To say that financial crime is complex would be an understatement; however, complex and impossible are very different things. As Dana Meadows wrote in her seminal book, Thinking in Systems, the most challenging problems facing the world–war, poverty, hunger, the environment–are the result of system failures, which are attributed to narrow thinking or attempting to fix a single piece of a problem in isolation from the rest of the whole. Very rarely do complex problems have an effective solution that does not take into account several driving elements.
This approach is oddly applicable to the realm of financial crimes and something that ACFCS and its co-founder, Charles Intriago, set at center stage during the conference. The panel, led by an impressive range of experts from the public and private sectors, “Convergence – Achieving Greater Effectiveness and Efficiency by a Unified Approach Across the Spectrum” laid out some of the ways in which the concept of convergence is already taking place, what still needs to be done and some of potential drawbacks.
The concept of convergence is the idea that financial firms and institutions, traditionally, have approached financial crimes in a “siloed” fashion. The AML and BSA folks, for example, have been distinctly separate from the fraud and IT departments or the business intelligence units. They might both be investigating an entity or principal, but not working in unison. Since the majority of these crimes include more than one predicate offense, why would FIUs want to waste time trying to decide between fraud, corruption or money laundering when the aggregated data allows you to immediately start the investigation?
The ACFCS approach rests on the theory that all financial crimes have something in common, most notably, money laundering, tax evasion, foreign entities and cross-boarder operations. So what might convergence look like if applied to a bank or financial firm? The panelists offered a number of blueprints. Essentially, the emphasis is on the need for convergence under one leader or department of fraud investigators, AML investigations, cybersecurity, sanctions compliance (OFAC), and ABC folks because of the above-mentioned commonalities. Through convergence of subject matter under the same roof, in combination with effective technology for data collection and analysis, financial institutions will be more efficient at catching criminals, while creating more safety for customers and the businesses themselves.
Chris Puder is currently in his last semester of an MA in International Policy Studies at the Monterey Institute of International Studies with a concentration in Human Security and Development Policies. Much of Chris’ initial interest in Financial Crimes began with research relating international arms control and illicit arms trafficking, which has evolved into a wider range of financial crime activities.
