I confess. I have ‘borrowed’ some product and sales messages from people outside of the company from time to time. But, in fairness, these people are usually recognized industry experts. Take Ken Rijock, for example. Mr. Rijock is a former banking attorney at an international law firm. He’s also a former money launderer. He spent the 1980s as a money launderer and adviser to drug traffickers until he was arrested and served a U.S. federal prison sentence for racketeering and money laundering. I recently re-read several installments of his Confessions of a Money Launderer series, which outlines a serialized account of his escapades while on the other side of the law.
We previously posted about Mr. Rijock’s writings back in October of 2007, but the information seems just as relevant today as it did back then. The issue of Anti-Money Laundering (AML) continues to be front and center for the global financial services industry, and as a group we continue to learn new and innovative ways to solve the problem.
To that end, the American Bankers Association (ABA) holds its annual Anti Money Laundering Conference in Washington, DC, next week. Beginning Sunday, November 13th, the conference runs through Tuesday the 15th and looks to be very well attended once again. The conference is a great venue for BSA/AML compliance officers, in-house and outside counsel, fraud officers and investigators, bank auditors, regulatory officials and consultants. According to the ABA, this conference reflects “must have” content for BSA/AML compliance professionals. It’s hard to argue that statement, given the robust agenda that has been put together.
The lineup of speakers this year includes the ABA president Mr. Frank Keating and the director of Financial Crimes Enforcement Network (FinCEN), Mr. James Freis. Additionally, a solid lineup of key industry players are involved in the sponsorship of this year’s event, including Infoglide Software Corp., LexisNexis, NICE Actimize, Palantir Technologies, and World-Check (home of the Confessions of a Money Launderer series). Infoglide, who hosts this industry blog site, will be at Booth 407 exhibiting their industry-leading Identity Resolution Engine (IRE) product for Fraud and AML detection/investigation. Please come by and visit us, because I truly believe that we have ‘borrowed’ all of the right pieces from industry experts to make our technology a viable solution for the banking and financial services industry.
“Professional analysts and law enforcement officers from more than 15 different agencies including the FBI, ATF, DEA, US Marshall’s, Homeland Security, and state and county partners work from one large room to put out intelligence products in a truly collaborative environment that defines New Jersey’s fusion center. Products include crime mapping with predictive analysis to help local departments know when and where crimes are likely to occur in the future.”
“Morgan’s prison sentence will be followed by three years of supervised release. Morgan was ordered to pay restitution of $2,804,462. Morgan, 64, was convicted in October 2008, of 69 counts of health care fraud, following a two-week jury trial in Albany. Michael J. Moore, U.S. attorney for the Middle District of Georgia, said the indictment charged that for a period of several years ending in August 2007, Morgan, a registered pharmacist and the owner of Thrift Center Pharmacy in Camilla, executed a scheme to defraud the Georgia Medicaid program, which is jointly funded with state and federal funds.
“TCSPs are often involved in some way in the establishment and administration of most legal persons and arrangements; and accordingly in many jurisdictions they play a key role as the gatekeepers for the financial sector. This report provides a number of case studies which demonstrate that TCSPs have often been used, wittingly or unwittingly, in the conduct of money laundering activities.”
“Early this year, Gartner suggested that a ‘data deluge’ has begun. In his recent Dataspora Blog post about ‘Big Data’ and what it means, author Michael Driscoll presents a unique and interesting perspective on the massive amounts of data being generated and stored. According to The 451 Group’s definition…”
“Gartner released a report in November entitled, ‘Top 10 Technology Trends Impacting Information Infrastructure, 2011.’ Two of the top ten trends were ‘Entity Resolution and Analysis’ and ‘Master Data Management.’”
“According to Taxpayers Against Fraud, a nonprofit group based in Washington, D.C., National Medical then launched a campaign to force Ven-A-Care out of business. But in fighting back, Ven-A-Care staff discovered National Medical was paying kickbacks to doctors who prescribed medicines and services that weren’t needed, then billing Medicare and Medicaid exorbitant sums far in excess of what the medicines and services cost. The Justice Department eventually got a $486 million settlement from National Medical — and Ven-A-Care received $40 million as its reward under the False Claims Act.”
“Russian financial institutions reported 120 trillion roubles (2.44 trillion pounds) of suspicious transactions to the anti-money laundering watchdog in the first nine months of 2010, the Kommersant daily reported on Monday.”
“Today, everything seems to be moving into the cloud. In 2005, investment in cloud computing was about $26 million. But in 2009, the investment grew to $370 million, more than 10 times of what was invested in 2005.”
“Some of the nation’s largest banks are exiting or scaling back their dealings with foreign embassies and missions in the U.S. because of the burden of complying with money-laundering regulations… ‘It’s a commercial decision, but clearly it has ramifications for diplomatic relations,’ said Mark Toner, acting deputy spokesman for the State Department. ‘We want these foreign missions to be able to carry out their normal diplomatic functions here in the U.S.’”
“There are an estimated 50 million patient records, with 20 to 200 records per patient, resulting in billions of individual pieces of information, all of which need entity resolution: in other words, which records belong to her, him or somebody else.”
“Federal laws require banks to know who exactly they’re doing business with - identification checks are mandatory - and they must gather details of clients’ backgrounds and lives. Failure to comply with those regulations can lead to administrative and criminal charges. Banks and other businesses that handle cash also are required to report suspicious transactions involving their clients to a federal anti-money laundering agency, FINTRAC. Reporting failures can also lead to administrative penalties and criminal charges.”
“Specifically, there were 145 FCA cases settled in the 2010 fiscal year and the 10 largest settlements involved health care fraud, with eight involving drugmakers, according to Taxpayers Against Fraud, a non-profit that supports whistleblower lawsuits. The 10 largest cases accounted for $2.7 billion recovered. Although fiscal year 2009 actually recovered a larger pot of money - $5.6 billion.”
“It’s no longer too scandalous or surprising to admit that technology- or IT-centric MDM strategies just don’t work. Building a single version of truth of master data in a central hub somewhere doesn’t directly solve any business problems. The only way master data can reduce risks, improve operational efficiencies, reduce costs, increase revenue or strategically differentiate an organization is by figuring out how to connect and synchronize that master data into the business processes and decisions most important to an organization’s success.”
“Police believe the real winner is a frequent player who purchased the ticket at a favourite store in St. Catharines in 2003, then had it checked at a Burlington store. Back at that time, there was no scanner allowing players to have their tickets checked automatically. They had to trust the clerk. Police have alleged the store’s operators lied to the customer and passed the winning ticket to a female relative to cash in.”
“Now that I have finished the four-part series on linking methods, I would like to talk about one of my pet projects, OYSTER. It stands for Open sYSTem Entity Resolution, a project to build a configurable, open-source entity resolution. Although I am somewhat hesitant to announce a system that is not yet available to readers, it does exist and has been a valuable teaching tool in my ER class. A run-time version (Java JAR file) will available soon on the ERIQ website, and the source code should be available on Source Forge by the end of the year.”
“Madan Sheina, author of the report and an Ovum lead analyst, said: ‘Bad data is a growing problem for businesses due to the sheer volume and pace at which it is now moved between organisations. We now estimate that bad data costs US companies 30 per cent of their revenues – a massive $700 billion per year and a figure that is set to increase.’”
“‘FINTRAC anticipates that the FATF will publish a public report on this work later in 2010,’ it said. Over the past few years, prepaid cards and Internet payment services have only been identified in a minority of domestic money laundering and terrorist financing cases. In 2008-2009, for instance, Internet-based payment services were involved in roughly 4 per cent of all disclosed cases, FINTRAC said in its report.”
“International companies, particularly those in the financial services markets, have long struggled to comply with the varying data privacy laws of the countries in which they operate. Simple data analysis practices in one region of the world may or may not be acceptable in another, and the penalties of non-compliance can be harsh to say the least. This leads to inefficiencies in areas such as AML, Compliance and Fraud Investigation.”
“Despite their alleged lack of medical licenses, authorities say, the trio treated thousands of disabled and low-income patients, helping Masood bilk at least $1.8 million from Medicaid, the federally funded health care program for the poor. ‘Unsuspecting patients were placed at risk through deceit and substandard medical care, while taxpayers were being defrauded of millions of dollars,’ said Michael B. Ward, head of the FBI’s Newark office.”
“The specific initial recipients of the new automated service were identified as the TSA’s Office of Transportation Threat Assessment and Credentialing; the TSA Secure Flight Program; CBP’s Passenger Systems Program Office for inclusion in the Traveler Enforcement Compliance System; and US-VISIT for inclusion into the DHS Automated Biometric Identification System (IDENT).”
“‘There are so many databases out there, officers want to be able to get into one portal for information,” Romley said. “Technology capabilities have improved immensely over the years, the real future is in databases when it comes to helping solve crimes quicker. Everyone knows the value of having an intelligence sharing system. the meeting was a baby step, but a monumental step forward.’ One example Romley cited was the East Valley Gang and Criminal Fusion Center that consists of law enforcement agencies throughout the East Valley such as the Mesa, Tempe, Chandler, Gilbert and Scottsdale police departments sharing information through having all of their police reports in a database for investigative purposes.”
International companies, particularly those in the financial services markets, have long struggled to comply with the varying data privacy laws of the countries in which they operate. Simple data analysis practices in one region of the world may or may not be acceptable in another, and the penalties of non-compliance can be harsh to say the least. This leads to inefficiencies in areas such as AML, Compliance and Fraud Investigation.
For most companies, the data to identify and catch fraudsters already exists within the organization; however, because data is distributed across various data silos in different countries, resolving identities and non-obvious relationships requires rapidly accessing multiple data sources with different structures and access methods.
Consider then the requirement to comply with data privacy laws, which make it essential that the analyst returns only the calculated probability of a match in a foreign database, instead of the actual data associated with that match. Businesses have spent massive amounts of money trying to tip-toe through the minefield of privacy laws and acceptable practices. Determining “who’s who” and “who’s working with whom” has proven difficult where data privacy laws prohibit individual analysts from ‘seeing’ the results of a search into a database in another country.
Infoglide’s Identity Resolution Engine is uniquely capable of solving these requirements by searching into disparate data – irrespective of where it resides – and returning only the percentage likelihood that a match or relationship was found. The software then returns contact information of the appropriate data steward, if desired.
Taking the weight of data privacy concerns off analysts increases productivity and helps them focus on the cases that truly matter to your organization. For more information, contact sales@infoglide.com.
On the heels of the very successful Association of Certified Fraud Examiners (ACFE) conference last month comes an industry event which represents investigators of financial crimes and fraud. The International Association of Financial Crimes Investigators (IAFCI) meets in Washington, DC next week with an agenda that is chock full of sessions involving discussions of best practices for solving and preventing financial crimes.
One thing for certain is that there is no one “right” answer to prevention and investigation. As I pointed out in a previous post here, it is clear that predictive analytics technologies have been a valuable tool for organizations to “catch” fraudsters based upon their behaviors. With more and more organizations adopting identity resolution technology, however, those “best practices” are becoming even better.
Identity resolution technology goes at the heart of who’s who… and who’s working with whom… by “gliding” across an organization’s data (internal and/or third party) and searching for those tiny pieces of forensic data attributes that are the golden nuggets of financial crime investigation. Identity resolution helps investigators understand the identity matches and non-obvious relationships between individuals across enterprise data – despite input errors or deliberate attempts to deceive.
In combating financial crimes, identity resolution technology has become the next big ‘thing’, as it provides answers to the following types of questions:
Does someone in an incident database resemble someone in another database… and who else is connected to them?
Is the witness in an insurance claim suspiciously similar to someone in the SIU data?
Do credit card applicants share subtle attributes that would point to bust-out fraud?
Does the loan applicant have a non-obvious relationship with an employee? Or a known fraudster?
How is the stock trader connected (by degrees of separation) to an insider?
Is an applicant somehow connected to a Denied Person?
Infoglide Software Corporation, the leader in identity resolution engine technology, will be attending IAFCI next week and we would encourage you to drop by our booth and say hello. Otherwise, drop a note to sales@infoglide.com and I will have someone reach out to you directly to explain how this all works.
“Medicare fraud and billing errors costs the government more than $36 billion last year, the Economist noted. The modus operandi involves a “care-provider” billing Medicare for non-existent or unnecessary services. These services and items include: HIV/AIDS medicines and therapy; medical equipment such as wheelchairs to neck and knee braces, as well as home health care, physical and occupational therapy and mental-health services.”
“Another method used by organized crime is to pay a 10 per cent premium for winning lottery tickets or to buy jewelry in Canada worth tens of thousands of dollars and sell it in the U.S., achieving money laundering and foreign exchange conversion at the same time.”
“Each center can have an individual purpose, McManus said. The South Texas center will have two branches: one working on homeland security, bolstered by a new San Antonio Police Department Terrorism Criminal Intelligence Division, the other a 24-hour tactical operations center for ‘all crimes and all hazards as they occur in San Antonio and the region.’”
“Schurke said a fraud-prevention effort launched in 2005 has increased collections dramatically. Collections due to L&I investigations have increased 40 percent, to $770 million. The department has invested in advanced computer technology that should make it easier to track down employers who are not reporting fully. The systems will make it possible to compare 20 state and federal databases, including the IRS.”
Infoglide Software provides entity resolution and analysis solutions for retail, banking, insurance, government, and law enforcement. Without the need for data cleansing or warehousing, Infoglide Software's Identity Resolution Engine™ (IRE) analyzes all of the information relating to individuals and/or entities from multiple sources of data and then applies...
Subscribe to this blog