How well do you really know your members?
Modern criminals are intelligent and organized. They know how to exploit your weaknesses and navigate around your defenses.
Today’s anti-money laundering and fraud detection technology can alert you to blatant criminal activity. But what about unusual activity that is well-hidden, appearing normal?
There is a gap in your armor and criminals are targeting it.
Financial institutions are siloed in their efforts to fight financial crime. You cannot catch what you cannot see, and today your view is restricted to what is happening within your own four walls.
What if you have members spreading their illegal activity across multiple institutions to avoid detection?
If you cannot see the full picture of criminal activity, how can you fight back against it?
The answer to this problem touches on the very spirit of the credit union community: By working together.
In a recent white paper on Section 314(b) of the USA PATRIOT Act, Chris Swecker, retired assistant director of the FBI’s Criminal Investigative Division and former Global Security Director at Bank of America, makes clear reference to the threat credit unions are facing and the importance of information-sharing.
“Many Criminal Enterprises prey on credit unions and community banks knowing that resources are scarce and strategies to link or ‘cross-reference’ crime ring activity are too often reliant on manual processes. They also know that due to intense competition between institutions, sharing data is not a high priority for bank executives who quite understandably are focused on the bottom line. In this environment, collusive criminal activity targeting multiple institutions thrives and prospers.”
Information-sharing between financial institutions, permitted by the 314(b) safe harbor, gives you a powerful weapon in the fight to protect your members from today’s criminals, from the simple to the complex.
Just ask Darla Grimes, vice president of compliance at First Service Credit Union in Houston.
On a Monday morning in late April, Darla and her team were logged into their transaction-monitoring application, reviewing their latest potential money laundering alerts.
There were two alerts that stood out above the others: They were marked as including cross-institutional activity. Since the team treat these alerts as carrying an elevated risk, they immediately dug deeper.
The accounts were recently opened online and each received a personal loan of more than $9,500. The loans had been funded and withdrawn in cash at a branch.
Looking through the alert, Grimes checked the transactions flagged as unusual and reviewed the list of other financial institutions where the individuals (for clarity, let’s call her Jane and Joe) were exhibiting abnormal behavior.
Next, from within the alert, Grimes sent a collaboration to the 314(b)-registered investigator at one of the other credit unions listed and opened an investigative case in the application.
The investigator at the other credit union responded to Grimes with valuable information: it also had noticed the same unusual activity.
Jane’s and Joe’s activity there had the same profile as at First Service: they both opened an account online, procured a similar personal loan, and withdrew the cash.
Armed with this knowledge, one-by-one she contacted four other credit unions, hearing a similar story each time. Grimes and her team felt confident they were dealing with identity thieves.
The next day, Jane entered First Service’s main branch looking to cash a large check issued by another local credit union. The teller noticed a hold Grimes had placed on the account and contacted her.
After speaking only briefly with Jane, it was obvious to Grimes that “Jane” was not who she was claiming to be—this was a case of stolen identity and loan fraud. Security immediately reached out to the identity theft victim, law enforcement was contacted, and an arrest was made.
“These people are pretty smart. When she opened the account she sent us a driver’s license that looked authentic, a utility bill, and a paystub,” Grimes explains. “Thankfully, our transaction-monitoring software alerted us that there were other credit unions affected by this woman’s behavior and enabled us to collaborate.
“Working with others means we aren’t blind and don’t overlook things that may seem innocent,” she continues. “Discovering activity is happening at multiple institutions is much more helpful when the time comes to prosecute. It makes the case stiffer: The district attorney and detectives approach it more seriously. The fines can be heavier and these criminals can go to jail for longer.”
This is a powerful example of how collaboration can play an important role in your efforts to stop unlawful activity and how those efforts can positively impact people's lives
Plus, the person the credit union helped was thrilled.
“She was eager to meet us personally to thank us, and she bought my team lunch,” Grimes says. “She wasn’t a member; she said her current financial institution didn’t seem very concerned and wasn’t doing anything to assure her that her accounts with them were safe.
“I told her, ‘See, we looked out for you when you weren’t a member—imagine how we can help you when you become one!’ I am pretty sure she’ll be a member soon,” Grimes continues. “It’s very satisfying to talk with the person you’ve been able to help in this way.”