Consider the U.S. Drug Enforcement Administration (DEA)’s Special Operations Division (SOD) which is a joint task force of all federal law enforcement agencies in Northern Virginia. SOD is staffed with the most dedicated, passionate and professional law enforcement leaders, agents, analysts, prosecutors, and contractors from the Department of Justice, Department of Homeland Security, Department of the Treasury, Department of Defense, and other teams. SOD has been, and continues to be, laser-focused on preventing, detecting, investigating, and analyzing narco-terrorism threats to the United States.
As we move into 2018 with a new focus on protecting the integrity of the global financial system and combatting terrorism and drug trafficking, financial institutions and RegTech companies continue to be uniquely positioned to assist our government partners. Innovative artificial intelligence (AI) and machine learning solutions can have a tactical, strategic, and lasting impact in the quest to root out terrorism, drug trafficking, and money laundering cells.
Drug trafficking has steadily escalated over the years. The Cocaine Cowboys era of Miami in the 80s has evolved to terrorist organizations producing and selling narcotics to support their terroristic ideals. Illicit drugs such as cocaine, methamphetamines, designer drugs, controlled prescription drugs, fentanyl and heroin continue to be trafficked throughout the world.
As evidenced the U.S. Department of Justice’s recent creation of the Hezbollah Financing and Narcoterrorism Team (HFNT), the government recognizes the significance of the terrorist and narco-terrorism threat.
This group of experienced international narcotics trafficking, terrorism, organized crime, and money laundering prosecutors are tasked with investigating individuals and networks providing support to Hezbollah, and pursuing prosecutions in any appropriate cases. The HFNT will begin by assessing the evidence in existing investigations, including cases stemming from Project Cassandra, a law enforcement initiative targeting Hezbollah’s drug trafficking and related operations.
Everyone probably has a family member or friend that has been touched in some way by the opioid epidemic. The opioid plague does not discriminate based on your job, income, social status, or education. According to the U.S. Drug Enforcement Administration’s 2017 National Drug Threat Assessment (NDTA), “Over the past 10 years, the drug landscape in the United States has shifted, with the opioid threat (controlled prescription drugs, synthetic opioids, and heroin) reaching epidemic levels, impacting significant portions of the United States. Drug poisoning deaths are the leading cause of injury death in the United States; they are currently at their highest ever recorded level and, every year since 2011, have outnumbered deaths by firearms, motor vehicle crashes, suicide and homicide. In 2015, approximately 140 people died every day from drug poisoning.”
The DEA and SOD continue to chip away at narco-terrorists as exemplified by the March 2017 arrest and extradition of Kassim Tajideen, whom DOJ describes as a prominent financial supporter of the Hezbollah terror organization. Tajideen was charged with evading U.S. sanctions and money laundering through his managerial role in Hezbollah’s Business Affairs Component (BAC), which is the logistics, procurement and financing arm for Hezbollah. The indictment alleged that after being designated a terrorist and placed on sanctions lists, Tajideen and his associates created a web of vertical shell structures to bypass sanctions detection by U.S. companies and financial institutions. The indictment alleged that Tajideen’s group sent approximately $27 million in wire transfers to be sent to the U.S. in exchange for goods from U.S. vendors.
DEA and prosecutors also charged Hassan Mohsen Mansour, a dual citizen of Canada and Lebanon, in October 2016 in the Southern District of Florida with money laundering after he allegedly wired approximately $500,000 for a drug cartel. Mansour maintained a network of globally dispersed money laundering network. Mansour is also alleged to be a member of Hezbollah’s BAC.
In addition to narcotics sales/smuggling, Hezbollah also has decades of experience in trade-based money laundering (TBML) and counterfeit goods sales to fund their terrorist activities. TBML is the process by which criminal organizations utilize legitimate international trade to mask their criminal proceeds. They do so by selling counterfeit goods, falsifying trade documents, over/under invoicing and falsifying financial statements.
In 2018, our resolution should be to work together to implement AI and machine learning components within financial institutions and government agencies to enhance detection and investigation of financial crimes, including narco-terrorism. By eliminating data silos and creating big data environments, AI-powered solutions can identify and visualize entity relationships, predict future suspicious activity, and provide better SAR reporting to the government. Every quality SAR that is produced could mean the difference if law enforcement disrupts a narco-terrorism cell.
While this is debated, the problem persists as legacy AML technology such as transaction monitoring systems (TMS) have little to no ability to identify and assess risk created by shell companies. And while policies, procedures, and processes, if applied correctly, can protect financial institutions from becoming conduits for some fraction of money laundering, terrorist financing, and other financial crimes, identifying shell company risk continues to be elusive.
On the final day of the FIBA conference, QuantaVerse Founder and CEO, David McLaughlin, participated on the “Customer Profiling, Use of Innovative Technologies in Onboarding and Risk Assessment” panel. David Schwartz, President and CEO of FIBA, set up the panel discussion by emphasizing the importance and impact that innovative technologies have on risk assessment and the customer onboarding process.
CASE STUDY: AI-Powered Entity and Alert Adjudication Streamlines Financial Crime Investigation Processes
Based on these outcomes, the bank is moving QuantaVerse AI solutions into production. Moving forward, the bank will be better equipped to find hidden financial crime risk while automating 70 percent of its AML investigation processes, enabling investigators to focus their time and talents on the most complex cases.