Compliance Blog

Written by Shari R. Pogach, Regulatory Paralegal

I’ve previously written that real world examples of criminal activity can be useful training tools for Bank Secrecy Act education.  Real world examples can be used to get your staff thinking about what to look for when interacting with members on the front line.  Under the news section of the Federal Bureau of Investigation’s (FBI’s) website one can find a treasure trove of cases involving financial crimes.  Here are snippets from example cases: 

Embezzlement and Elder Financial Abuse:

Bank Employee Sentenced for Embezzling from Senior Citizens’ Accounts

“Diane Elizabeth Niehaus, 40, of Sugarcreek Township, Ohio, was sentenced in U.S. District Court to serve 60 months in prison, followed by three years of supervised release, for embezzling from the accounts of elderly customers of the bank where she worked as a manager. She was also ordered to pay restitution to the victims of her embezzlement and to the IRS.”

Automated Clearing House (ACH) Fraud:

Kansas City Woman Indicted in $3 Million Fraud Scheme That Forced Employer into Bankruptcy

[…]

“According to the federal indictment, for approximately 10 years (January 2004 until February 2014) Brooner created unauthorized Automated Clearing House (ACH) transactions from Galvmet’s bank account. An ACH is a batch-oriented funds transfer system that includes direct deposits of payroll from companies. Brooner allegedly deposited these funds into her personal bank accounts. Brooner also manipulated ACH transactions to inflate her salary, the indictment says, by increasing her bi-weekly payments without the knowledge or authorization of her employer. She allegedly deposited these funds into her bank accounts.

As a result of Brooner’s fraud scheme, the indictment says, Galvmet lost at least $1,863,914. As a result, Galvmet declared bankruptcy, and was forced to cease operations. To keep the scheme going, Brooner allegedly falsified documents to support Galvmet’s operating loan with Missouri Bank & Trust, causing a loss to the bank of $1.1 million. Brooner allegedly converted the embezzled funds for her personal enrichment. The total loss from Brooner’s alleged fraud scheme was at least $2,963,914.”

Trade-Based Money Laundering Activity: 

Money Laundering Takedown - Operation Targets Sinaloa Drug Cartel

“In a major takedown in Los Angeles on Wednesday, September 10, nearly 1,000 federal, state, and local law enforcement officers seized approximately $100 million in cash, arrested nine subjects, and searched dozen of businesses in the city’s downtown fashion district alleged to have laundered money for Mexican drug cartels.”

You might want to use cases from this website as yet another resource to help with ongoing BSA education and training.

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Programming Note #1.  NAFCU’s offices will close at noon today for the Columbus Day Holiday and will reopen on Tuesday, October 14.  We will be back to blogging on Wednesday, October 15.

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Programming Note #2.  It’s seminar time at NAFCU! The Regulatory Compliance team will be at NAFCU’s 2014 Regulatory Compliance Seminar in Baltimore, MD. Your compliance questions will be answered but we appreciate your patience as the team will be in and out of the office this week.