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TRANSCRIPT
FinCrime During and After COVID-19:Navigating the New Normal
Session 2
Boring but Important Things – Event Logistics
2
• Daily reminder emails to let you know what’s on tap
• Most sessions being recorded, available until August 14
• Certificates of participation • Attend 80% of the session• Fill out the survey – Triggers at end, available
throughout
Boring but Important Things – Troubleshooting
3
Audio/visual/other issues: • Try REFRESHING BROWSER as first step• If issues persist, close out and rejoin• Find troubleshooting guide in Resources
box
For customer support: • [email protected]• 786-591-1346
• Guidance from US regulators – PPP, fraud schemes and advisories
• FinCrime enforcement actions during the pandemic
• Criminal trends from law enforcement perspective – What’s
happening, who’s behind it, what you may be missing
• Key areas of focus for global financial institutions – Documentation,
disruption, and more
What’s On Tap – The Agenda
How has the pandemic impacted the alerts you’re seeing in your
fincrime compliance programs?
• More alerts related to fraud
• More alerts related to money laundering
• Fewer alerts related to fraud
• Fewer alerts related to money laundering
• More alerts related to other financial crime (corruption, tax, etc.)
• Fewer alerts related to other financial crime (corruption, tax, etc.)
• No major impact
Polling Question
Meet the Experts
6
Patty O’Connor
President
Compliance Strategy Group (CSG)
Meet the Experts
7
Sonia Desai
Head of International Compliance
Charles Schwab
Meet the Experts
8
John Tobon
Deputy Special Agent in Charge
Homeland Security Investigations
Meet the Experts
9
Jim Vivenzio
Acting Director, BSA/AML Policy
Office of the Comptroller of the Currency (OCC)
Initial COVID-19 Notices from the Regulators
• Issued by FinCEN, OFAC and the OCC
• The agencies affirmatively acknowledged the challenges fianancial institutions faced;
• Required filings may be delayed,
• Financial institutions should implement a risk focused approach toward compliance
• Encouraged communication with your regulators when problems developed.
10
Payroll Protection Plan Guidance
• Banks do not need to collect or re-verify BO information on existing customers even if you previously have not done this.
• For new customers, reliance on the identifying information provided in the PPP loan application will satisfy the BSA requirements.
• Acknowledged that the U.S. government will not challenge lender PPP actions that conform to the guidance, and to the PPP Interim Final Rule and any subsequent rulemaking in effect at the time.
11
FinCEN Fraud Guidance
• In March 2020 FinCEN advised about malicious/fraudulent transactions similar to occurrences in the wake of natural disasters.
• FinCEN referenced the following emerging trends:
– Imposter Scams
– Investment Scams
– Product Scams
– Insider Trading
• SAR filing instructions for COVID-19 links.12
FinCEN COVID-19 Notice
• Direct contact mechanism for urgent COVID issues and instructions for notifying FinCEN of delays in filings.
• Use of the term COVID in SAR narratives.
• Verify requesters for SAR supporting docs.
• Encourages 314(b) sharing
• Listing of Federal agencies to report various types of crimes
• Expansion of their rapid response program for recoveries.
13
FinCEN Medical Scam Advisory
• This May advisory set out various medical scams, set out the red flags for each type of scam as well as case studies. It covers:
• Medical related frauds including fraudulent cures, tests, vaccines and services
• Non-delivery fraud of medical related goods scams
• Price gauging and hoarding of medical related items.
• FinCEN requests financial institutions to reference the advisory in the SAR narrative and provided specific guidance on completing the SAR fields for purposes of medical scams.
4
FinCEN Guidance on Imposter Scams and Money Mules
• Criminals impersonate organizations such as government agencies, non-profit groups, universities or charities to offer fraudulent services or otherwise defraud victims.
• COVID schemes include imposters posing as representatives of the IRS, CDC, WHO, other healthcare or non-profit groups or academic institutions.
• Scams related to COVID stimulus payments, unemployment benefits, contact tracing and phishing schemes with malicious links.
• Sets forth various red flags. 15
FinCEN Guidance on Imposter Scams and Money Mules (Continued)
• A money mule is a person who transfers illegally acquired money on behalf of or at the direction of another.
• COVID money mule schemes include good Samaritan, romance, and work from home schemes. Also used in unemployment insurance scams.
• Sets forth various red flags.
• FinCEN requests the financial institutions reference this advisory in their SARs to indicate a connection between the SAR being reported and the activities highlighted in the advisory.
16
COVID -19 Challenges for Banks
• Potential consequences to banks of the unending lockdown include the following:
– Impaired ability of businesses to service their debts, thus increasing default risk in the banking systems.
– Reduced value of collateral securing commercial loans because of burglaries and vandalism of vacant strip malls, storefront, etc.
– Impaired collateral that secure real estate loans from cities cutting off utilities to buildings occupied by businesses operating in violation of local lockdown impairing the condition, structural integrity, and value of the properties.
17
COVID -19 Challenges for Banks (Cont.)
• Potential consequences to banks of the unending lockdown include the following:
– Higher losses by banks due to degradation of the physical loan collaterals.
– Heightened risks in the commercial real estate portfolio, which may:
• prolong and worsen an economic downturn
• reduce the availability of credit and capital that would support recovery, and
• result in significant safety and soundness issues for community and regional banks with business concentrations.
18
Examiner Guidance for Assessing Safety and Soundness Considering the Effect of COVID-19
• Outlines the Supervisory Principles for assessing the safety and soundness of institutions given the ongoing impact of COVID.
• Covers the following areas:– Overall Supervisory Assessment
– Effectiveness of Risk Assessment
– CAMELS Components
• Interagency guidance, the OCC has also issued guidance to our examiners.
19
2020 OCC BSA Actions and Tools
• 2 C&Ds and 1 Formal Agreement
• 1 CMP Action
– $100,000 (Community Bank)
• 17 Formal Actions Outstanding
• MRAs and other supervisory tools
4
OCC BSA/AML Formal Enforcement Action Trends
21
OCC Formal Enforcement Action Trends
22
What have been your top two concerns related to criminal activity and the pandemic?
• Money mules
• Medical equipment fraud
• Imposter frauds and scams
• Investment frauds
• Cybercrime/cyber fraud
• Fraud in lending tied to government relief (e.g. PPP in US)
• Movement of illicit proceeds through alternate channels (e.g. crypto, e-commerce)
Polling Question
Meet the Experts
25
John Tobon
Deputy Special Agent in Charge
Homeland Security Investigations
COVID-19 and Financial Crime
The Law Enforcement Experience
COVID-19 and Financial Crime
Collaboration
with Small
Business
Administration
What we
expected…
Sham
Companies
Importers of
Counterfeit
Merchandise
CARES Act
Fraud
Tele-
Marketing
Fraud
COVID-19 and Financial Crime
These
Schemes Are
Not Isolated
Criminal Acts
Transnational
Criminal
Organizations
Black
Market
Foreign
Exchange
Currency is
a
Commodity
John F. Tobon
Deputy Special Agent in ChargeHomeland Security Investigations
Miami, FL
www.linkedin.com/in/jftobonhsimiami
Meet the Experts
31
Sonia Desai
Head of International Compliance
Charles Schwab
Managing COVID-19: A global perspective
Sonia DesaiHead of International Compliance
Areas of focus
Employees
Clients
Required documentation
Training / Testing
Systems
Governance / Regulation
Political unrest Real Estate / Travel
What’s likely to remain the “new normal” for fincrime compliance
programs after the pandemic?
• Working from home or hybrid work arrangements
• Digital identities in CIP, CDD
• Digital-first banking, payments, financial services
• Increased emphasis on cybersecurity
• Increased use of automation/machine learning/AI
Polling Question
Questions?
THANK YOU!
Next session: Opening Night Reception4:00 PM ET