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Following the Money: The Evolution of Financial Intelligence Post-9/11 · The Decision Advantage

• Brian: Welcome to the Decision Advantage, a Fusion Intelligence podcast by Fernan Consulting. I'm Brian Leclerc, and today I will be speaking with Suzanne Lynch, consultant in financial intelligence and payment systems here at Fernand Consulting. Suzanne, welcome to the show. Suzanne: Thank you very much, Brian. just a little bit about myself. I've spent thirty years actually in the corporate sector as financial investigations, global financial investigations while working for MasterCard, Midwest banks, working with anti-money laundering and fraud detection networks. training for law enforcement throughout the world, Europol, Estonia, and then back to the NYPD Academy. That is correct. Brian: So you work directly with the law enforcement? Okay. Suzanne: in complex case investigations globally. and and a lot of that, as we will discuss, became part of after 911, we all knew we all had to work together, whether the private sector the government and you know the the public sector law enforcement, low even local and state. we worked a lot with some of the federal and intelligence agencies so they could understand how money moved. and so Brian: Right, 'cause because things really changed after nine. Suzanne: yes, which I'm going to address and we don't have enough time to go through all of it. but how things happened. Brian: So before we get into that, so how did you find yourself into this this sector and this field? Or do you even remember? Suzanne: i again I know. No, actually I was local law enforcement for about Brian: okay. Suzanne: six or seven years. I don't know if some of you remember the movie Eight Mile Road. I I didn't work. I did work on Eight Mile, but not on the Detroit side. Brian: Mm. Suzanne: The other side. And after I got an offer one day from a bank on a case that I had helped them with as a local. Brian: So were you working as an investigator or? Suzanne: No, I was on actually on patrol and Brian: all right. Suzanne: ha and so happened to catch a bad guy that was doing credit card fraud. Brian: Mm. Suzanne: and so it evolved into the bank was creating fraud units. So I was asked to apply. so I made the transition. Hmm, banking hours. No more midnights. That sounded good. Brian: That sounds a little bit more appealing, yeah. Suzanne: Yeah, yeah. So that's actually how I started. Brian: interesting. Suzanne: yes. and then was recruited to come out to New York to work for MasterCard, after many years and worked on Wall Street as well, protecting really rich people's money. And so it's been a variety of careers. and being able to work with frankly in partnership with the Intel communities as well as you know law enforcement has really been my honor. Brian: Hm. Yeah, and that's quite the achievement actually. So so did you first get involved with the intelligence side of things after nine eleven or were you already involved? Suzanne: Not pretty much after nine eleven. you know, where especially in which I'm gonna talk about how frankly we really you f I like to say that financial intelligence really didn't kick in. We're kind of the new kids on the block till after nine eleven, right? Where you had human intelligence, signals intelligence, all these different ones. Now we have Finite. Financial intelligence. And it's a book called Brian: I'm sorry, just to just a step back, you're you teach or you have been teaching. Yeah. Yeah, I know. We lost that part. Suzanne: I'm sorry, yes. and then and then yeah. then we I I went to and I had been teaching and gotten my masters and I decided I've always wanted to be a teacher. So I went to made the transition to academia from the corporate world, which that could be a story in itself, and started teaching at Utica University. I was there for ten years. and as a professor of practice, which is a newer term in academia. So that meant I wasn't I didn't have a PhD, I wasn't doing research, but academia is starting to see the need for those of people who are in the field. So I was a Professor of practice in financial crime, which some people may just say, Wait, she practiced financial crime? Well, you have to know, right? Brian: Right. Now you're saying you have experience in it and you yeah. Yeah. Suzanne: so and then was director of both the graduate and undergraduate programs, which entailed changing some classes, creating a course, money laundering and threat finance. you know, compliance and different things and it was definitely an honor and especially to pay it forward, right? to students. 'Cause at one point with the undergrad students, I was and as you've this especially this twenty fifth anniversary, I had students who weren't alive w when nine eleven happened, right? So you know, going through that and to say why are we why are we why are we doing this, right? Brian: Right, 'cause it's more more than even a reminder. It's actually in you know, telling people what happened. Suzanne: Again and showing how, as I told my students and tell them, my job changed on September twelfth, two thousand one. Right? Brian: Right. Right. So what were you focused on bef right before that? You said you were helping yeah. Yeah. Suzanne: The financial investigations, fraud, that kind of you know, you still want to get the bad guys and you can still do that. Brian: Mm-hmm. Suzanne: and and many of the same foundations and fraud can also be used for detecting terrorist financing and as well as, you know, any type of other threats, right? So like what we're dealing with with Iran. you know, who's helping fund Brian: Mm-hmm. Suzanne: where they're getting money. we can always do so much whack a mole with you know the US with sanctions and all that. And I'll I'll get into that at a very high level. But it suffice it to say that it's all the foundation, the financial transactions, the old coaches follow the money. Right? and that became more so. Not as much, not as much. Brian: Right. And was that term really used before th before nine eleven, follow the money? Yeah. Suzanne: bottom line is this is the age of financial warfare. Think of it. What are we doing? And that where even Treasury, there are boots on the ground in Afghanistan as well. working with governments, financial institutions, the global economy. So that's why it's the new era. Nine eleven changed everything in how financial institutions are held accountable, where they're going, how they move money, and we have a lot of c cooperation with other countries. it's to stop the flow of terrorist funds. I mean the the proceeds of money laundering obviously is from human trafficking, narcotics trafficking, all sorts of things. So those same skills are applying to what we started on nine eleven or nine twelve. Brian: Right, and it's not right. And it's not like some of these things were happening beforehand, but you you know, you started, yeah. Suzanne: The emphasis and and the methodology changed, right? So now we have, for instance, this day and age, we have the Chinese money laundering for the drug cartels. Who knew? Brian: Mm. Suzanne: So we see this, you know, the the the global economy tries to also work around, you know, other countries trying to, you know, work around the US and use, you know, countries that maybe don't have or put willful blindness to what's going on in their financial networks. Brian: So what kind of rules or regulations changed that help helped you to, you know, alter the way that things were being done? Suzanne: Well, so let me just get back to that day on September eleventh. I know 'cause there's I'm sorry, there's so much Brian: Sure, yeah, yeah. Yeah, I know we keep skipping around. Right, no no it's Suzanne: but i and and the reason is because I was at a money laundering seminar in Midtown Brian: Mm. Suzanne: Manhattan. Who knew? at Brian: Right. Suzanne: my boss and I, I was working down on Wall Street and Like everyone else, we thought, it was just a small plane, whatever, my boss goes, Yeah, you know what, let's head back down to the office and hopped on a subway and only made it to Yeah, we were in midtown, we were Brian: So how far away from from the attack were you? Okay. Suzanne: d and the office was down. and so it's at least, you know, half hour on the subway, right, depending on. So but we were evacuated at Fourteenth Street. got off the subway, was like and remember back then I had a BlackBerry but was mostly internal to my firm, Brian: Yeah. Suzanne: but the only real information you got was people stopping at storefronts and people who had televisions. So it was like, okay, I'm gonna try to walk back to Grand Central where I took my train out of. So walk back and by then one of the the planes the The tower fell and and a and obviously a traumatic and I know people have told their stories. So walking back, got to Grand Central. So I was at 14th Street when we were evacuated, got to Grand Central, which is at 42nd Street, and went in and obviously the place was crazy. And then all of a sudden somebody yelled over the loudspeaker, get out now. Brian: Yes. Suzanne: So just ran. and had no idea why. But just ran and Yeah. yeah. Brian: Right, but but but a complete chaos. Yeah. Suzanne: Hundreds and hundreds of people. And so what we do of course, there's a problem, which again we all looked at each other. We were only across the street. Now something happened at Grand Central. We're like, are we too close? you know, you had to have some Brian: Right, so you didn't run very far. Right. Suzanne: Some sense of sanity. Anyway, Brian: Yeah. Suzanne: they ended up all clear and and we went back in and they they herded us onto trains. It's a cattle car of you know, just this is your line, this is your line. We stop at every and Yeah, Brian: Just just get out of the city. Yeah. Suzanne: and it was good. It was good and But was interesting is all of a sudden the train stops. And if you know anything about Manhattan, you're like, okay, there's not a stop. We're at a bridge crossing the Harlem River. So we're leaving. Right. Brian: Just where you wanna be, right? Yeah. Suzanne: And so luckily, and and there were people sitting there covered still in soot that had made their way. I still I lost a couple pairs of shoes. I have no idea what was on them. and so the conductor says, the NYPD is they're checking the bridge. Their scuba team. Okay, making sure all clear. Right? Glad they thought of that. Take your time. So the minute we met, we made it on over the bridge. Everybody's little nervous no matter what, our fell our phones started to work because obviously the tower had fell. So anyway, flash forward back into Manhattan. This happened on Tuesday, went back on Monday. and the most serene Brian: So you're right back in the city. Yeah. Suzanne: the most serene people trains, subway, whatever, silence, people, you know, holding American flags, it it was whatever. They still at this point, they let us the train stopped early, right by City Hall, which is a couple I don't know, six blocks from my office. But there were still plane parts. that far City Hall and it's the the the dust and the whatever and people were checking IDs for us to go into the containment area. So now what was my role after that? and Brian: Right. Well thank you for giving us that background. Suzanne: yeah it was you know your focus is a little bit off to say the least. But there you're you're Brian: Yeah. Suzanne: in and it's it's you know, get to work. And We had a number of clients. Now what happened at that point for all the financial investigators, whatever, whatever you were doing, everything stopped. And that's why when we start talking about financial intelligence, it was all over the map. Nobody knew. We were getting faxes, remember faxes, Brian: Mm-hmm. Suzanne: emails, things from multiple federal agencies and some local on names. Check if you have these accounts. Che 'cause that's when it finally hit. How was this financed? How did this all happen? Right? And I mean some Brian: So you ha you might have had the information but didn't know what to do with it or even to look for it at that point, right? Suzanne: Right, right. and the the firm I work for had the good the good bin Laden family as private wealth clients in Saudi Arabia. but you know, I don't care if you disowned them, yeah, okay fine. my brother and I disowned ourselves, you know, for Brian: No. Suzanne: years that came back, right? And and then there were just a number of different names and again duplicates sent by you know agencies, everybody just all over. So yes, overwhelming. Brian: So information overload at that point. Yeah. Suzanne: And we were you know, we were pretty clear, but there was a task force with all of us, just you know, who you know Lynch, do you have a contact here? Who? Do you have you know people calling and all that? So so that was the absolute insanity afterwards, scrambling. Cause nothing, obviously, as we all know, like this had ever happened. So let's flash forward. we're like, okay. I don't know how we can you know, everybody how could you have prevented it? Yes, there was a lack of communication with those in the federal government, you know, whatever. and and my job, all of our jobs, my colleagues, you know, how do how was this funded? Well here's the thing. This wasn't a lot of you're not gonna see a you know, a wire transfer for ten million dollars. This was done very well. There were no financial indicators or red alerts, really. And, you know, the hijackers themselves were scattered. Brian: So it's not that somebody missed something. Yeah. Suzanne: No, no. The only thing f some of the people finally found were ATM withdrawals at the airports. These under the radar, you know, it's not like something's gonna hit you. we could have fouled. Brian: Normal, everyday sort of things. Suzanne: Exactly. Which in that respect was good. Plus nobody knew what they were look would be looking for anyway. I mean, I think the only thing we ever had was the the issue with people taking flight lessons. at the school in Minnesota and you know weren't you know, never asked how to land a plane. Yes, that's a clue. But we did not we never had those kind of red flags, okay? Obviously and f trying to follow the millions and millions of transactions would have been, you know, we don't even know the guy. And remember, money is global. Right? Trans so, for instance, you know you can now Use your MasterCard and Visa in Syria because the global network opened up to Syria since we don't have sanctions. So you could put money in here in New York and then you could take it out in Syria through the ATM. Who knew? Is that risky? Anyway, I digress. So after that, The outreach went on for weeks. and since that, and probably the most important legislation that came out of that, and and and talk about getting the job done, in October 201. This is a month and a half later, October twenty-sixth, I think, two thousand one, Congress passed the US Patriot Act. Brian: Yeah, nothing moves that fast nowadays. Suzanne: And that gave structure to what people, what financial institutions, money service businesses, all sorts of different areas had new responsibility to look at. you know, and I just you know the it really has become this was the way to gather financial intelligence. This was there was always responsibilities that banks had. There's a bank secrecy act. And again, I'm not gonna there won't be a test, okay, after this. Brian: It's good. Suzanne: however, that you know, allowed the tools that frankly were typically used to look at organized crime and drug trafficking. It's like Brian: So were you already familiar with some of this stuff then? That came out in the in the act? Yeah. Suzanne: Some of it, yeah. Brian: Yeah. Suzanne: But now it's in a totally different light, right? money laundering, especially n organized crime, you know, that was a little bit more sophisticated. and you know, you're s that the concept was still follow the money 'cause you had to do that, but you had to look at different sources. Right? Looking more globally, right? Because there's still remember this is back in 2001, 2002. There weren't a lot of, you know, understanding global networks, all sorts of things like that. And and that's where I was able to be helpful because my first three years at MasterCard, obviously what what were we doing? We were global. our sp our security teams were all over the world. Okay. Brian: Which was unusual for that time. Suzanne: exactly, exactly. so one of the things there was always a Bank Secrecy Act was in place that was created in nineteen seventy. so some of the you know Brian: So there was some forward thinking. Suzanne: I know and again mostly for narcotics trafficking and you know, organized crime. So it's like, you know what? This could be applied quite well, but we're going Brian: Right. Suzanne: to, as I like to say, put it on steroids. So, you know, Bank Secrecy Act became you know, everybody knows the currency transactions. So you can't just walk into a bank with ten thousand dollars and twenties and deposit it without the bank having to write a report. Or people think they've become more sophisticated just you know do two thousand one day three thousand the next two thousand because guess what the systems will catch you but the point is we now have far more controls or procedures that every bank should have to and has to follow. I don't care if you're a credit union I don't care if you're Citibank or Chase. All right. So Patriot Act added to that, obviously far more on steroids with a lot of rules and regulations, more due diligence of your customers, more understanding their types of business. And this is where today a lot of banks have gotten in trouble for not doing that. and I'll mention it because it's out there, it's a public document, and I'm just one of the geeks that, you know, read ninety-nine pages of a government regulatory action. T D D Bank. I didn't bring pictures. Brian: Well that's why you're here to explain it to us. Suzanne: but that's why T D D Bank I read the whole thing, actually I use it in my in my courses. That ninety-nine pages of clearly money laundering, not caring, no controls, policies, and procedures. That's where a lot of Wells Fargo, a lot of different banks have an and there's a lot placed on them. It's a lot of responsibility, it's a lot of investment. I always joke that when I was doing fraud and money laundering, the bank, you know, we were necessary evils 'cause we didn't bring in money. We were the ones where if we called somebody, nobody wanted to answer to see, you know, what we were doing. Brian: Well, I mean, that's sort of how risk management is all the time, right? It it it's not a big line item that's gonna bring in money, but it's something you kinda need. Suzanne: Exactly. Exactly. Or or even some of the the supervisors and some of the units that I worked with. You know, can we could we talk knock can we talk to you? no, now what? You know, that kind of thing. No it's Brian: Yeah. Suzanne: no no boss wants to hear this kind of stuff. But anyway, so it i it has evolved considerably. where the scrutiny and now you know any type of global conflict becomes more and more integrated no matter what because of the global financial system and we do have a lot of good help there's a lot of good good information and there's a lot of good cooperation with some countries some others not so much And and that's why, like I said, when we wanted I we almost like to have to play whack-a-mole. We can sanction things and all that, but it just I'll just move to another country. Or use their banking system. And that's really what it's become. So under The Patriot Act I and I really just want to finish with that, 'cause this is where it can be some kind of challenging work. There's it's called Section Three Fourteen B. And what it does is codify that we must all we must all work together and cooperate. Brian: That sounds nice. Suzanne: Yes, it always does, right? Brian: Yes. Suzanne: so even banks can supposedly share. If you know if I want to know if so and so a guy I think is a bad guy has an account at another bank, that bank should be able to let me know. Where as you know we we are very structured, you can't, you know, cannot do anything that you know would deviate against consumer privacy of their accounts. But this is the one where you file it under a three fourteen B. Which of course hasn't worked as well as everybody would like. Right? And then closing, when I talk about financial intelligence, the Financial Crimes Enforcement Network, which is an arm of the Treasury, really kind of oversees all the financial implications, rules, policy, whatever. And one of the things that banks are responsible to do is what we call a suspicious activity report, a SAR. So if I'm an investigator and I see something, account movement, money movement, and I kinda do some, you know, due diligence, a little bit of background, because most of these things get alerts, you know. We program detection methodologies. And let's say this alert pops in. and you determine, yeah, there's something not right here. And there's forms that must be filed with the US Brian: Okay. Suzanne: Treasury because of this. And they've always have been. But and you can never tell the customer. Brian: Hm. Suzanne: Suspicious activity report, if you file it, it's between the bank and the Treasury now, US Treasury. Brian: So they never know about it. Suzanne: Correct. And it has become an excellent intelligence tool. for many types of investigations, not just national security, but you know, criminal enterprises, all sorts of things like that. And so that has become a focus and that's again when many financial institutions have had problems. Even real estate and title companies. Because if you buy ca you know pay cash for penthouse in New York, we need to know about it. Right? Brian: Yeah, where is that money coming from, right? Yeah. Suzanne: source of funds. So again I could do a lot of acronyms, I could do whatever, but Brian: Mm-hmm. Suzanne: suffice it that after nine eleven, when I say my job changed on September twelfth, again I could go on for another half a day on on and and your perspective, right? You look at things differently. Following the money. Brian: Yeah. No, I think that gives us a pretty good idea of, you know, how your job changed and and, you know how we are following the money now. So so that's that's good. Suzanne: Right, right. Yeah, exactly. Brian: Is there anything else you think you should tell executives or leaders that are listening to this that they definitely need to know? Yeah. Suzanne: Well yeah, they you know, again follow the money. What is the source of funds? and even in non-financial institutions, right? Because how can you be there's a whole thing called trade-based money laundering. I'm not even gonna get into that one. That could actually be a separate topic. But Brian: Maybe we'll have you on again and we'll just talk about that. Suzanne: Yeah, yeah. and we'll leave it at that. But there are w workarounds and ways that are you know, becoming, how shall we say, more popular on a global level. And trade Brian: Okay. Suzanne: based money laundering is is a huge part of that. Brian: Okay. Well, I think you know, that's pretty good and covers a lot of things. So thank you for coming on the show. It was great to talk to you and kinda get your take on the financial sort of things. Suzanne: Yes. Okay. Thank you, Brian. Brian: All right. Thank you. And please follow and subscribe to our podcast on your FairPod listening app. I'm Brian Leclair and this has been The Decision Advantage.