son had previous received no personal economic benefit and (b) no other officer or director of either the bank or the subsidiary was aware of the new arrangement. 

Other organizations have suffered similar losses due to unreported conflicts-of-interest and improper related party transactions. It is notable with the Pamrapo organization because they had so recently been reprimanded and apparently made little effort to change their ways.  In the aftermath of a fraud detection, it is crucial that organizations take action to prevent additional fraud. Lousy tone-at-the-top can be especially difficult for companies to correct.  However, little can change without it.

Read more of Sheila's insights on her blog, Business Done Right.

'One Size Fits All' Approach Doesn’t Work in OFAC Compliance Programs

AUTHOR'S POST

Mandy Moody

ACFE Social Media Specialist

Daniel Tannebaum, CFE, Regional Head of Currency Services Compliance - Americas at Travelex and a former compliance officer with the Office of Foreign Assets Control (OFAC), refreshed ACFE Fraud Conference attendees on the importance of complying with OFAC sanctions in the breakout session, “The Most Important Regulation You’ve Never Heard Of.”

What is OFAC?

Economic sanction regulations have existed since 1812. The Office of Foreign Assets Control (OFAC) was first organized in the 1940s, and administers and enforces economic and trade sanctions against target hostile governments, individuals, entities and practices. The office has jurisdiction over American citizens and permanent resident aliens located anywhere in the world, as well as any individual, regardless of citizenship, which is physically located anywhere in the United States. In other words, this small acronym means big compliance issues for businesses potentially (or even mistakenly) interacting, or preferably not interacting, with governments like Cuba, Iran and Libya, terrorists, drug traffickers or businesses involved with proliferating weapons of mass destruction.

“OFAC is not a regulator, but rather an enforcement agency; when they turn up at your office, it’s usually too late,” Tannebaum said. “It is unlike any other regulatory agency in the world. Its sole mission is economic sanctions.”

He compared OFAC to the Bank Secrecy Act (BSA), advising strict liability compliance versus taking a risk-based approach. Federal regulators and compliance professionals like Tannebaum are dedicated to monitoring and avoiding interaction with those businesses and individuals on the Specially Designated Nationals (SDN) and Blocked Persons List, and those part of the regime based sanctions programs.

Read the full article here.