AML reports a key tool for analyzing “21st century crime scene,” New York prosecutors say

June 4, 2013

By Stuart Gittleman, Compliance Complete

NEW YORK, June 4 (Thomson Reuters Accelus) – The suspicious-activity reports and other filings submitted by anti-money laundering officers are quite unlike a child’s letters to Santa Claus — they can be assured of an audience, Manhattan’s top local prosecutor and top staffers told reporters last week.
New York County District Attorney Cyrus Vance Jr. said his staff is continuing the war Bob Morgenthau, his predecessor, waged against the usual focus of AML efforts – drugs, fraud, taxes and terrorism – but they are using new tools and methods to fight emerging criminal threats as well as lower-level “street crime.”

Suspicious-activity reports (SARs), currency transaction reports and IRS Form 8300 reports of large cash transfers are used as forensic tools by staff in the prosecutor’s office working under a newly launched Financial Intelligence Unit (“FIU”) that aims to bring prosecuting crime fully into the Internet era.

“The internet is our 21st century crime scene,” Vance said, adding that the resources have “oxygenated the trial divisions” by helping to explain motives as well as money movements.

Vance announced the FIU launch on Tuesday, in conjunction with the U.S. Secret Service, the Federal Bireau of Investigation and the Internal Revenue Service.

The FIU’s work is like using algorithmic trading techniques, compared to prosecuting crime one by one. It can sort through multiple files – including social-media postings – to establish patterns, identify possible accomplices and help locate assets to start making victims of crime financially whole, Vance said.

Evidence of money laundering obtained during an investigation can support a wiretap order that can further develop the prosecutors’ case against anyone suspected of a wide range of crimes, Vance added. He cited the case of a sex-trafficking ring, which his department treated as a business entity so it could identify and seize assets.

The FIU was launched in March but it dates to November 2010, when Vance launched a pilot program of having SAR reviewers proactively search through Financial Crimes Enforcement Network data, said senior investigative counsel Jordan Arnold.

By January 2011, trial prosecutors were asking the SARs reviewers for targeted searches, and funding in July 2012 from the Secret Service, long a close partner of the office, helped create a hub for learning more about what’s behind the AML filings.

Arnold noted that the FIU has “processes and protocols for using the information from the searches,” and that only certain people can access the data.

The FIU also works closely with the IRS, the FBI, the Department of Justice and federal and state prosecutors, Vance said.

A key part of the FIU is its”cyberlab” that conducts forensic analyses without outsourcing the research to third parties.

Having the lab is critical because New York State law does not let prosecutors hold suspects as long as their federal counterparts can without presenting formal charges, said David Szuchman, head of the Investigations Division.

Without the lab, judges might be required to release suspects before incriminating data could be recovered from their computer or smartphone showing accomplices’ telephone numbers, information on money movements, even photographs or videos of the victims or the crimes themselves, he said.

Data obtained through the FIU also lets prosecutors go after convicted suspects’ “toys” – their cars, jewelry and other proceeds of their crimes, Szuchman added.

Moreover, FIU resources help the office bring “intelligence-driven prosecutions” of all types of crime, Vance said.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter: @GRC_Accelus)

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