ACFCS Certified Financial Crime Specialists PDF

ACFCS AND THE CHALLENGE OF FINANCIAL CRIME THE ASSOCIATION OF CERTIFIED specialists advance and elevate their careers. ACFCS is also committed to providing its FINANCIAL CRIME SPECIALISTS...

ACFCS AND THE CHALLENGE OF FINANCIAL CRIME THE ASSOCIATION OF CERTIFIED specialists advance and elevate their careers. ACFCS is also committed to providing its FINANCIAL CRIME SPECIALISTS members and the larger global audience with a community of live and virtual networking The Association of Certified Financial Crime opportunities that allow them to connect with Specialists (ACFCS) was created to respond to other professionals worldwide. the growing need for documented, verifiable and certifiable knowledge and skill in the To achieve these goals, ACFCS counts on financial crime field and to meet the career a professional staff that has decades of development needs of the diverse and growing experience in managing highly regarded number of specialists in the private and public professional associations. ACFCS is guided by a sectors who work in this field. distinguished Advisory Board that is composed of top international experts in diverse fields. The principal mission of ACFCS is to certify the They guide the association and provide direc- skill, knowledge and expertise of financial crime tion and assistance in the development of its specialists across the full spectrum of finan- programs and services. cial crime. It provides learning and continuing education benefits that help financial crime © 2024 Association of Certified Financial Crime Specialists 1 CHAPTER 1: ACFCS and the Challenge of Financial Crime be considered essential to test a candidate for the Certified Financial Crime Specialist certification. Nearly 400 specialists throughout the world responded to the survey and provided the data that is the foundation of the certification exam. The survey was designed by volunteer expert professionals and ACFCS under the guidance of psychometric experts from a distinguished psychometric testing firm. The survey identified that financial crime professionals need knowl- edge and skills in the topics listed below, which are also the topics tested on the exam: Financial Crime Elements and Overview ACFCS CERTIFICATION Money Laundering EXAMINATION Corruption Enforcement and Investigation The CFCS certification examination is a univer- Money and Commodities Flows sal exam. It does not rely on the knowledge of Tax Evasion and Enforcement laws or regulation of any one country or region Fraud Detection and Prevention for the basis of the examination. It is also unitary, meaning that it is not designed for any specific Investigations number of occupations or professions. Instead, Cybersecurity and Privacy it is built to accommodate the job tasks and Sanctions Compliance requirements of all occupations in the financial crime field. Ethics Compliance Programs and Controls To build the certification examination, ACFCS International Standards took various steps over several months. Initial- ly, a group of diverse, expert professionals Asset Recovery gathered over several days to identify hundreds This Certification Examination Preparation of job tasks that are performed by financial Manual is designed to provide you with instruc- crime specialists in distinct occupations. tion that will prepare you for the examination. Once they identified the job tasks, their work was By studying this manual, however, you should distilled and framed into hundreds of questions not assume you will earn a passing grade on that went into a worldwide survey, asking special- the exam. Other knowledge and experience ists of many occupations and in many world in diverse financial crime fields in the private/ regions to evaluate the job tasks for importance, public sectors will enhance your preparedness. gravity, frequency and other factors. The ACFCS This manual also includes practice questions worldwide survey was also designed to determine similar to those in the actual exam and an the skills, competencies and job tasks that should extensive listing of references you may wish to review for further preparation. © 2024 Association of Certified Financial Crime Specialists 2 CHAPTER 1: ACFCS and the Challenge of Financial Crime CONSTRUCTION OF THE CFCS CERTIFICATION EXAM “ I was The CFCS certification examination is construct- ed according to the same nationally recognized psychometric standards as other distinguished professional certifications. To meet the most exacting standards, top financial crime, psycho- metric and certification experts have devoted more than one thousand hours, and hundreds impressed by the breadth of respondents shared their answers and comments in the extensive worldwide survey that ACFCS conducted. This process was overseen by a professional staff with substantial experience in creating of the exam. and administering professional certifications. ACFCS adheres to the principles of psychomet- It is not US-centric ric competency assessment to ensure that its certification exam is a fair, unambiguous legally defensible test of knowledge and skill. In collaboration with ACFCS, a psychometric firm assures security at hundreds of testing or based just locations worldwide, including more than 400 in the United States and Canada. Candidates on money for the CFCS certification who meet the appli- cation requirements may take the proctored exam at any of these locations by appointment. laundering. ” Also, ACFCS offers online proctored exams for those who are not close to a testing center. ACFCS is independent of all government agencies, vendors, attorneys and consultants. Juan Ducali, CFCS, CAMS, Senior Compliance JOB AND CAREER BENEFITS FROM CFCS CERTIFICATION Officer, United Nations By earning the CFCS certification, a person will Federal Credit Union validate his or her skills and earn an objective, verifiable credential of competence. The CFCS certification will enable financial crime special- © 2024 Association of Certified Financial Crime Specialists 3 CHAPTER 1: ACFCS and the Challenge of Financial Crime ists to advance their careers and give them CONCLUSION compelling evidence of an advanced level of professional skill. It will assure employers that The effort against financial crime in the private the work of discharging or managing organi- and public sectors faces growing challenges. zational responsibilities, advocating for their The skills and knowledge that professionals like interests and strategically promoting their you must acquire, refine and display to meet cause is in the hands of someone who meets these challenges have great value. We challenge independent, rigorous standards of knowledge you to become a CFCS and stand on the cutting and skill in the financial crime field. edge of financial crime competence. The CFCS certification provides a unique, With thoughtful attention to the material in marketable asset in a competitive workforce. It this Manual, you will go far toward success in demonstrates talent and skill. Those who earn the CFCS certification exam. Your work as a it can expect to be compensated accordingly. Certified Financial Crime Specialist can offer Increasingly, organizations in the private and enormous benefits to your employer and public sectors around the world are certifying organization, your clients and your career. From their personnel as a visible sign of commitment to the entire ACFCS team, we wish you the best. competence and skill. The CFCS certification is a timely embodiment of the “knowledge economy” or “knowledge era” in which we now live. With thoughtful attention to the material in this Manual, you will go far toward success in the CFCS certification exam. © 2024 Association of Certified Financial Crime Specialists 4 FINANCIAL CRIME OVERVIEW, COMMONALITIES AND CONVERGENCE FINANCIAL CRIME OVERVIEW about $70 billion annually, or the equivalent of $192 million daily. Just as with other financial The world is awash in financial crime. No person crimes, the fallout goes beyond the health- or organization, public or private, secular or care programs themselves. Higher taxes and religious, profit or nonprofit is immune. Perpe- insurance premiums, along with increased trators of financial crime come in many forms, government expenses to monitor and super- often using the façade of sham or shell legal vise the integrity of the programs, are some of entities to conduct their criminal activity. the consequences. The immense earnings of financial criminals Much of this fraud, and thousands of other and their global co-conspirators are impossi- similar instances worldwide, is facilitated by ble to calculate but easily run into the trillions corruption of the participants in the programs of dollars annually. Notable examples of the or in the public agencies that conduct them. sources of illicit profits of financial criminals Lax controls and auditing, poor supervision by are the public and private healthcare programs regulators, inadequate enforcement by inves- that many nations provide to their citizens. The tigative agencies and inattention to recovering United States government, for example, claims the assets stolen by financial criminals embold- its Medicare program suffers fraud losses of ens others and breeds more financial crime. © 2024 Association of Certified Financial Crime Specialists 5 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence Government agencies and private sector victims trafficking, prostitution and similar offenses. of financial crime fare poorly in recovering the While these crimes are also motivated by the funds that are taken unlawfully from govern- desire to make money, they do not fit into the ment programs and from private sector victims. financial crime categories in this Manual. While estimates are inherently difficult, statis- tics issued by government agencies suggest For your needs, we will cover those crimes that only two to five percent of assets that in which perpetrators possess or control the private- and public-sector victims lose to finan- criminal proceeds. At that point, these criminals cial criminals is ever recovered. Asset recovery is become classic financial criminals who must addressed in its own chapter of this Manual. engage in some of the common steps that all financial criminals take. Money laundering is present in all financial crimes and is a common DEFINING FINANCIAL CRIME and essential element that all financial crimes share, regardless of how they made their money. Permutations and perpetrators of financial crime constantly evolve. At any given moment, What is financial crime? A good working defini- persons in all parts of the world are conceiving tion may be that it is a non-violent action that new ways to take money or gain economic results in the unlawful taking, moving, hiding advantage illegally from organizational and or disguising of money or other value by the individual victims. use of guile, artifice, corruption or deception for the benefit of the perpetrator or of another. Except for crimes of passion and those commit- ted to make an ideological statement, such as Financial crimes include corruption, money terrorism, all crimes are committed to make laundering, fraud, tax evasion and sanctions money or gain an economic advantage. Even violations. Each of these categories has subsets, crimes of pure passion sometimes have a finan- offshoots or tributaries. For example, identity theft cial element, such as in the case of a person and embezzlement are subsets of fraud. Corrup- plotting the murder of a family member to tion exists in both the public and private sectors. claim a life insurance policy. Money laundering may be practiced in many ways and may involve persons in all walks of life Most financial crimes have four phases: and private and public-sector organizations. One type of financial crime often overlaps another, as 1. When the crime is being planned. is discussed below in the section dealing with the 2. When the crime is committed. commonalities of financial crime. 3. When the proceeds are laundered. TECHNOLOGY CHANGES 4. When the victim’s losses are identified and COMPLEXION OF FINANCIAL CRIME asset recovery is needed. Financial crime is not static. It evolves and adapts This Manual covers all of them, focusing mainly on to circumstances and opportunities. Identity crimes that have a cash or economic advantage theft, for example, is not a new type of crime, as their primary objective. However, the Manual but the advance of technology has spurred its does not deal with some profit-motivated crimes, growth and made it a global menace. Similarly, such as drug trafficking, illegal gambling, nuclear © 2024 Association of Certified Financial Crime Specialists 6 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence cybercrime did not exist before the arrival of monitor, investigate, report, train and remedi- digital technology and the Internet. ate on financial institutions, businesses, and other organizations, all at a significant cost. Financial crime today is more extensive, complex and technology-driven than ever before; so Even in the face of these mighty defensive are the government and private sector efforts and offensive efforts composed of private- and against it. Investigative and enforcement public-sector organizations, financial crime procedures and regulatory measures that seek continues to grow. Financial criminals are to block or detect financial crime need to grow industrious and find weaknesses, loopholes, at the pace of the evolving techniques of finan- negligence or corruption to facilitate their cial criminals. crimes. New laws and regulations, multinational agreements, treaties and conventions, and GLOBALIZATION OF working groups are all aimed at financial crime. FINANCIAL CRIME Non-governmental organizations, such as the Financial Action Task Force (FATF), the Egmont Financial crime flourishes when it crosses Group, Interpol and others, have been formed national borders. By crossing these borders, the in the past fifty years to help public and private financial criminal complicates law enforcement sector organizations to combat financial crime. efforts by forcing the agencies of one country to obtain the cooperation of their counterparts Starting in 1990 with the creation of the in other countries for the purpose of gathering US Financial Crimes Enforcement Network evidence or locating suspects and witnesses. (FinCEN), nations began creating agencies It usually causes the pertinent authorities to that have come to be known as Financial seek the assistance of an international treaty, Intelligence Units (FIUs) that facilitate inter- convention or agreement, or an international national information sharing and cooperation. organization such as Interpol. The success of these efforts often depends on the political will of nations to accept, adopt and This takes extra time, which favors the financial enforce them. criminal. As time passes, the financial criminal is better able to find refuge for the financial The patchwork of national and international crime proceeds, tamper with the evidence and requirements and standards places the duty to even seek safe haven. The more than 60 “secrecy havens” around the globe, ranging from obscure islands, such as Nauru and Tortola, to long-standing havens, such as Lichtenstein and Switzerland, are a convenient and vital resource for financial criminals to move and hide their assets. These havens provide financial criminals a crucial resource that completes the crime. © 2024 Association of Certified Financial Crime Specialists 7 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence COUNTRIES LISTED ON VARIOUS TAX HAVEN LISTS Caribbean/West Indies Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados,e,e British Virgin Islands, Cayman Islands, Dominica, Grenada, Monserrat,a Netherlands Antilles, St Kitts and Nevis, St. Lucia, St. Vincent and Grenadines, Turks and Caicos, U.S. Virgin Islandsa,e Central America Belize, Costa Rica,b,c Panama Coast of East Asia Hong Kong,b,e Macau,a,b,e Singaporeb Europe/Mediterranean Andorra,a Channel Islands (Guernsey and Jersey),e Cyprus,e Gibralter, Isle of Man, Ireland,a,b,e Liechtenstein, Luxembourg, Malta, Monaco, San Marino, Switzerlanda,b Indian Ocean Maldives,a,d Mauritius,a,c,e Seychelles Middle East Bahrain, Jordan,a,b Lebanona,b North Atlantic Bermudae Pacific, South Pacific Cook Islands, Marshall Islands,a Samoa, Nauru,c Niue,a,c Tonga,a,c,d Vanuatu West Africa Liberia A Table Listing Countries that Have Appeared on Multiple Lists of Tax Havens Issued by Countries and NGOs, Including the OECD, US Government and Others. Source: US Congressional Research Service Report in 2015, “Tax Havens: International Tax Avoidance and Evasion” COMMONALITIES OF ALL tive approach to financial crime, and maybe get even better results. The issue of convergence is FINANCIAL CRIMES discussed in this chapter. There are many types of financial crime, such Financial crimes have these commonalities: as money laundering, fraud and corruption, each with distinct subsets, such as terrorism All financial crimes involve money laundering. and threat finance, identity theft and commer- At some point in the planning and execution cial bribery. But, they all share several constant of financial crimes, all of them involve money commonalities, which make them more alike laundering. A business involved in a foreign than not. corrupt payment, a public official who receives illicit payments, a violator of sanctions laws, an Recognizing and exploiting the commonalities identity thief and other financial criminals, at helps private- and public-sector organizations some point, must hide or disguise the criminal build a cohesive, comprehensive and collabora- proceeds. The domestic or international © 2024 Association of Certified Financial Crime Specialists 8 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence movement of “clean” money for the purpose of committing a financial crime, money launder- CASE STUDY: BANK HAPOALIM ing is a necessary function of the financial criminal because it permits him to mask his In 2020 Israel’s largest bank pled guilty to involvement in the financial crime, evade the criminal misconduct and entered into a payment of taxes and move the money to hide deferred prosecution agreement, agreeing it from victims and government authorities. to pay almost $875 Million in fines. The broad reach of most money laundering Through a Swiss private-banking subsidi- laws and the predicate crimes that activate ary, Bank Hapoalim assisted US taxpayers prosecutions for money laundering, as well as in concealing ownership of companies the international money laundering control and assets in order to evade taxes. From standards of the Financial Action Task Force 2002 to approximately 2014, the bank (FATF) and other world bodies, lend credibil- hid upwards of $7.6 Billion in more than ity to the fact that all financial crimes involve 5,500 accounts. Senior executives, includ- money laundering. ing former Board of Directors members, All financial crimes result in tax evasion. had direct knowledge of the scheme. It would be a unique financial criminal who would go to great lengths of stealing and disguising his gains and still declare his Apart from this important step toward a criminal proceeds in an income tax return. Tax more active world effort against tax evasion, evasion is committed by the parties on both the enactment of far-reaching tax compli- sides of most financial crime transactions, such ance laws with a multinational reach, like the as those involving corruption. Where a transac- landmark US Foreign Account Tax Compliance tion involves official corruption, for example, tax Act (FATCA) of 2010, was a harbinger of a more evasion is usually committed by both parties of active multinational assault on tax evasion and the transaction. The corrupt party falsifies his its arrival as a top international priority. These tax return by mischaracterizing the withdrawal landmark developments, symbolized by FATCA or transmission of funds or the generation of and the OECD’s Common Reporting Standard, cash destined for the corrupt official. The public are among the major financial crime develop- official who receives the corrupt payment will ments of the early part of the 21st century. They either not report the income or falsify its source are discussed in the chapter on tax evasion. on the tax returns that he may file. All financial crimes require a financial insti- Tax evasion is not only a financial crime in its tution. No financial crime of any magnitude own right, but it is also a byproduct of other can be carried out without a financial insti- crimes. The FATF announced in February 2012 tution. The term “financial institution” covers that it was expanding its “40 Recommenda- more than banks. In the broad sense, it also tions” on money laundering after 22 years to includes private banks, credit unions, cooper- include recommendation for measures against ative institutions, securities dealers, insurance tax evasion. This can be viewed as an important companies, commodities traders, money trans- validation that financial crime and tax evasion mitters and other entities where the public can are intertwined. conduct financial transactions. © 2024 Association of Certified Financial Crime Specialists 9 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence The FATF resources offer a wealth of information on financial crime, including the wide range of financial institutions that financial criminals use. The FATF also publishes a wide range of financial crime typologies and commentaries that financial crime specialists will find helpful. The many types of financial institutions and businesses that are implicated in financial crime cases attest to the indispensability of financial institutions to financial criminals and the diversity of them. The vulnerability of these businesses to be leveraged in a financial crime is compounded by the risks that their employees, who may be corrupted or compromised, present. All institu- tions and businesses face this common threat of the “enemy within.” These are the employees or insiders that can compromise operations, steal or leak confidential information, corrupt internal processes, rig technological settings and programs, weaken organizational defenses, assist inside or outside financial criminals, and inflict harm that their unique position enables them to carry out. A corrupt or compromised employee can wreak as much havoc or more in a private- or public-sector organization as any outside financial criminal can. The irony is that despite this ability to inflict so much harm, employees or insiders often receive far less screening and due diligence examination than customers before they are placed on the job. Financial institutions spend significant time and money on due diligence reviews focused on customers, but for employees or other insiders, they spend relatively little in pre-em- ployment screening and post-employment monitoring. Employees are often hired with the prior review and approval of only human resources departments. Investigation and © 2024 Association of Certified Financial Crime Specialists 10 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence vigilance of post-employment employee and All financial crimes create the need for asset insider conduct is usually the responsibility of recovery. All financial crime leaves someone corporate security departments. poorer than they were before. The seminal fraud schemes and financial crimes over the Financial criminals appreciate the value of a last two decades and others have left behind complicit insider and are eager to promote the tens of thousands of victims with billions of employment of an accomplice by an organiza- dollars in losses. tion that they are targeting. Thousands of less-celebrated financial crimi- All financial crimes interface with govern- nals worldwide leave millions of other victims ment agencies. Every financial crime produces behind. Victims that have the resources to or activates a pre-existing interface for a finan- attempt to recover their assets rarely succeed cial institution or affected business with a in these efforts. Government agencies that seek government agency. For most financial insti- to recover funds that are stolen from govern- tutions, a regulatory or supervisory agency that ment programs are no more successful in their oversees compliance will normally need to be efforts, despite the strong asset recovery, legal informed of the occurrence or the suspicion of and judicial weapons they possess.3 a financial crime in a Suspicious Activity Report1 (SAR) or other communication with an agency. Asset recovery is the neglected art of the finan- cial crime continuum. The failure to recover the If a financial crime occurs at or through a assets taken by financial criminals is a primary business that is not required to file suspicious cause of the growth of financial crime. The deter- activity reports, the business will invariably rent effect that successful asset recovery could interface with a government agency when achieve is missing. Financial criminals have the agents arrive to investigate the crime or seek pleasant reality that they rarely are required to records pertaining to the crime. relinquish the money they take from their victims — even if they go to prison. Asset recovery is In most countries, data from suspicious activity discussed extensively in a later chapter. reports and other government reporting forms are processed through government “financial All (major) financial crimes involve more than intelligence units.” More than 120 nations have one country. Whether it is the location of the FIUs, which band together in a confederation financial crime victim, the base of operations known as the Egmont Group.2 The Group facil- of the financial criminal or his co-conspirators, itates the exchange of data and intelligence the home of the financial institutions they use, among its members, under security protocols, or the countries where the criminal proceeds with the goal of improving multinational efforts moved through or were applied, all major against financial crime. financial crimes involve multiple countries, especially in today’s electronic world. 1). These are known as Suspicious Transaction Reports (STRs) in many jurisdictions. 2). To learn more, please click here: www.egmontgroup.org 3). While it is hard to ascertain an exact number for obvious reasons, it is estimated that five percent or less of assets are recovered from financial crimes. © 2024 Association of Certified Financial Crime Specialists 11 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence The many bilateral agreements and multi- CAPITALIZING ON THE national treaties, mutual legal assistance ‘COMMONALITIES’ AND treaties, tax information exchange agree- ments, financial information exchange EXPLORING ‘CONVERGENCE’ agreements, intergovernmental agreements, extradition treaties and other international By examining these commonalities, financial cooperative agreements that bear on financial crime specialists in the distinct component crime underscore the international nature of fields of anti-money laundering (AML), fraud, these crimes. global anti-corruption and others can deter- mine if adoption of a coordinated, integrated Some laws have an international focus by approach, instead of a splintered or siloed definition or by their very name. The US Foreign approach that now characterizes financial Corrupt Practices Act (FCPA) is an example. crime efforts, is advisable. The placement of law enforcement agents of a country in their nation’s embassies overseas Currently, many detection, prevention, regula- and the work of international organizations, tory and enforcement efforts directed at such as Interpol and the FATF, all highlight the financial crime follow the siloed approach. A cross-border nature of major financial crimes. unified or “converged” approach may allow private and public entities to end underutili- Financial crime often involves public or private zation of disciplines and allow internal units sector corruption. Nothing facilitates finan- to achieve greater efficiency, economies and cial crime more than a corrupt or complicit effectiveness. business insider or public official. Corruption is the engine that drives most major international Understanding and appreciating the common- financial crime. Appreciation of the corrosive alities can lead to development of a cohesive, effect of corruption has moved many organiza- more effective global approach to financial tions to mount a broad, still blossoming assault crime in public- and private-sector entities. on corruption in recent years, as evidenced in The culmination of this approach comes in the part by the revised 40 Recommendations of creation of converged units with titles such as the FATF. Global anti-corruption is covered in the Financial Crime Risk Management Group its own chapter of the Manual. within institutions and organizations. This approach has the potential to improve results, Public and private-sector corruption has many streamline procedures, upgrade utility of infor- variations. Examples include the unlawful mation and intelligence, increase collaboration payment by a business to the employee of among diverse employees and organizations, another business to obtain trade secrets, or and save money. the bribery of a regulator to turn a blind eye to criminal activity in a financial institution or For example, some financial institutions have other type of business. unified fraud and AML departments that previ- ously operated separately. This has allowed fraud investigators to learn and capitalize on monitoring tools used by AML analysts and, at the same time, provided the AML analysts © 2024 Association of Certified Financial Crime Specialists 12 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence access to the investigative expertise of persons Among its most significant objectives, AMLA in the fraud units. contains provisions to: If the common bonds that financial crimes establish new federal-level beneficial share make the case for a centralized approach, ownership disclosure and transparency then convergence may be the best course of requirements; action. The commonalities seem to justify a establish a list of national AML priorities deep examination of the way financial crimes expand the BSA’s purpose and mandate are dealt with by private- and public-sector a review of the AML/CFT regulatory entities. They call for a streamlined, unified framework; effort that improves effectiveness. promote public-private partnership and engagement opportunities on AML/CFT THE FOCUS ON EFFECTIVENESS IN matters; FINANCIAL CRIME PREVENTION introduce new staffing options and programs to enhance AML/CFT expertise; While many experts will quickly point out that promote international cooperation on large economies – the United States, Europe, financial crime matters, while protecting the United Kingdom – and other countries with financial intelligence from misuse; large financial centers are where the world’s money gets laundered, these countries also in invigorate whistleblower provisions; and many respects lead the way when it comes to expand the regulatory scope to include the depth and breadth of laws, regulations and businesses that provide services involving enforcement. “value that substitutes for currency.” The United States (U.S.) for instance, is just a Stronger investigative skills needed as AML few years removed from upgrading the center- teams shift to ‘effective’ programs piece of the country’s laws to fight all forms of The AMLA was just the beginning. One of the financial crime with the Anti-Money Launder- key aspects of the AMLA was the creation of ing Act (AMLA), what many have called a “once a formal list of national (AML/CFT) priorities in in a generation” event on par with the original 2021. 2001 U.S.A. Patriot Act. As of 2023, the FinCEN priorities were: Passed in January 2021 as part of the National Defense Authorization Act (NDAA) for FY2021, corruption; the AMLA amends and builds upon the existing cybercrime, including relevant AML statutory framework, originally estab- cybersecurity and virtual currency lished under the Bank Secrecy Act in 1970. considerations; The AMLA also contains the Corporate Transpar- foreign and domestic terrorist financing; ency Act (CTA), which for the first time imposed fraud; a federal requirement for identifying beneficial transnational criminal organization activity; owners of certain legal entities. © 2024 Association of Certified Financial Crime Specialists 13 CHAPTER 2: Financial Crime Overview, Commonalities and Convergence drug trafficking organization activity; partnerships as the most effective form of human trafficking and human smuggling; engagement. and Demonstrate AML/CTF program effectiveness through quantitative and Also in 2020, the Wolfsberg Group issued a qualitative factors. The Group notes statement on Developing an Effective AML/CTF that statistical metrics alone may not be program, detailing what compliance program enough, and law enforcement feedback effectiveness would look like, a welcome model is essential to help institutions determine to add hard edges to the esoteric idea of what is effective. “effectiveness.” The shift to place more emphasis on results The statement lays out five broad steps to help follows efforts by the Paris-based Financial financial institutions evolve their programs Action Task Force (FATF), which sets global AML toward effectiveness: standards, to move away from simply grading technical compliance, laws on the books, and Assess risks in defined priority areas, focus on effectiveness, such as assets forfeit- such as those articulated as national ed, number of convictions and other tangible priorities by law enforcement and/or enforcement measures. regulators, or key areas laid out in national risk assessments. Taken together, the priorities and metrics of Implement or enhance controls against effectiveness give a glimpse of present devel- identified risks, which could include opments in fighting financial crime. developing new controls. Prioritize resources, using the risk-based CONCLUSION approach to allocate time, staff and accompanying compliance resources. This The global financial crime field is complex and includes assessing the benefits of using rapidly evolving, but recognizing the common- emerging technologies, and potentially alities and intersections between all financial discontinuing processes that don’t lead to crimes is a necessary starting point. Approach- useful outcomes. ing financial crime more holistically may offer Engage with law enforcement, to a more coordinated, efficient response in the understand emerging risks and typologies compliance, investigative and enforcement and support operational priorities. fields. It also serves as a means to introduce The Group highlights public-private the wide range of topics that will be covered in subsequent chapters. © 2024 Association of Certified Financial Crime Specialists 14