Tag Archives: terrorist financing

Insurance Fraud and Terrorist Financing – A bloody mix.

Published by Tyler Wood, Operations Manager at Crime Tech Solutions

December 7, 2015 – Nice post on LinkedIn today written by Aaron Denbo, Lead Trainer at Frauducate Counter-Fraud Academy

Terrorist-picture-scan-750x500

The game has changed. Insurance Fraud isn’t the “quiet fraud” committed by otherwise “normal” people fudging a bit on their past driving experience, prior injuries, work status, or income. It is an $80 BILLION dollar a year problem and it funds and fuels organized crime rings, drug cartels, and terrorism. In a recent article by Christopher Tidball at PropertyCasualty360, “We’re seeing organized trans-national crime rings that are using insurance fraud as a vehicle to fund illegal activities.

$80 BILLION is a lot of money. That’s a lot of well-funded death and destruction that can be bought and that’s just from the Insurance Fraud front.

That $80 BILLION also includes terrorism, which is more poignant than ever in the wake of both the Paris and the San Bernardino, California terrorist attacks. Combating insurance fraud – and fraud in general — has never been more important.

Now those of us who are counter-fraud professionals and have completed training in identifying, detecting, and investigating fraud and work fraud cases know that what we do is important. Your friends and family probably have a general understanding of what you do but have you connected your work to combating organized crime or terrorism? Have you thought of your work as part of a bigger piece that just might combat the next wave of terrorism? Have you thought of your fraud fighting in terms of making it so that some bad people with bad intentions might just not be able to make that extra explosive device because you disrupted their funding?

After San Bernardino, after Paris, after …. [insert next terror attack here]maybe we should think of ourselves not just as fraud fighters but also as disrupters and agitators to terror groups and organized crime rings. It is a change in awareness and mentality that I’m advocating here, an expansive sense of purpose. Terrorism Finance is more than just working Anti-Money Laundering cases now or leaving that to a problem that the banking sector has to face. It means our insurance fraud investigations are more than just money for our companies or agencies. It means we’re playing for keeps now.

__

Crime Tech Solutions delivers powerful link and social network analysis software to insurance companies to find hidden and suspicious connections between people, places, and things.

To 314(b) or not to 314(b)?

Posted by Douglas Wood, Editor.  http://www.linkedin.com/in/dougwood

FinCEN today (November 1, 2013) released a fact sheet regarding data sharing between financial institutions under the Section 314(b) of the US Patriot Act.

314(b) provides financial institutions with the ability to share information with one another, under a safe harbor that offers protections from liability, in order to better identify and report potential money laundering or terrorist activities.  314(b) information sharing is a voluntary program, and FinCEN has always encouraged its use.

A few years ago, I spent considerable time looking at the overall 314(b) program. I interviewed dozens of Chief Compliance Officers (CCO) and AML/Fraud experts. I found that, despite the benefits to financial institutions – reduction of fraud loss, more complete SARs filings, shedding light on financial trails, etc – the program was not particularly well-utilized. The system, for all it’s good intentions, is very manual.

Imagine you are a 314(b) officer at a financial institution. Your job is to facilitate the data sharing amongst the community. So, much of your time is spent interacting with your CCO on which specific cases should be shared, and with whom. When you get that information, you open up you financial crimes investigation tools, and begin contacting your counterparts across the U.S. and asking them “Hey, do you know anything about Douglas Wood?” You’re calling the other officers completely blind with no idea whatsoever if they know Doug. In the meantime, your voicemail inbox is being flooded with other calls from other institutions asking if you know a bunch of other people (or entities).

Finding the institutions that know Douglas Wood is a lot like looking for a needle in a haystack… except you don’t know which haystacks to look in. The system too often grinds to a halt, despite some excellent work being done by 314(b) officers across the country. There has to be a better way, and some have proposed a data contribution system where financial institutions upload their bad guy data into one large third-party haystack, making the needle a little easier to find. As an advocate for the use of technology in the fight against financial crimes, I hope that model finds some success. The problem, of course, is that banks are LOATHED to put their data in the hands of a third party. Also, it’s typically up to each individual bank to decide if and when they choose to upload their data to be inter-mingled with other institutions. Far too often, it is not entirely reliable and not particularly current.

There is a better way. Several years ago, working with some tech-savvy employees, I envisioned a member-based 314(b) program where each institution maintained total control of their data. The model does not require individual banks to contribute their data for inter-mingling.  All ‘bad guy’ data sits and remains securely behind the banks’ respective firewalls. When an individual bank sends out a request to find out who, if anyone, may have information about a suspicious entity, the request is systematically sent out to all members using a secure network such as SWIFT, for example. That electronic search returns to the querying bank only a risk score which indicates the likelihood that another member is investigating the same entity.

No personally identifiable information (PII) is ever shared, yet the search is productive. The enquiring bank now knows that the person of interest was found in the bad guy data from other participating institutions. With this information in hand, the respective 314(b) officers can move their voicemail exchanges from “Have you ever heard of Douglas Wood” to “We’re both investigating Douglas Wood… let’s do it together.” The time-consuming, manual efforts are dramatically reduced and more bad guys are put away.

So if the question is to 314(b) or not to 314(b), perhaps the answer lies in data privacy compliant technology.