Financial Crime - training analysts to understand context

We asked one of our veteran City of London Financial Crime trainers 'what makes Anti-Money Laundering training really effective?'

From my 38 years of experience, my advice to new Financial Crime and Anti Money Laundering analysts is that you must understand the underlying crimes which create the problem funds.  Money laundering isn’t a matter of checklists and operational risk metrics – it’s a real process by which bad people conceal the source of their money.  There are two basic levels of money laundering - the individual level and the corporate level. In this introductory blog I will outline the individual level of money laundering.

Most street crimes generate cash; theft, prostitution, fraud, counterfeit goods – even the proceeds of bribery and corruption may be paid in used notes if the amounts are not too large. The money generated from these crimes can be stashed under a bed (which is actually a money laundering offence as in ’concealing the profits of a crime’). The cash can be taken to a bureau de change and changed into another currency (another money laundering offence). It can be taken out of the country or used to buy consumer goods (again both are money laundering offences.)

But the criminal – or his boss – is more likely to want to have their illicit proceeds in a form that they can spend normally, as if it was earned in honest business.  This means getting the dirty cash into their own bank account. This is where the front line employees are vital; once the cash is in the banking system, it is much more difficult to identify its source.  Even the best Financial Crime staff are dependent on the customer-facing employees to be vigilant and to recognise what is normal customer activity and what seems unusual.

Whenever we train Financial Crime analysts, we always drill students hard in respect of ‘indicators’ that make you consider the validity of the transaction by the person in front of you. Individual financial crimes do not always fit neatly into the categories listed above though, so our training helps students build up innovative thinking and good pattern recognition instincts.  For example, when it comes to individual crimes, it’s important to remember how very mundane criminal activity can be.

Maybe there was someone in there with me, who had received a tip-off to be in that specific elevator at that time and place.

To add to the potential crimes arising here, both men had their names and company name displayed on a lanyard around their necks. There have been many cases where employees are targeted by criminal gangs when they see a bank employee’s identification card on show.

It is particularly important for front line employees to feel that they are engaged with their regulatory Compliance, Legal and Financial Crime teams either directly or through their management structure.  The reason is that many crimes committed against financial institutions will involve all these areas and they could be vital in helping to lead to a potential prosecution as well as aiding in any improvements to internal systems and procedures.  I always emphasise this in my training – Financial Crime analysts need to understand the business context, so they can communicate with people all the way along the value chain. 

Are you ramping up your anti-money laundering or wider Financial Crime team?  Get in touch to share our experiences of how to train proper, effective, analysts.