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#1181473 - 05/12/09 05:28 PM Do you want to be deputized?
Andy_Z Offline
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This came across my reading e-pile and I thought it might be an interesting topic. Personally, I can't see it. The fact that the government is getting more involved in the business because of special programs though, does strike me with a bit of fear.


Banks Are Not Mere Bystanders
Why Compliance Officers Should Have Security Clearances
Brett Wallace
Spring 2009

Now due to the recent financial calamity, the banking industry has been forced to slash the budgets and staffs of its compliance offices, further compounding the problem. In order to patch a potentially gaping compliance hole, the federal government should use law enforcement to enhance banks’ ability to effectively exercise due diligence. The best mechanism the government can use is to formally grant security clearances to select bank employees so that classified information can be shared with compliance offices.

The above comes from the PDF link on this page. http://counterterrorismblog.org/2009/05/bank_secrecy_and_compliance_of.php
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#1182712 - 05/13/09 07:01 PM Re: Do you want to be deputized? Andy_Z
luvflipflops Offline
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I agree... along those same lines, in your reading e-pile have you come across any findings from any of the bank/cu regulators where they cited a lack of due diligence after finding suspicious activity? My bank is pulling so far back from any due diligence that at this point our only SARs will be for structuring. I've quoted the manual where it states that the bank should do certain actions for cdd and edd, but they are focused on the SHOULD and see it as an out for them to severely cut back. They are restricting looking outside of our bank information for anything that may help to decide to write a SAR or do a no SAR filed. Ie - we can use google but only if it's to see what kind of business a customer is supposed to have; we cannot use court records (public), google maps, google customer names for news articles, etc. And edd actions such as on site visits and requesting information from a business customer is so far off limits in their view. Do you have anything you can point to where an FI has been cited for weak cdd/edd controls? Unfortunatley everything in the manual is "should" and they do not see that as anything other than "the govt trying to make us all into cops".

Thanks for your help...feels like I'm fighting a losing battle...

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#1182872 - 05/13/09 08:50 PM Re: Do you want to be deputized? luvflipflops
John Burnett Offline
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Look up "should" in any good dictionary. You'll see that it is the past tense of "shall." Your regulator feels the same way.

Unfortunately, compliance is one of the bank functions that if often hit with the ebbs and flows of company net income. It's not unusual to see the compliance pendulum swing too far in one direction. But inexorably, it swings back the other way (in this case, it could take getting hit with an adverse exam report).

Document the heck out of what you are trying to do, even if you feel like you're alone in your efforts. If the bank's management won't let you cover its assets, at least you can cover your own.
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#1182905 - 05/13/09 09:13 PM Re: Do you want to be deputized? John Burnett
luvflipflops Offline
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Thank you John....great advice... memos to file will certainly become my friend in cases like this. Unfortunately we've already been hit with an adverse exam report (a serious one) a few years back... I knew this day would come where they get so comfortable with stellar examinations that they begin to think they are doing too much and need to roll it back...ugh.

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#1182936 - 05/13/09 09:54 PM Re: Do you want to be deputized? luvflipflops
WonderWoman Offline
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I'm a little confused by this article. Towards the end (Page 16), he has an idea of a FBI list that could be scrubbed against all bank accounts.

Isn't this 314(a)?


In a way I feel we've already been "deputized" - but it's the part of my job that I love! Investigation wink
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#1183038 - 05/14/09 12:09 PM Re: Do you want to be deputized? WonderWoman
rdelgado Offline
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Originally Posted By: (not as) newbsa
I'm a little confused by this article. Towards the end (Page 16), he has an idea of a FBI list that could be scrubbed against all bank accounts.

Isn't this 314(a)?


In a way I feel we've already been "deputized" - but it's the part of my job that I love! Investigation wink


He addresses that exact assertion/question on page 19:

Originally Posted By: Source Document
Critics might contend that the status quo already possesses a mechanism for information sharing between banks and law enforcement under FinCEN’s Section 314(a) requirements.83 Law enforcement agencies have the ability request information via FinCEN from 45,000 points of contact throughout U.S. financial institutions.84 Every two weeks, FinCEN sends information to a secure server and financial institutions check their records for data matches. Although the program thus far has claimed results, it is only a half-measure. First, agencies must certify that the money laundering activity is ‘significant’ before submitting a request for information.85 This is problematic for terrorism related investigations. First of all, it may not even be a criminal transaction, but merely paying for a mundane “pre-crime” item such as food, lodging or transportation.86 Additionally, when using financial intelligence to investigate a terrorism suspect, the financial activity may not be ‘significant’ but it may be crucial to determine links to a broader terrorist organization, to determine accomplices or to determine a suspect’s location. Second, the agency must certify that all other methods of investigation have been exhausted.87 This decreases the likelihood that the information gained will be actionable since it delays the request until other methods have been pursued.88 Third, banks can only give information for accounts dating back one year and transactions from the previous six months, limiting the scope of information available.89 Even worse, law enforcement is often reluctant to use section 314(a) as they fear disclosing their sources and methods.90 If banks had the necessary clearance and ability to protect classified information, it could alleviate law enforcement’s concern. Providing security clearances is thus the best mechanism to generate the most meaningful and most actionable financial intelligence.


Hope that helps clear that up. smile
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#1183444 - 05/14/09 03:25 PM Re: Do you want to be deputized? rdelgado
Hrothgar Geiger Offline
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It was an interesting read, Andy, thanks for posting it.

In my opinion, it was very high-level and gee-whizzy, with plenty of rhetorical hand-waving. Because it was at such a high-level, the author did not take into account:
* at least 2 significant information sharing projects already underway; the DHS Private Sector Information Sharing Task Force and the Terrorist Information Data Interchange and Security Project.
* Existing problems on the government's side for harmonizing the classification schema, standards, and information sharing. One interesting report to DHS documented that even at the Unclassified level, agencies declined to share data. Just taking three agencies mentioned in the paper; the CIA, the FBI and the Department of the Treasury, have 3 distinct definitions of 'top secret', multiple individual flavors of top-secret, and their own requirements for access to such information.
* Top-secret clearance takes money, time and resources to obtain. And it is no guarantee that the information needed will be made available if the project is code-word, or if specific information is classified TS-SCI. Unlike the author, I do not believe that merely possessing a TS clearance will alleviate a LEA concern about revealing 'sources and methods'.
* Most of the information classified in 2008 (according to the ISOO audit) was classified as 'Secret' or 'Confidential', 97% to be exact. Only 3% was classified as 'Top Secret'.
* On the bank's side, it would create a problem of 'institutional knowledge', once you know something, the FI knows it and is expected by regulators to make risk decisions using that knowledge.

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#1183579 - 05/14/09 04:34 PM Re: Do you want to be deputized? rdelgado
WonderWoman Offline
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Thanks rdelgado! I missed that

smile
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