Financial Crime Fighting: "All Driven By the Data"

Fictitious trading in the securities and futures industries more than doubled in the first half of 2009. Identifying and registering money service businesses abroad that have “no bricks or mortar presence” has become a priority.

Because comprehensive collection of consistent data around the world is what makes financial crime-fighting possible, according to Jamal El-Hindi, associate diretor for regulatorypolicy and programs at the Financial Crimes Enforcement Network of the U.S. Treasury.

“All of it is really driven by the data you put into the system," El-Hindi told attendees of the opening keynote session at the Securities Industry and Financial Markets Association’s 10th Anti-Money Laundering And Financial Crimes Conference, held at the Grand Hyatt Hotel in New York.

Here are some numbers from the most recent FinCen summary of suspicious activities reports coming in from firms in the securities and futures industry.

Bribery reports increased 95%, nearly surpassing all of 2008
Wire fraud increased 35%
Check fraud increased 19%
Fictitious trading reports jumped 150%, but,
Computer intrusion reports dropped 41%

The reports cover the first half of 2009 and comparisons are to the same period in 2008.

Filings involving foreign currencies and foreign currency futures increased from 100, total, in the first half of 2008 to 702 in the first half of 2009.

Which may be one of the reasons El-Hindi indicated that FinCen would like to extend its collection of data on financial entities operating around the globe to include money services businesses that have “no bricks or mortar presence.”

FinCen’s mission is to enhance U.S. national security, including combating the financing of terroristic activity, deterring and detecting criminal activity, and safeguarding economies from abuse by promoting transparency into how U.S. and international financial systems operate.

El-Hindi said FinCen recognized the difficulties of getting non-brick-and-mortar entities abroad to register and comply with reporting requirements.

But he said the “great majority” of such money service businesses abroad “are looking to comply and demonstrate compliance.” Such firms would supply information to FinCen’s database of financial entities that acts as a resource for financial crime fighters around the world.

This article can also be found at SecuritiesIndustry.com.

Tom Steinert-Threlkeld is the editor-in-chief of Securities Technology Monitor.

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Data Management