Anti-Money Laundering: 'You Need to Collaborate' - Kevin Sullivan, AML Expert

Individually, banking institutions, law enforcement agencies and regulatory boards understand the risks of money-laundering crimes.

But collectively, in active collaboration, they could do much more to prevent, detect and investigate these crimes, says AML expert Kevin Sullivan.

In an exclusive interview in advance of his latest AML webinars, Sullivan discusses:

Anti-money laundering trends;
The greatest challenges facing investigators;
What's most misunderstood about AML legislation - including the Bank Secrecy Act (BSA)?

Sullivan is a former Investigator with the NY State Police and was the state investigations coordinator assigned to the NY HIFCA El Dorado Task Force in Manhattan. He has more than 20 years of police experience. Sullivan possesses a Masters in Economic Crime Management and is both a certified anti-money laundering specialist and certified anti-money laundering professional. He is also the director of AMLtrainer.com.

TOM FIELD: Hi, this is Tom Field, editorial director with Information Security Media Group. Today we are discussing anti-money laundering and with us is one of our foremost anti-money laundering experts, Kevin Sullivan. Kevin, thanks for joining me again today.

KEVIN SULLIVAN: Thank you. I'm happy to be here Tom.

FIELD: Kevin, when we last spoke you were with the New York State Police and now you aren't. Can you tell us about your new role and what you are doing?

SULLIVAN: Contrary to popular belief I did not leave in disgrace or get involved in any trouble; I left after almost 21 years on the job. I retired at the end of 2008. I have now moved on to creating my own consulting and training business.

FIELD: Now the last time you did a Webinar presentation for us it was on anti-money laundering trends in 2009. Now that we are almost halfway into the year, what do you see emerging as the key trends?

SULLIVAN: You know that is probably one of the most common questions that I get and my answer is going to seem like I am talking out of both sides of my mouth, so let me explain.

On one hand the bad guys are always looking for something new. What's new could be something that's old and redone again, certainly like new technology for example. Gambling has been a staple of money laundering for years and when internet gambling came around that was a new twist on it. So they are always looking for something different.

On the other side of that coin, there are only a finite number of things that they can do. While there are many methods to launder money, there are not millions. Sometimes you look up and you realize, "I don't see anything particularly new and outstanding on the horizon here," but it doesn't mean that it's not happening somewhere or they're not trying to do something new. Usually when a new technology is developed you can be rest assured the bad guys are looking to abuse it. I know the latest trend now with law enforcement is taking a long, hard look at trade-based financing, and basically it's an old technique, but an old technique that is now getting some new look-ats. Law enforcement is putting more hours and time into looking very hard at it.

Since the last time we spoke, I don't particularly see any new, latest-and-greatest thing that the criminals are doing. But rest assured, they are out there looking for new ways and if there is a new technique that comes to improve our lives and what we do, they will abuse it somehow, someway.

FIELD: So what does that mean for investigators? What challenges does that create for people that are investigating these crimes?

SULLIVAN: Well the biggest challenge is networking. Unless we arrest a criminal and the criminal tells us what is going on, the next chance of learning anything actually comes from the banks. When the banks start seeing things that are unusual or suspicious and they start creating SARS on them, law enforcement takes a long, hard read of it and says, "Well this looks weird. Why is this happening? This is unique."

So sometimes, because we get our leads from the banks and we don't always get them from the criminals, it is a hard thing for the investigators to keep up with. There should be some networking. You have to sit down with the regulators; you have to sit down with law enforcement and the financial institutions. Sit under one roof, under one table.

We used to do it monthly and we called it an ALERT meeting. That was an acronym for "Anti-money Laundering law Enforcement RoundTable." We would go into a room, close the doors, and talk about what is going on and what we all see. We did this because one bank might see something that is interesting that law enforcement didn't know about, and we pick up on it and then we discuss it with the regulators and some of the other banks. And all of the sudden, you start to see it happen more often and you realize you have got yourself a new trend.

So the most important thing is to get out and talk to your peers, talk with law enforcement and discuss what is happening.

FIELD: So Kevin, you've got an upcoming Webinar for us on understanding money laundering laws, what are some of the key points of this session?

SULLIVAN: Well, this is the crux of everything that the financial institutions are doing when it comes to compliance and AML [ph]. You have to understand what the Bank Secrecy Act is all about, as well as the Patriot Act and some of the rules and regulations.

Sometimes what is easy for law enforcement might not be easy for banks because law enforcement sees the beginning and the end of a problem. They don't see what is in the middle.

Bankers see what is in the middle. Law enforcement doesn't realize some of the issues that the bankers have to deal with and vice versa.

Once you understand some of the laws, the bankers and the financial institutions will understand why these rules are in place and why they are important and law enforcement will understand why they are here and how it applies to the bankers. So it is just a matter of looking at the laws and regulations and trying to figure it.

FIELD: Now you talk about coming to an understanding, what do you find to be the most misunderstood part of basic anti-money laundering legislation?

SULLIVAN: I think what is misunderstood most is there is still a lot of confusion, but different institutions read it differently. It has gotten a lot better since the manual came out, because that really shed some light on the subject, because let's face it; it's a pretty gray area.

Take SARs for example. What constitutes a SAR? What makes a SAR? When do you SAR? You talk to six different banks and you get six different answers. You talk to different regulating bodies and you get different answers. You talk to law enforcement and you get different answers.

Since the manual has come out, confusion has narrowed down a little bit and we are getting more specific answers and people are more in tune with what we have to do and what gets created and what gets reported.

FIELD: So Kevin, for this Webinar you have coming up, who is the real target audience for this? Who is it most appropriate for?

SULLIVAN: I think this is most appropriate for the financial institutions, particularly lower management and mid-management; as well as entry level. It is for people to grasp the basics of why we are here, of why these laws came about, what prompted them and what these laws exactly are. For example, what is the Bank Secrecy Act? What does it consist of? What does it mean to you? How does it make you do your job?

You may be an automatom [ph] and just say, "Okay, x happens and I have to do y." But it really helps the situation if you knew that x was happening because of this and now you have to do y because it will do this. And once you get a complete and total grasp of what is going on, I think it makes everyone's job a lot easier to do.

FIELD: So after this, I know you have some other session and activities coming up. Why don't you give us a sense of what you will be doing over the next few months?

SULLIVAN: We have some things coming up regarding AML for the government to get everyone into. As I said before, it is nice to have everybody understanding where the other parties are coming from because we all have to work on this together. AML is not just an issue with banks or MSB's; it is an issue to all of us. Some of these Webinars for learning AML are for law enforcement, for government, for training the bankers in some basic concepts of the laws and how to run investigations.

It helps us get through the process and hopefully I can do it in such a way that I can make it nice and clear for everyone to understand. Because if you really understand what anti-money laundering is, it really sheds light on the entire problem and makes it easier for everyone to understand to complete their mission.

FIELD: Makes sense. Kevin, it was a pleasure catching up with you and I look forward to talking with you again soon.

SULLIVAN: Thank you very much Tom.

FIELD: We've been talking with Kevin Sullivan about anti-money laundering. For Information Security Media Group, I'm Tom Field. Thank you very much.




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