Communication lets them down – again

- 2 July, 2021

Last month, law enforcement agencies around the world arrested more than 800 members of organised crime groups. Most were not caught in the act of committing a crime. Instead, they were asleep in their beds, possibly believing they were safe as the crimes had been committed some time ago and they had not been caught. Well, it’s happened again, communication has been their downfall. Only this time law enforcement officials did not need to break a code, because this time, they controlled the code.

The case of ANOM, within which law enforcement agencies infiltrated organised crime by providing secure communication devices. The devices were modified mobile telephones which communicated upon a secure network. Criminals were led to believe their communications would be secure and the network could not be penetrated by law enforcements agencies. Unbeknownst to the criminals, law enforcement agencies had total control over and unlimited access to the network. Consequently, law enforcement agencies intercepted and analysed millions of messages, some of which were reported as plans to commit murders.

Communication is necessary, but risky

The case once again highlights, the importance and simultaneously the vulnerability of communication. It has been said armies, and for this article we will include organised crime armies are at their weakest when communicating. Of course, the Enigma machine created by Alan Turing and others during WWII bears testimony to this.

Using communication to our advantage

Now, I am not suggesting we as compliance and risk professionals should spy upon our clients, on the contrary we should be working to stop other people spying upon them. That stated, we should fully understand and exploit those moments when we are in communication with our clients, as these present opportunities to project our business; to protect legitimate clients and to potentially deter, detect or frustrate criminals who seek to abuse our services. Furthermore, information gleaned from bad actors may one day be of significant evidential importance within an investigation or prosecution.

When communicating with clients we can use the opportunity to educate them, indeed warn them regarding emerging fraud and money laundering threats or trends. Moreover, we can advise clients how we communicate with them, and specifically advise the kind of intrusive privacy questions we do not ask of clients. Of course, fraudsters do ask such questions, as they seek to obtain personal data by way of artifice and then use the same to defraud the clients. Most importantly, always tell clients to feel free to put a phone down, stop answering questions and emails at anytime, in the event they feel uncomfortable.

How we communicate matters

Thus, how we communicate with clients as well as when and most importantly how such communication is recorded and retained is very important. It is has always been held that face-to-face engagement with prospective clients reduces risks presented by financial criminals, because they do not want to show their face. This is why criminals use offshore companies, corporate accommodation addresses and nominee parties who pretend to be the owners or controllers of such offshore companies. It is our job to get beyond these nominees and identify the ultimate beneficial owners and controllers.

In the event a client or prospective client is reluctant to communicate with us, we should immediately identify bright red flag. Such reluctance often indicates there are parties who are seeking to hide and do not want to be identified. Communication should not let us down, rather it should serve as a shield would we ever be challenged as to why a prospective client was approved or a relationship with an existing client was terminated.

Maintaining records

It was the records of the communications which led to the arrest of the criminals and will ultimately led to their conviction. Essentially law enforcement agencies have irrevocable records of what was said, when, where, by whom to whom. These connections will not be based upon the vague recollection of a witness, no they will be based upon robust communication records. Thus, financial crime and compliance professionals must make and maintain records, which extend beyond a ‘know your client’ (KYC) process, to records of conversations with clients, relationship managers and colleagues.

Making and maintaining communication records will serve you well and allow you to rely upon the same should you subsequently be cross examined upon your actions. Absent to records, the financial crime and compliance professionals invite unwanted scrutiny, challenge and even doubt.

Assume you are being recorded/watched

There was a time when the pen was mightier than the sward, but in 2021, technology has taken over from the pen. Mobile telephones communicate in many ways and can effectively talk to systems even when we are not actually using them to communicate. Data extracted from mobile telephones can place devices and users in specific places at certain times. Pursuant to which surveillance cameras may also make a record of our presence at specific locations at certain times.

We live in an age of surveillance and whilst we have nothing to hide and no one to hide from, we should always assume we are being watched and what we say may be recorded. Nowadays everything we write is automatically recorded by the devices we use. Very few law enforcement and regulatory investigations are undertaken without using electronic data, in particular mobile telephone records.

We should assume that at some point in time, law enforcement will obtain and may already hold recordings of organised crime groups holding conversations with professional money launderers, including lawyers, accountants and bankers. Such conversations may one day present as evidence which convicts one or more professional launderers.

Conclusion

We may need to update our training to protect our colleagues and shareholders. Simultaneously, we should ensure we never lie to customers, because the customers may be recording the conversations and the lies may later be revealed and cause unnecessary problems.