Terrorist Financing "Red Flags" & Advice From Law Enforcement & Banking Regulators

By Andrew Cochran

The retiring director of the New York and northern New Jersey division of the U.S. Treasury Department's High Intensity Financial Crime Area (HIFCA), Gary Murray, gave an interview to Fortent's MoneyLaundering.Com with some insights into recent trends in his work to fight money maundering and terrorist financing. The HIFCA program concentrates law enforcement efforts in designated high-intensity money laundering zones. Murray also seconded a proposal by Contributing Expert Dennis Lormel and by Jeffrey Breinholt, a valuable Contributing Expert here while he was on temporary leave from the Justice Department. Some excerpts:

In terms of criminal activity, 50% of my work is involved with some kind type of economic crime. In New York, you see a lot of tax evasion, Black Market Peso Exchange activity and the money often moves around the world before to New York. Structuring is still prevalent but criminals are continuing to exploit as many avenues available to them as possible. I do think we are seeing less cash leaving airports but more bulk cash smuggling throughout the borders - a lot of moving from the southern part of the former Soviet Union and that money appears to be washing through our shore for tax purposes...

I can tell you that the SARs (Suspicious Activity Reports) we receive today are ten times better than five years ago. When financial institutions are new to SAR writing, they have a learning curve to go through. But I think recently issued guidelines from FinCEN have helped.

Q.: People like former FBI special agent Dennis Lormel and Department of Justice agent Jeff Breinholt have called for greater openness from law enforcement, such as providing select compliance officers with access to otherwise classified data on investigations. What do you think about the idea?

I think there should open communication between law enforcement and the financial community. There should be a security clearance for certain institutions.

See Doug Farah's June 27 post on the criminal-terrorist nexus and Dennis Lormel's June 16 post on the impact on the enforcement of money laundering laws from a recent Supreme Court decision.

Today, the Treasury Department's Financial Crimes Enforcement Network (FinCEN), which administers the Bank Secrecy Act (as amended by the USA Patriot Act), issued new guidance, "Recognizing Suspicious Activity - Red Flags for Casinos and Card Clubs," with indications "that may indicate the presence of money laundering, terrorist financing, and related financial crimes." They are a laundry list of ways in which suspects attempt to evade BSA reporting requirements, engage in unusual gambling activites or financial transactions in and around casinos, with examples as specific as:

A pair of bettors frequently cover between them both sides of an even bet, such as:
- Betting both "red and black" or "odd and even" on roulette;
- Betting both with and against the bank in baccarat/mini-baccarat; or
- Betting the "pass line" or "come line" and the "don't pass line" or "don't come line" in craps; and,

the aggregate amount of both bettors' total wagering is in excess of $5,000.

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