Corruption – More than just undermining democracy, corruption deepens socio-economic disparities. In their fight against corruption, financial institutions must fortify their know your customer (KYC) processes and vigilantly monitor for transactional red flags of illicit activities. Recognizing corruption is not solely an external issue; institutions should be vigilant against domestic instances. While we may think of corruption as an international issue in other countries, such as Venezuela or Nicaragua, corruption can also happen within the United States.
Cybercrime – In our digital age, cybercrime tactics are always evolving. Financial institutions are prime targets, necessitating strong information security measures and continuous employee training. A well-integrated transaction monitoring system, synchronized with fraud detection procedures, can identify suspicious cyber activities, including cryptocurrency transactions.
Terrorist financing – Both foreign and domestic terrorist activities rely on funds to propel their agendas. By leveraging intelligence, financial institutions can pinpoint transaction patterns linked to terrorist groups, thereby blocking monetary conduits that support their operations. A financial institution’s AML/CFT program aims to detect and report terrorist financing to disrupt or prevent the transfer of funds to further the terrorist agenda, whether in the U.S. or internationally.
Fraud - With various methods like synthetic identity fraud and skyrocketing check fraud, criminals continually seek opportunities. Institutions must develop a holistic approach to identify and report fraudulent activities. Coordinate efforts among the operations department, frontline staff, fraud teams, and risk management to educate employees on common fraud trends and patterns. A robust fraud prevention program is essential to identifying and reporting known fraud to the proper authorities.
Transnational crime organizations (TCOs) – TCOs span continents, engaging in multifaceted criminal activities. A robust customer due diligence (CDD) program, aligned with the latest FinCEN advisories, can assist in the early detection of potential TCO affiliations.
Drug trafficking organization activity – IThe far-reaching implications of drug trafficking underscore its significance. Institutions can curb these illegal operations by refining their monitoring systems and drawing insights from FinCEN advisories. The 2019 FinCEN advisory extensively discusses typologies, case studies, and red flags for DTO activity.
Human trafficking and human smuggling – Human trafficking and human smuggling can be traced and reported by financial institutions taking a vigilant approach to addressing the AML/CFT priorities. FinCEN has published multiple advisories on the human trafficking and human smuggling crisis in the United States. These include typologies and behaviors for financial institutions to look out for during transaction monitoring.
Proliferation financing – This pertains to illicit financing for weapons of mass destruction. Look out for high-risk transfers, adhere to sanctions programs, and keep up with customer due diligence to mitigate risk. FinCEN has issued several counterproliferation advisories related to this activity identifying high-risk countries, including Iran, North Korea, and Syria.
