Posted by & filed under AML General.

fincenIn a news release issued yesterday, FinCEN has launched the “FinCEN Exchange” program to enhance information sharing between financial institutions and law enforcement.

Per the release,

“FinCEN, in close coordination with law enforcement, will convene regular briefings with financial institutions to exchange information on priority illicit finance threats, including targeted information and broader typologies.” Through these regular and as-needed operational briefings, both law enforcement and financial institutions will benefit, as law enforcement will be able to obtain “information intended to support specific lines of investigation or broader typologies related to a particular illicit finance threat…[and] financial institutions will be better equipped to incorporate responsive information into SARs.”

Information shared through previously held briefings has resulted in private sector SARs and public sector cases on: “weapons proliferators, sophisticated global money laundering operations, human trafficking and smuggling rings, corruption and trade-based money laundering networks, among other illicit actors.”

Industry Impact

This is exciting news for those working in financial institutions, as sometimes it can be frustrating to work on a case or file a SAR and not know if its useful for law enforcement.  It appears that the FinCEN Exchange briefings will allow financial institutions to more specifically target areas of priority and better identify risks.  Participants in the FinCEN Exchange will be able to obtain information both from law enforcement, other governmental organizations, and other participating financial institutions.

FinCEN indicated that private-sector participation in FinCEN Exchange is voluntary and there are no new regulatory requirements.  Existing information-sharing mechanisms through the USA PATRIOT Act (such as 314(a) for law enforcement and 314(b) for financial institutions) remain in place.  The purpose of the FinCEN Exchange is to have better focus on high-value and high-impact activities and strengthen the overall anti-money laundering framework for participants.

Posted by & filed under AML Presentations.

…Yep, you read that right!

money-laundering-pop-cultureMoney laundering is an important part of many Hollywood story lines. Whether it be through an original Netflix series, prime time television shows, or on the movie screen, there’s now a plethora of financial crime-related media to watch.

What does this mean? Financial crime compliance and money laundering awareness is increasing. A show about drugs, the mob, or Wall Street would not be realistic without depicting the financial aspect. Viewers are introduced to what money laundering is, the criminal aspect of it, and the effort put in to combat it (both in the private and public sectors). Though the portrayal of financial crime may be a bit sensationalized for the big screen, the increased attention allows more viewers to learn about the importance of the roles of AML professionals.

So, whether you are looking for some new shows or movies to watch this holiday season or want to show Great Aunt Sally what you do for a living (she doesn’t need to know you sit behind a desk all day taking screenshots), check these out:

breaking-badBreaking Bad (2008-2013)

A high school chemistry teacher diagnosed with inoperable lung cancer turns to manufacturing and selling methamphetamine in order to secure his family’s future. –IMDB

Ozark (2017-)

A Chicago-based financial advisor secretly relocates his family to the Missouri Ozarks when his dealings with a drug cartel go awry. –IMDB

Office Space (1999)

Three company workers who hate their jobs decide to rebel against their greedy boss. –IMDB

The Firm (1993)

A young lawyer joins a prestigious law firm only to discover that it has a sinister dark side. –IMDB


Casino (1995)

A tale of greed, deception, money, power, and murder occur between two best friends: a mafia enforcer and a casino executive, compete against each other over a gambling empire, and over a fast living and fast loving socialite –IMDB

Lethal Weapon 2 (1989)

Riggs and Murtaugh are on the trail of South African diplomats who are using their immunity to engage in criminal activities. –IMDB

The Sopranos (1999-2007)

New Jersey mob boss, Tony Soprano, deals with personal and professional issues in his home and business life, which affects his mental state and ends up seeking professional psychiatric counseling. –IMDB

Narcos (2015-)

A chronicled look at the criminal exploits of Colombian drug lord Pablo Escobar, as well as the many other drug kingpins who plagued the country through the years.  –IMDB

wolf-of-wall-streetThe Wolf of Wall Street (2013)

Based on the true story of Jordan Belfort, from his rise to a wealthy stock-broker living the high life to his fall involving crime, corruption and the federal government. –IMDB

The Infiltrator (2016)

A U.S. Customs official uncovers a money laundering scheme involving Colombian drug lord Pablo Escobar. –IMDB

Billions (2016-)

U.S. Attorney Chuck Rhoades goes after hedge fund king, Bobby “Axe” Axelrod in a battle between two powerful New York figures. –IMDB

Compliance (upcoming show on FX)

The half-hour series, currently titled “Compliance,” will focus on the SEC compliance officer at powerful Wall Street firm. –Variety


Happy watching!

Posted by & filed under AML General, Negative News, Research & Investigation.

Correspondent Bank Monitoring
If you have been in the AML industry for any amount of time you are aware that correspondent banking clients pose an increased risk of money laundering to a financial institution.

Based on existing regulations, guidance from the Office of the Comptroller of the Currency, and industry “best” practices, financial institutions conduct enhanced due diligence on correspondent banking clients at the time of onboarding and on a predetermined periodic basis, generally every year.

The disconnect is in the fact that Section 312 of the  PATRIOT Act outlines the following due diligence requirements.

U.S. financial institutions covered by the final rule must establish a due diligence program that includes appropriate, specific, risk-based, and, where necessary, enhanced policies, procedures, and controls that are reasonably designed to detect and report known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered, or managed in the United States.

In today’s regulatory environment, is it reasonable for financial institutions to ignore all of the public risk information made available everyday, and only look at the new information once a year, or rely only on transaction monitoring systems to identify every case on suspicious activity?

What’s the risk?

The most obvious issue is that if a corresponding banking client has negative news published on them between periodic renewal periods, a financial institution will generally not be alerted to it until the time it comes up for renewal again.


Only last week, FinCEN announced the assessment of a $2 million civil money penalty against a small Texas bank for willfully violating the BSA by taking on international correspondence activities without properly equipping themselves to manage such business.   Specifically the bank failed to identify and consider public information about a foreign correspondent bank owner’s alleged involvement in securities fraud among other things.

My bank’s covered, we screen against {insert database’s name} for negative news

Sorry, while screening a static vendor database for negative news is better than nothing, those databases are extremely limited in the amount of information available in them, and how often they are updated.  The volume of information publicly available is growing at an exponential rate and the database vendors who curate those lists are simply not able to keep pace with the volume of relevant risk information published every day.  If you aren’t actively monitoring media directly and only relying on a vendor’s list, you are missing relevant information.

If you are interested in learning more about how those databases work, check out David Caruso’s article outlining their strengths and weaknesses.

But I don’t want to do any more work!

Now even if you acknowledge that the vendor lists you are screening against don’t nearly identify all of the risk information and negative news relevant to your high risk clients, it is a valid concern that implementing a system that actually finds this information will cause significantly more work for your overworked analysts and investigators.

While it is true that this could create some more work dispositioning important things that previously went unidentified, the potential work load is offset by two important factors.

With today’s existing technology the media monitoring system should utilize natural language processing and machine learning to identify relevant results and provide in-depth controls to identity only the information that is important to your financial institution.  This will cut down on the noise and false positives.

Also, if you are actively monitoring a client throughout the periodic review timeframe the update should go much faster because you will not need to conduct due diligence on the whole last year of information since the client has been continually monitored.   At this point regulators will most likely not be on-board with completely foregoing the periodic review, but automating this research throughout the year should save substantial analyst time across the entire client base.

TransparINT Monitor

So how can I do this!?

(Spoiler) Well you are on the TransparINT blog, and we do provide negative news and risk data search and monitoring solutions to some of the largest banks in the world.   Our TransparINT Monitor tool is a completely self-contained web based solution that can be implemented and accomplish all of the above goals within days.  No need for custom development or involving IT for integration.

If you are interested in learning more, just complete this form and I will have our Chief Client Officer David Caruso reach out to answer any TransparINT questions or regale you with tales of money laundering investigations involving South American dictators at Riggs Bank.

Posted by & filed under AML General, Negative News.


It’s like the Panama Papers all over again!  On November 5, 2017, information on the Paradise Papers was released to the public via the International Consortium of Investigative Journalists (ICIJ – view page here).  Without a doubt, financial institutions and banks are scrutinizing these documents for client, account, and transactional exposure.

A quick overview of the Paradise Papers:

  • 4 million documents (1.4 terabytes of information) relating to offshore investments
  • Almost 50 years’ worth of inside loan agreements, financial statements, emails, trust deeds, and other paperwork from Appleby, an offshore law firm; Estera and Asiaciti Trust, corporate service providers; and business registries in 19 tax jurisdictions
  • Unlike the Panama Papers which involved only a single country jurisdiction, the Paradise Papers involve 19 tax haven jurisdictions

Who has been identified from this vast amount of information?

  • 120 politicians and world leaders
  • 13 allies, major donors, and Cabinet members of President Donald Trump
  • 100 multinational corporations, including Apple, Facebook, Twitter Nike, and Uber

General Overview and Summary Information

Reactions and Updates




Fintech – Wirecard

Queen Elizabeth II and the Duchy of Lancaster

Stephen Bronfman, Canadian Prime Minister Justin Trudeau’s adviser


Trump Associates




As more documents and articles are released, including the searchable database, TransparINT will update this list.  Hope it helps, and stay tuned for more details!


(updated as of November 9, 2017)

Posted by & filed under Negative News, Research & Investigation.


The pinnacle of a well-established AML program is its transaction monitoring program.

There are entire groups dedicated to reviewing transactions generated by these systems, groups dedicated to reviewing the initial reviews, groups optimizing scenarios and rules, groups auditing these scenarios, groups tasked with drafting policies and procedures, etc.  Transaction monitoring is an extremely important component of a financial institution’s anti-money laundering (“AML”) program.

What else is as important as transaction monitoring?  Negative news screening, also known as adverse media or derogatory media checks.  While financial institutions dedicate some resources to this necessary piece of an AML program, by no means does this aspect get the same resourcing as transaction monitoring reviews.  This blog piece will not define WHAT negative news is (that can be found here), but rather WHY it is so important.

The power of negative news

Negative news screening is a powerful tool for institutions to combat money launderers and other criminals from using their banking facilities.  An item of negative news – such as a local media article identifying suspicion of bribery – coupled with transactions, can result in a client’s higher risk-rating, multiple SAR filings, or exit. Negative news can make seemingly innocuous transactions appear unusual or suspicious.

Adverse media is powerful enough to result in further actions taken against a client or counterparty, even without suspicious transactions.

Adverse media is basis enough for SAR filing or exit.  Negative news does not always have to pertain specifically to an accusation or conviction related to financial crime.  Reputational risk can be enough.


The requirement for on-going negative news screening

A one-time negative news screening check of an institution’s client base may not be enough.  Many banks and financial institutions screen their medium to high-risk client base with higher frequencies.

fincenOngoing media monitoring is suggested by both the Wolfsberg Group and the Clearing House as components of  a continuing client risk review.  For banked marijuana businesses, FinCEN actually requires this.  For most institutions, they will be faced with the upcoming Ultimate Beneficial Ownership identification rule.  FinCEN’s Customer Due Diligence Requirements for Financial Institutions final rule commentary indicates that “covered financial institutions should also develop risk-based procedures to determine whether and/or when additional screening of these names through, for example, negative media search programs, would be appropriate.”fincen

The need to invest in continued negative news screening is now more essential than ever.

Can this be done?

It’s easy to monitor transactions in real time, or as close to real time as possible.

It’s easy to conduct negative news searches on parties that have alerted in a transaction monitoring system or that have been identified as a party of interest either in the media or by law enforcement.

It’s not easy to monitor clients or counterparties for negative news in real time.  Or is it?

Contact us today for a demo!

Posted by & filed under AML General.

If you are available Thursday, October 19, 2017 at 1:00 pm (EST) consider joining me for ACFCS’ free webinar on “How AI, Automation, and Regtech are Impacting Compliance Careers Webinar”.

I had the opportunity to first give this presentation as a much smaller round table discussion and I am very happy that ACFCS decided to open it to the general public as a free webinar.

Below is the description of the webinar.  Hope you can join!


Artificial intelligence, automation and the rise of Fintech and Regtech will affect how financial crime compliance professionals are doing their jobs currently and what is likely to change in the future.

The session will look at the future of staffing and examine the experiences, skillsets and knowledge that will be required of AML, fraud, sanctions, and similar roles in this new reality.

Attendees will learn:

– How AI, AML and automation can affect their jobs
– What skills may be required to be in-demand in the current and near future
– How financial institutions are adopting and adapting to new tech developments
– How new technologies can both support and challenge financial crime compliance programs

Hosted By:

Chris Focacci, CIO, TransparINT

Chris Focacci is the CIO of TransparINT a financial crime compliance technology firm focused on CDD, KYC and CIP challenges to help financial institutions better identify risk. He was also the founder of an AML job search site and was a financial crimes investigator at Citi.

Register here!

Posted by & filed under AML General, Negative News.

easy-aml-complianceAt my twin daughters’ 7th grade back to school night last week I was forced to relive my horror of Algebra 1.

As the parents walked into the classroom, the teacher handed us an index card and told us to complete the problem on the board.  “Show your work or no credit, and your kids will be the ones grading,” she said.

The next day my daughters let me know that I got zero credit.  It was as though I was sitting back in 1983, when I first realized a career requiring math skills was probably not in my future.

Math isn’t the only place though where we must show our work.  Turns out AML requires the same thing.

In fact, “showing your AML work” aka, “documenting files” is where analysts and investigators spend most of their time.

Excited AML executivesDocumentation is critical to maintain strong compliance.  However, documenting work is inefficient and detracts from more important tasks.  This is particularly the case when it comes to documenting negative news searching and results.

Fortunately, all negative news documentation can now be automated, freeing up investigators to spend more time on work that matters.

Why We Document AML Work

Just like in Algebra, AML investigators must document what they do so that others (managers, auditors, regulators) can assess whether decisions, like filing a SAR, are supported by sound reasoning.  If an EDD analyst decides to recommend raising a customer’s risk rating from “moderate risk” to “high risk,” because there is an article reporting the customer is entering the (legal) marijuana retail business, having a copy of that article in the file is essential.

AML analysts and investigators also document their work to prove they did work in the first place.   As every AML analyst, investigator, and manager knows, documentation requirements eat up enormous time.  As much as 50% of AML work is copying, cutting, pasting, taking screen shots, and creating PDF’s.

This time would be better spent analyzing more alerts, investigating more cases, and conducting more EDD reviews.

Documenting AML Work Is Monotonous and Slow

Let’s look at how many banks require investigators to document negative news searching.

  • Investigators are often required to show evidence of what name they searched. If the case is about Troy Bolton, they take a screen shot showing “Troy Bolton” in the search bar. Some banks also require investigators capture any search terms or search strings they use to better target their searches, meaning another screen shot.
  • Then there is a screen shot of results, or in the case of Google, a screen shot of a portion of the first page of results. This is so a reviewer or auditor sees that a search was conducted and something was found.  Of course, no-one takes a screen shot of the 50,000 results Google returns.  But why not?  This screen shot is meant to show whether something relevant or not was found, so why only show fewer than 10 results?
  • If an investigator decides to open and read any of the results, he or she will then take another screen shot of what they read. This makes sense of course since these results will often support the investigator’s decision about whatever action they recommend (filing a SAR for example).
  • Interestingly many AML departments require investigators document their review of results that end up not being relevant. For those that must do this, you know the pain.  Proving the negative is becoming the norm in AML.

Doing this over and over again, all day long takes a lot of time and is inefficient.  What is the value of that time and how could it be better spent?

Documenting AML Work Is Now Simple and Fast

In 2017 computers can complete monotonous human tasks.  For AML analysts and investigators this means negative news documentation where copying, cutting, pasting, and screen shots are no longer needed!

Reducing inefficiency, improving investigations, and increasing output of every AML worker is a shared goal.  This is now achievable.

Showing your work is a critical part of AML.  It should be easy to do.

If only Algebra was.  That problem I had to solve was this:  2(x-5) = -16.  Remember, show your work.

This is the fourth post in a series.  See part 1,  part 2, and part 3.

Posted by & filed under AML General, Negative News.

The real estate market is hot…especially for money launderers.

The purchasing of real estate with illicit proceeds is not a newly identified method of money laundering, yet it continues to be pervasive with drug traffickers, corrupt officers, and criminals.

In a way, this should be one of the more difficult ways to launder funds, as there are so many gatekeepers involved in a real estate transaction:  real estate agents, lawyers, bankers, mortgage brokers, accountants.  There are many opportunities to detect and report suspicious activity at various stages throughout the purchase.

However, there are no mandatory SAR filing requirements for many professionals working in the real estate industry, thus enabling criminals to utilize these loopholes and blind spots.  Criminals can launder billions of dollars a year through shell companies or via all-cash purchases of luxury properties throughout the world.  Purchasing real estate through these methods “cleans” dirty money, allows large sums of money to be easily legitimized, and avoids the instability of market fluctuations.

Just last month, reports came out on Transparency International’s finding of Australia as an attractive haven for money launderers.  The country’s AML laws do not cover real estate agents, lawyers, and accountants and therefore these “gatekeepers” are not required to report suspicious transactions.

FinCEN’s Geographic Targeting Orders

Hitting a bit closer to home, last week FinCEN announced the issuance of revised Geographic Targeting Orders (GTOs) requiring US title insurance companies to identify the individuals behind shell companies used to pay for high-end, high-value real estate in several metro areas in New York, Florida, California, and Texas.  FinCEN continues to view high-value all-cash real estate purchases as worthy of higher scrutiny, as some version of this GTO has been issued since July 2016.

A FinCEN advisory was also released on the importance of filing SARs related to the purchase of real estate.  FinCEN included an interesting section on the value of voluntarily filing SARs by real estate brokers, escrow agents, title insurance brokers, and others involved in the real estate purchase.

For those of you working at a financial institution, the BSA and USA PATRIOT Act requires that SARs be filed on suspicious real estate transactions.

Red Flags to Look For

For an investigator reviewing transactional activity related to the purchase of real estate, here are some red flags to look for:

  • Property is purchased through anonymous shell companies or trusts
  • Property is purchased via companies with complex or opaque ownership structures
  • All-cash transactions
  • Value of real estate transaction is disproportionate to KYC profile on client
  • Real estate transaction is inconsistent with other activity identified in the account
  • Negative information identified on purchaser or shell company involved

While many (hopefully most!) real estate transactions are purchases from a client’s legally gotten gains, these red flags should be considered in connection with the entirety of the activity in the account, the customer’s profile on file, and the negative news identified on a party.

While TransparINT cannot determine the legitimacy of a real estate transaction, we can help you identify the most relevant negative news and risk information related to any of the parties to the transaction!

Posted by & filed under Beneficial Ownership, Research & Investigation.

Anyone who has spent time in a KYC group knows the challenges of trying to identify the beneficial owners of companies with complex structures.



Even when new clients are cooperative about providing ownership information during onboarding, there are many cases when there is just no simple way to understand the ownership structure without breaking out the calculator and charting it on paper.

Could there be a better way?

For a long time I have wanted to create a KYC tool that not only helped visualize complicated ownership structures, but also calculated ownership percentages across multiple levels.  But since TransparINT’s core focus is building tools focused on negative news and publicly available risk information, and we have had our hands full with our expanding client base,  I have not been able to dedicate much time to the idea.  Enter Hudson Harriman-Smith; a promising young computer science student from Wesleyan University.  Fortunately, we had the opportunity to have Hudson on board this summer as a Web Development Intern, and he has provided the extra bandwidth to take on the project.

Our new and completely free Beneficial Ownership Tool provides a user interface to chart simple or complicated ownership structures.  Once the structure is mapped, there is an ownership calculation feature that determines the percentage owned of the target company through each parent company back to the individual owners.  This is the approach many KYC groups currently use to calculate ownership percentages to meet the new CDD rules.

How does it work?

To get started creating ownership structures, simply click on the company icon on the center of the page and add parent companies, subsidiaries, or individual owners as necessary from the pop-up form menu.  Names and ownership percentages can be added to all nodes in the graph.



Once the structure is complete, click on the target company, and select the “Show advanced ownership relations” button to see how much each of the parent companies own of the target company through their respective subsidiaries. 

calculate UBO


The calculated percentage will appear in parenthesis next to every parties’ name, allowing users to easily identify which individual owners have the most control.



Free!? Is there a catch?

Nope, no catch.  Go nuts with it.

Over the course of my career I have conducted KYC reviews on thousands of companies, and this is a tool that I always wished existed, so I am happy to be in a position where I can help make it a reality for all of the AML/KYC analysts who have to do this work everyday.

We hope that you find it useful, and it makes your job of identifying beneficial ownership a little easier.

Posted by & filed under Negative News.

Third in a series.  See part 1 and part 2.

aml-efficiency-part-3Current ways of reviewing negative news results are monotonous, frustrating, and harmful to AML compliance.

Negative news is the best way to identify AML risk, yet reading piles of irrelevant results can zap the attention and spirit of every AML investigator.

So, a troubling paradox exists: The process of finding what matters most ends up weakening AML compliance.  Wading through endless irrelevant results wastes time better spent on meaningful work. The monotony erodes an investigator’s attention and initiative, increasing the likelihood of mistakes.

Reviewing Negative News Is a Grind

karate-kidYou’re an EDD analyst, a SAR investigator, or a transaction monitoring alert analyst. Day after day part of your responsibility is to search and review negative news results.  And, day after day you are confronted with having to read dozens or hundreds of profiles, news articles, and watch list hits.  At the forefront of your mind is this reality:  the vast majority of what you will read is either irrelevant or incomplete.

That is depressing.

Yes, all jobs have tasks that are boring and leave you questioning, “Why am I doing this?”  But, unlike the skills Danny LaRusso gained by waxing on and waxing off, painting the fence, and sanding the floor, reading endless irrelevant negative news results has no purposeful benefit.

The Problems with Reviewing Negative News Alerts

For the past 15+ years, in order to find negative news, AML investigators use databases and/or search engines.  Both approaches have serious flaws.

Negative news databases create two big problems: (1) irrelevant results, and (2) incomplete information.

Search engines also present (1) too many irrelevant results, and (2) just too many results in total that no one has time to properly review (does anyone look at page 4 of Google results?).

Negative New Database Headaches

Irrelevant Results

“Irrelevant results” is a softer way of saying “false positives.”  Not much more explanation needed.  Everyone in AML knows the frustration.  A full explanation why negative news databases return so many irrelevant results is its own topic for a future blog.

But in sum, negative news databases return so many false positives because people’s names are not unique identifiers, basic key word searches used by databases are outdated, and negative news databases don’t incorporate modern computer science.

Problems with Profiles

Negative news databases typically provide a “profile” for an investigator to labor through.  These profiles contain multiple fields such as date of birth, passport number, and aliases.  Most of the time these fields are blank and serve no purpose other than to distract an investigator trying to process endless information all day long.

Included somewhere in these profiles is a short snippet summarizing whatever negative news items relate to the result.  This synopsis is never enough information on which to base a decision, so the investigator clicks the web link included in the profile.  And then, as the link is launching, the investigator waits to see the dreaded, “404, Page Not Found” error code.

What a waste of time.

Now the investigator, believing there may be something important, leaves the negative news database, goes to Google and begins searching the world-wide web, asking themselves, “Why do I even use the database in the first place?!”

Search Engines Challenges

Seeking some measure of confidence, and hoping to avoid the consequences of missing critical information, the investigator goes to Google and starts the negative news process all over again.  If they are lucky, the search name is unique and the investigator must only look past a few advertisements, LinkedIn results, Twitter feeds, and Facebook accounts before they spot the negative news.

If they don’t see what they think they are looking for right away, they either continue to page through results until their eyes glaze over, or start the search process over yet again this time devising a search string that will hopefully return better results.

This is AML in 2017.

A Better Way to Review Results

Instead of relying on methods devised in 2005, AML investigators today should expect to use negative news applications that are simple, fast, and enable them to make better decisions.

Negative news results should be relevant and they should be scored so an investigator can see what is important and move quickly.

Results should be easy to read, and there should be far fewer of them.

It is time AML applications support the way investigators want to work.  Investigators should not have to adapt their work to the limitations of the systems they are forced to use.

Next week in part 4 of the series, we discuss a better approach to documenting negative news work.  The days of manual and monotonous steps of copy, cut, paste, screenshot, and PDF – another huge waste of time, are finally over.