KYC360 interviews Ana Linda Solano, former Director of the Economic and Financial Judicial Police in Colombia.

 

 

Transcript

Amos Wittenberg:

Thanks for listening in to this episode of the KYC 360.com podcast, a regular series of conversations with leaders in the world of financial crime prevention.

To the uninitiated, money laundering conjures dramatic images. Drug barons, suitcases full of hundred dollar bills, that sort of thing. For most people working in compliance, the associations are a little more drab; verbose EU policy documents, for example. But cash filled suitcases aren’t a complete fiction, and there are a privileged handful of financial crime prevention professionals who work at the very sharp end of compliance. Today we’re speaking to Ana Linda Solana, who worked for more than six years in Fiscalia, the office of the prosecutor general of Colombia. During that time she helped design and directed the Economic and Financial Judicial Police. A key element of her work was developing policy to manage a potentially dangerous power vacuum after the end of the country’s half-century long conflict with the revolutionary armed forces of Colombia, or FARC.

By updating Colombia’s financial crime prevention regime, Ana aimed to target the financial structures of emerging criminal organizations, and so ensure peace and stability in regions scarred by extensive conflict. Ana joins us over the line from Bogota.

Ana, first off, could tell us a little bit more about the Economic and Financial Judicial Police? What exactly is its remit?

Ana Linda Solano:

Well, when we started PEF, very important economic and financial criminal cases were in the front page of the different diaries. I don’t know if it has to do with Colombia’s economic growth, an opening to the world as an economic actor, but for many different reasons, we weren’t just a drug and internal conflict country anymore and I’m not sure how to read that, but definitely, it was one of both or crime was mutating or new forms of crime were more evident at the time. So with these complex big cases we have, like the “contract carousel” procurement in Bogota, a really important political corruption case, VAT front carousels, we have like huge, that extend to the whole country and also the first embezzlement scandal, like financial case Interbolsa, these were very important and complex cases.

So there was a need to build a capacity to understand them, and to be like, efficient in a response for prosecutors and investigator, in order to attend this cases, they had to learn a lot of the national stuff and understand … like these economic sectors… they didn’t have real experience so the learning curve was taking really long, and the main asset whether … if these crimes were going to continue happening …we couldn’t afford to have this knowledge just in a specific group of people attending a specific case, but it was something that was needed to be institutionalized. So PEF was created for this reason; mainly focused on anti-money laundering, taxes, costing crimes, asset forfeiture, financial crimes, economy of organized crime, corruption and cybercrime, but mainly cyber as a hub or as a medium for this type of crime, in which we focus.

So, the interesting part is that PEF works transiently for the different careers or prosecutors’ offices that work in these cases, for example. PEF works with the corruption prosecutor, works with the anti-money laundering prosecutor and so on, so somehow you have a specialized group that is able to understand the whole phenomena in a systemic way and focus its response depending on the situation. So, for us it was…we needed something to systemically understand the crimes that were related. I remember someone saying for example, regarding FARC…like FARC was investigating but like everyone and no one at the same time, because you have so many different cases, so many different prosecutor’s offices that no one did have at the time, the whole picture. So, you can use that parallel to understand what the idea was with PEF to have someone understanding the economic and financial crimes, and in a more systemic way trying to respond to that.

Amos Wittenberg:

Could you say a bit more about the Interbolsa case?

Ana Linda Solano:

We helped at the end, because as I said, this was one of the precedents for PEF being created and we were helping one of the branches but mainly it regarded…like they, Interbolsa saw a business opportunity in some stocks related to textiles. The stock was called Fabricarto they used this repos figure where they buy the stock but they cavort with the money and then buy it back. But for that time, Fabricarto stocks were working very well but after a good period of time they didn’t continue working well, so they in order to sustain that scheme, they start obtaining money from public for different…other investments and diverting it to cover the losses in the other type of stocks.

Amos Wittenberg:

How did you become to be the director of the Economic and Financial Police? Is your background in law or in law enforcement? Was financial crime a longstanding professional interest?

Ana Linda Solano:

Well I think that my experience combine in… I don’t know, a unique way that lead me, not just direct path, but the side path. I’m a lawyer…my profession is lawyer. I specialize in criminal law…first of all my experience was related to the criminal procedure system. Like when Colombia had the transformation, I was part of that process, like it came from a mixed system to a more adversarial system, so I had from first hand the ability to understand the challenges, the difficulties and the advantaged we have. And one of the main aspects always was the judicial police; the main challenge was the judicial police, in order to assist them to be efficient. I think that in the beginning the transformation process focused on…on the prosecutors and their ability to work in hearings and not that much in the judicial police. So, that began to become an issue. So, as a director of the school of prosecutors and investigators I had the opportunity also to go deeper into the challenges that the judicial police had, and transform the capacity building in order to make it more efficient. At that time, I started working with OECD, tax and crime group, they were creating their tax and crime academy with the Guardia di Finanza, so I became close with the economic and financial crimes needs. At that time, the prosecutor general started restructuring Fiscalia. One of the big changes was the judicial police, so at the time he asked me to design a more modern and efficient and specialized group. So, for a year I worked mainly with Guardia di Finanza, which as you know is a sophisticated group, also with others, the CI from the US so and we start this diagnosis nationally, going into the different local parts of Colombia, trying to understand how the economic and financial crimes dynamics were in our country and try to come with a formula that could be useful to combat that criminality.

There is or was PEF, so I have to say I lead the group that design it but there was a lot of national and international incorporation to come with answer… And I believe that the decision of making me responsible was part of that process. I mean if you lead the design, prove it useful, prove that it is correct…so at the time…well I start directing this in 2014, so it’s very recent. But since then the growth had been very important and I say they lead now, the most important and economic and financial crimes in Colombia.

Amos Wittenberg:

Laundering drug money, for many listeners, will conjure up images of suitcases stuffed with cash, does that reflect reality at all or are modern cartels more sophisticated?

Ana Linda Solano:

I think that partly it does, there are sophisticated financial money laundering cases, but many of the drugs, illegal money, contaminated containers, trade based money laundering, most physically…so not necessarily the idea of suitcases, but I think exchange houses, our frontiers are very porous financial sector is very well controlled and regulated, but what we call the real sector still remains us an important challenge. So, I don’t think that the idea of suitcases, but definitely money still more physically in a large way.

Amos Wittenberg:

Focusing on drugs, where drugs are sold in a foreign market, you have laundering in both directions; so you have money coming back to the organized crime groups from the drug sales, and the same money leaving the country to be deposited again in assets such as real estate in desirable jurisdictions, do the laundering methodologies differ depending on the direction of travel of the money?

Ana Linda Solano:

Yes, I think they change, but in essence not that much. I mean, I think that in the base, the typologies are very similar of course, it varies in goods, it varies in where you invest, but each country represents a different business opportunity. But definitely when money goes, its more for investment, when money comes you invest it, but also you need to use it again, like bring it back to the business so you need to have a different type of money laundering. For example, you need to money launder for investing in the drug business or in the mining business or in the trade business, or for sustaining your corruption network. So I think that it comes back, you invest for your own benefit, but also you need to reinvest in the business itself for continue making it work. So even though the investment or trade typologies are similar, the needs probably are different depending on which way of the chain you are trading.

Amos Wittenberg:

Listeners will be aware of the 2012 conviction of HSBC for turning a blind eye to the obvious laundering of drug money through its Mexican branches, and HSBC isn’t the only bank to be fined for that sort of behavior. I wondered whether in the course of your work, you found financial institutions generally cooperative or generally difficult?

Ana Linda Solano:

In general, they are cooperative I mean UIAF -that’s our FIU its very strong- but I think that there is corruption. I don’t mean endemic, the system is corrupted, but I mean more like you can see that they are enablers or facilitators. For example, some people… whenever there was a request from the judicial police you could tell for example that they’d call their client because they wanted to protect their client and alert them. Or people that had relations for a very long time, moving from one bank to another, so facilitating their long-time clients entering into new companies or bank opening new products. So, I think we need to focus more into enablers and facilitators, that hasn’t been the main target. Anti-money laundering cases are you know, very complex itself, and I don’t think in Colombia we have focused enough into the facilitators and enablers line.

Recently, like very recently, the prosecutor general presented this bill, where he want to make lawyers, accountants, auditors…tax auditors like oblige to present SARS to our UIAF, our FIA, and also to create a crime commission for SARS recording, corruption cases- I’m not sure, because this is…this week they presented to congress. I don’t know it very well, I think it’s a little bit controversial, but somehow it shows the interest to shift the attention into the financial and professional enablers.

Amos Wittenberg:

I’d like to spend some time talking about FARC; much of your work in Colombia was linked to that. In addition to military conflict the country was fighting; would you say that your organization was involved in conducting a kind of financial warfare against the group?

Ana Linda Solano:

I don’t know if warfare would be a precise term, but definitely there is this strategy going… mainly the focus on asset forfeiture following the money. Today in the news, this week in the news you have like a front man of FARC case…it’s not an easy task. Many years of FARC operating, very complex structure, local relations are different, different lines of work, a lot of information but not necessarily with the economic and financial relevance. So, there’s a lot of international corporations right now…intelligence many things like coordinated to…as I said basically, or mainly in the financial aspect follow the strategy. I think that the challenger here, or relating to FARC, would be going backwards and going forward. Because backwards to understand where the money has been invested…where the money is, and also as we talk about where the money is from, we talk about where the money will go, so it’s kind of a combined strategy what’s needed there in order to understand the illicit flows, from a past but also a future perspective.

Amos Wittenberg:

Yes I want to pick up on that…I mean to some extent, like Islamic State, FARC’s a much more complex organization than a typical organized crime group. It controls land and assets, it pays salaries and pensions and so on, and I wondered how tactics for hindering FARC’s financial flows would differ from those you might use in other organized crime cases?

Ana Linda Solano:

FARC have umm…you can say they have four lines through front men…front people. They have underground money physically hidden. They have financial products and also investment. Part of their money seems to be in cow…the meat industry is really important…. they have land. But a large amount of what it’s considered, the groups riches are invested are inside Colombia in transport companies, properties, and the stock market. Some money may also be hidden in countries like Costa Rica, Venezuela, Ecuador or panama, but there’s something that must be understand, and it is that sustaining a criminal organization itself, it’s difficult. I mean in order to make it operate, and FARC, certainly it is really difficult, as you say they pay to their workers, they work almost like a parallel state, they work like a parallel working authority with institutions and all that, so the organization is really complex work. When you have the secretariat which is like…the national level but each front was very independent in the way that they conducted their business with some national instructions but…somehow you don’t need…you have to understand that it is very difficult to know precisely how much money we are talking about. They had to invest in uniforms, in food, in arms, in so many things in order to sustain a war for more than fifty years. So it’s really…there are some estimations of their wealth, but there’s not certainty of how much money we’re talking about. Also, as we were talking about earlier, there’s a lot of information from computers you have from different military operations, so you have a lot of information but none necessarily with a financial or economic relevance, so it’s very hard. You can estimate it but it’s difficult to come to real numbers.

Amos Wittenberg:

How important has financial crime prevention and enforcement work been in stabilizing post conflict Colombia?

Ana Linda Solano:

As I said, one of the main concerns is the mutation of the economy of the crime in a local, and in a national level so it’s a main issue in the agreements there’s support where it said that, if I’m not wrong, it’s 3.4 of the agreements where it said that strategies regarding corruption, money laundering and drugs should connect in order to…avoid that mutation mainly. So, it is a very important part nationally and locally, there are some recent studies…I mean we have started to see how they are FARC dissidents, they don’t want to stop business so they renounce being FARC. Like they don’t want to make…they don’t want to make… come into the peace process, we have franchise being sold from one criminal organization to others. We have like many local dynamics that certainly are going to be the main aspect of assuring truly peace in a post conflict area. The agreements trust, in a certain way, peace with FARC and they focus in developing certain abandoned areas of the country. Rural areas, that after focusing returning land to people, reconstructing the country, paying attention to these economy dynamics, like illicit the economy dynamics, it’s going to be like one pillar of the strategy in order to really achieve peace. Also, the strategy with the private sector, think they are going to relate, I think the economic development, land development, entrepreneurship, it’s kind of one of the main aspects…the economic aspects is one of the main aspects of the agreement, and of course if we want to transcend the conflict so for certain, the economic crimes, the financial crimes, it’s going to be central for that.

Amos Wittenberg:

So if I understand correctly, there’s a kind of two-prong approach, where on the one hand effective financial crime prevention limits the profitability of criminal enterprise, where on the other hand you provide opportunities in the legitimate economy for those same people to make money in a legal way?

Ana Linda Solano:

Yes, exactly and I think that with…that is not just business but also to prevent the corruption relations. Corruption is…it’s kind of, one of the pillar sources that we need develop in order for the agreements to be successful. Anti-corruption strategies, so not letting these illicit flows coming from corruption and it’s kind of one of the main issues, so that’s why the agreement related these strategies, anti-corruption strategies, anti-money laundering strategies and anti-narcotic strategies and that works in two levels, or in many different levels, in a very local or not petty corruption level. But also a national and a strategic level…the post conflict is going to need the creation of many new institutions, many new functions…services have to be supplied for people, like education, health so those are also important opportunities for corruption to happen if you don’t have…money is going to be transferred to local authorities so you have to have the structure in order to prevent having a new way of victimizing people.

Amos Wittenberg:

Colombia is, I guess, surrounded by countries where corruption is a real issue. There’s Brazil where there is this huge ongoing corruption investigation, and there’s Venezuela where Madura won the OCCRP’s person of the year for corruption award last year, is corruption a real issue in public life in Colombia?

Ana Linda Solano:

Yes, it is. Recently there was a very important scandal regarding the Anti-Corruption Prosecutor, Head of the Anti-Corruption Group being captured for corruption matters. And we have, as I said this ‘Carousel Corruption’ in Bogota, we have mayors or governors or local authorities, or national authorities related to some corruption cases, political corruption, but also liked to organized crime or linked to drugs groups, drug cartels. So it is, but I think that being able to detect that, I mean, it is rally pitiful to have your Anti-Corruption Head Prosecutor been captured for corruption, but at the same time it shows that we are trying as a country to overcome that, and try to solve that and as I said, its kind off…right now, it’s kind of the main, the central issue here in the country. There is a public consultation regarding to people…people want to say they are tired of corruption, they are marching… there is not just from a law enforcement or a public policy perspective, but also from people in general. A sensation of being tired of corruption, and try to overcome that….so those are, I think, good signs of wanting to have a change.

Amos Wittenberg:

Can I ask what lead you to leave your role at the Economic and Financial Police?

Ana Linda Solano:

Yes, I think it was, it was really hard I have to say, but I did it because I wanted to conduct an academic investigation in order to understand the PEF methodologies and the structure and translate that, as I said, into mutation, to understand which could be the design that we should have for mutating criminal groups. So that was kind of the formal reason, like I was going to lead the direction to working in a more academic aspect of the same problem, and make that contribution from an academic perspective but certainly for me it was part of the process for PEF to evolve. The idea of someone to really institutionalize and grow in its own way, so I think it was part of a natural process that needed to be done in order for it to grow institutionally, in order for many different people feel that they own PEF and for it to grow in a dynamic, and somehow for it to prove if it really worked. So leaving it was, kind of, a natural process, but also an experiment to see if it would continue being efficient without…without the person that created it initially.

Amos Wittenberg:

As a final question, can you tell us about some of the things that you’ve been working on since leaving the Economic and Financial Police?

Ana Linda Solano:

Yes, as a private consultant, I’m working with public sector and private sector. Mainly understanding the economic crime dynamics but also trying to create important partnerships between public and private sector, like new dynamics relating exchanging information. When I say understanding these economic dynamics it’s because one of the lessons I learnt in PEF, was you have to understand your threat, even if you are private or public, so developing new ways of relating…new ways of obtaining information so that are going to make you smart. So, working in private sector I have some international initiatives of relating many different people and companies in order to relate in a way with public sector. In my experience in PEV we come to understand that in order to understand economic sector dynamics, you needed to relate in a different way with private, and changing the dynamics is so-so…it’s simple as someone from the financial sitting down with someone from law enforcement and exchanging experiences of how, I don’t know, if you were contraband of cigarette organizations, how would you approach to the ban, which would be your characteristics? And in this way, it’s changing experiences, ideas and things like that with a coffee. You can come with new typologies; you can come with new profiling, you can come with so many different ideas so that’s kind of what we are trying to do in an innovation lab, where we want to make public and private sector come closer in order to understand and combat criminal economy and economic and financial crimes.

Amos Wittenberg:

I think that that’s a very important and good point to end on, and I’m sure that your emphasis on the importance of the relationship between the public and private sector will resonate for many of our listeners. Ana thank you so, so much for your time, it’s been fantastic to talk to you.

Ana Linda Solano:

Thank you.

Amos Wittenberg:

That was Ana Linda Solano, former director of the Economic, Financial and Judicial Police in Colombia. Since leaving that role, she’s been working as an independent consultant advising the public and private sector on issues relating to AML, illicit trade and the economy of organized crime. That’s all for today but keep up to date with us at KYC360.com for daily updates and expert insight into the latest money laundering methodologies and emerging financial crime risks. I’m Amos Wittenberg, thanks for listening.