Tracking Terrorists. How you are Effected

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Tracking Terrorists.How you are Effected

• CMTA Advanced Workshop
• January 24, 2007
• Deborah M. Higgins
• President
• Higgins Capital Management

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The alleged terrorists on this list have been
indicted by sitting Federal Grand Juries in
various jurisdictions in the United States for
the crimes reflected on their wanted posters.
http//www.fbi.gov/homepage.htm
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National Money Laundering Strategy

• In 2003, the U.S. government implemented a
  national money laundering strategy to attack
  money laundering and terrorist financing on all
  fronts both formal and informal methods of the
  domestic and international financial systems.
• Information taken from the Dept. of Justice and
  Dept. of the Treasurys 2003 National Money
  Laundering Strategy.

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National Money Laundering Goals

• Safeguard the international financing system from
  money laundering and terrorist financing
• Enhance the U.S. governments ability to
  identify, investigate and prosecute major money
  laundering organizations and systems
• Ensure effective regulations

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Examples of Terrorist Funding

• Alternative Remittance Systems (ARS)
• Informal Value Transfer System (IVTS), or
  hawala
• Bulk Cash Smuggling
• Trade-based money laundering and terrorist
  financing
• Cyber Crime

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IVTS or Hawala

• IVTS, or hawala..an individual in one country
  gives funds to a hawala broker, who notifies a
  counterpart (usually of the same extended family
  or ethnic group) in another country, to transfer
  an equivalent amount of money to a recipient in
  that country used in South Asia, the Middle
  East, Europe and North America its fast,
  cost-effective no paper trail

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Bulk Cash Smuggling

• Bulk cash smuggling is used by money launderers
  and terrorists
• U.S. is working with the international community
  to ensure mandated inbound/outbound currency
  reporting at reasonable levels (U.S. reporting is
  10,000)

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Trade-based Terrorist Financing

• Terrorists move money by means of commerce in
  either licit or illicit goods
• We now know the Taliban relied on international
  narcotics trafficking to raise funds
• Knock-offs of designer goods are used by
  terrorist groups
• A North Carolina Hizballah Cell used buying large
  volumes of cigarettes in a cigarette smuggling
  enterprise to fund activities

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Cyber Crime

• Terrorist solicit donations, share info, and
  recruit supporters directly via web sites, chat
  rooms and targeted electronic mailings
• Exploit charitable organizationssolicit funds
  but with covert intent
• Identity and credit card theft, intellectual
  property piracy and fraud

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Safeguard the International Financing System

• Section 311 of the USA PATRIOT Act provides
  special measures for jurisdictions, financial
  institutions, or international transactions of
  primary money laundering concern
• This is where your day-to-day banking,
  broker/dealer, and custodian bank interaction
  come into play.
• This is where your personal accounts privacy
  come into play

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FinCEN

• Financial Crimes Enforcement Network (FinCEN)
• This is a network, a link between law
  enforcement, financial institutions and the
  regulatory communities.
• Receive personal business lists to check
  against client databases
• Update the firm contact annually at the Dept of
  the Treasury

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OFAC

• OFAC-Office of Foreign Assets Control
• Administers and enforces economic and trade
  sanctions
• Financial firms are sent the latest updates via
  email and must scan client databases to determine
  whether the name is in the system

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Ability to Identify, Investigate and Prosecute

• FinCEN plays a key role in sharing information
  OFAC plays a key role in asset control and
  sanctions
• Steady stream of emails on above
• Tougher customer due diligence requirements,
  including those related to identification of
  beneficial owners of corporate vehicles

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CIP-Customer ID Program

• Must have program implemented for new account
  verification and tracking
• Scans for verification of the following OFAC,
  SSN, birth date, address, address high risk, DL ,
  phone number each account pass, fail or review
• NASDs Customer Identification Program Notice

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CIP Existing Account Docs

• In working with your financial institutions, the
  Feds are involved the rules are set.
• Know your customer..remember to forward all
  updates and changes immediatelyname not there
  can not accommodate
• Moving is strictly by-the-book

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Ensure Effective Regulation

• FinCEN
• OFAC
• Anti-money Laundering Policies and Procedures
  (AML) for financial institutions
• Annual independent audits of the AML
• National Security Letters

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On a personal Note

• Banks get nosy to battle ID theft (12/11/06,
  Teresa Dixon Murray, Newhouse News Service)
• New security measures being required for online
  access of bank, credit card investment accounts
  online.
• Extra credit measures to access financial
  accounts by phone

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On a personal note, 2

• Cheney defends banking, credit record searches,
  1/15/07, Associated Press
• Not violating peoples rights by examining the
  banking and credit records
• National security letters permit the executive
  branch to seek records about people in terrorism
  and spy investigations without a judges approval
  or grand jury subpoena.

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Why do you want to know?

• Hopefully this reduces your frustration both
  professionally and personally as your financial
  institutions ask for things they let slide in
  the past.
• Remember, these are federal mandates we must all
  comply with.
• Update ASAP any changes to your financial
  relationships. If the name doesnt match
  existing records, the requests will be denied.
• Do memory exercises at one point online, I
  didnt know the answer to any of the 5 new
  security questions!