KYC360 speaks to Dennis Lormel, former Chief of the Financial Crimes and Terrorist Financing sections of the FBI. Mr Lormel was serving at the time of the 9/11 attacks, and helped shape the way banks, regulators and governments work to prevent the financing of terrorism.

 

 

Transcript

Amos Wittenberg:

Thanks for listening in to this episode of the KYC360.com podcast, a regular series of conversations with leaders in the world of financial crime prevention. More often than not AML (anti-money laundering) appears alongside another abbreviation CFT or CTF (countering the finance of terrorism), but though most people don’t doubt CFT as important, it does tend to be treated as a bit of an add-on, for a few reasons. First, money laundering has a long history, you can track its discussion in legal and political literature back to the mid-seventies, whereas terrorism financing, only starts to get attention after the 9/11 attacks. Second, whereas money laundering can involve the movement of huge sums of money, in total around one and a half trillion US dollars, according to the UN- terrorist attacks are cheap. The reporting threshold for transactions, under the Bank Secrecy Act in the US is $10,000- that’s about the same of the total costs that killed 130 people in and around the Bataclan Theatre in Paris, 2015.

Today we’re speaking to a man who can claim a role in shaping our current approach to CFT, Dennis Lormel served as a special agent in the FBI for nearly thirty years and was chief of its financial crime section, on the 11th September 2001. In the immediate aftermath of the attacks, he designed and ran the Bureau’s investigation into how and by whom, they were funded and influenced the strategies and the legislations that continue to direct efforts to prevent future authorities. Dennis joins on the line, from the suburbs of Washington DC.

Dennis, when the first reports came through from the 9/11 attacks, what was your immediate professional response?

 Dennis Lormel:

Well my personal reaction at first, was obviously shock and a full range of emotions. The initial response from a government perspective was one of chaos and so from an investigative standpoint, I was concerned where the financial information was going, because what happened was, immediately after the attacks, the entire FBI became basically engaged in the investigation. So, from the FBI perspective we have fifty-six offices in the United States and all fifty-six ran unilateral investigations. So, my concern and I know the concern of Director Muller and Deputy Director Pickard, at the time was to centralise an investigation. So, as that first day unfolded that’s what they were trying to do and get centralised control from Headquarters and what I saw that there was a fragment of response financially and so I went home the night of 9/11 and wrote an investigative plan on how a financial investigation should be conducted and I sought out the director the next morning and the deputy director and they agreed that we needed to have a financial focus investigation. So, I took all of my resources and all of their local resources that I could gather in the field and through a plan, we conducted a centralised investigation which included process of getting financial records from the financial institutions around the United States.

Amos Wittenburg:

What information sources and other resources were key to guiding that investigation?

Dennis Lormel:

First was bringing together the entire federal government community of law enforcement and intelligence agencies and anyone that had access to financial investigations, to get them involved with us. So, we formed an immediate task force and to get the infrastructure up, we needed a database that our collective systems could run on, we were able to accomplish that. The DEA they had an intelligence centre, so we got them to provide us with the necessary equipment and training, so we could have one uniform database. But, more importantly than that we had that platform set up, was to get the financial services industry, to get the financial institutions, both banks and MSBs and in addition to them, any third party providers, who were engaged in transactional activity and to get that financial intelligence, was critically important to us. So, we almost immediately in the first couple of days, had access to the bank accounts and transactional information and we started to build that transactional profile and financial profile immediately.

Amos Wittenberg:

It’s interesting that the DEA was one of the first points of contact, is that because formerly the infrastructure around investigating financial crime had to be centred on narcotics trafficking?

Dennis Lormel

No, in that particular case it was a matter that the DEA has a joint intelligence centre outside of DEA, but they… it’s run under DEA and actually an FBI agent was the number two person there and he immediately called me and said “Hey, I have resources, I have a database that you guys could use”, and it was attractive because all of the other agencies in the government other than the FBI use that database. So, it was compatible to their systems. So, I had him immediately set that up for us, then we bought in all the investigative agencies, particularly US Customs Service and the internal revenue service, with their financial expertise. Then we all collaborated together. We also had FinCEN, here in the United States as our intelligence unit. They sent resources to us as well.

Amos Wittenberg:

Is it fair to say that before the attacks, US legislative and legislator infrastructure relating to the funding of terrorism was insufficient, or did the perpetrators manage their finances in a sophisticated manner, that helped them avoid detection?

Dennis Lormel:

I think before 9/11, the problem that we had was that we didn’t really pay enough attention. It’s not that we didn’t have legislation. But we did not… we never considered that we would be attacked. Whether that’s arrogance or lack of prepared-ness and likewise, from a financial standpoint, we weren’t monitoring for terrorist financing, so we were not prepared. Interestingly they weren’t that sophisticated. It was a blatant attack, they certainly used false IDs, but they did also use their real names and things. Where there was false identification, or where there was a level of sophistication, it was superficial in the fact that we were able to penetrate it very quickly. Through the financial investigation, we unequivocally identified and were able to trace the money back to Al-Qaida. We were specifically able to state that Al-Qaida was responsible .

Amos Wittenberg

In the financial crimes section of the bureau, what was your main focus before the attacks?

Dennis Lormel:

So, before the attacks our main focus was criminal oriented and it dealt with criminal financial crimes of all sorts and especially money laundering. Things that we did factored around money laundering, so certainly a lot of bank frauds, advanced fee-schemes and various different types of financial crimes, were our primary concern. Then as we got involved with the terrorist attacks in 9/11, we transitioned to the more traditional criminal investigative means into counter-terrorism and that required us to get hold of more classified information.

Amos Wittenberg:

Googling your name, researching this interview, one of the things that comes up at the top of results, is a transcript of a speech you gave on the 10th September 2001, I think talking about schemes duping elderly citizens out of their savings.

Dennis Lormel:

That’s amazing- just as an aside, when I got back to my office that day, I got call from a gentleman in Chicago who was an elderly gentleman who cried on the phone about how he had been defrauded and it just cut to my heart. What he was going through and I promised I’d try to help him and then 9/11 happened and I lost that. I found it three or four weeks later and amongst everything else that was going on, I was devastated and I got to our Chicago office and I asked them to please go and get this information. It’s interesting how the September 10th, day before 9/11, we were talking about elderly fraud and that we didn’t have enough resources to adequately address that crime problem.

Amos Wittenberg:

But it’s fantastic to know that wasn’t forgotten, entirely.

Dennis Lormel:

No, no, not at all.

Amos Wittenberg:

Just a month after the attacks, President Bush signed into force the Patriot Act, which has since been a mainstay of MLA, CFT enforcement. I wondered if you could give the listeners an overview of the acts key provisions in relation to money laundering. 

Dennis Lormel:

Ok, well in a broader context, the patriot act basically, it really gave the US government incredible power, a lot of enhanced powers and things. Both interims of national security and financial related matters. On the financial side, title three of the patriot act had a number of sections in it, which really enhanced our capabilities and really helped us significantly going forward for instance, section 3.11 is a special measures section, which enabled us to freeze and seize and do sanctioning from the US treasury department and those sections had a very, very chilling effect on terrorists and their ability to raise money. So, that was very important and then other aspects enhanced due diligence, there were measures on corresponding banking and additional power for us to reach out through correspondent banks and to seize and freeze money, in foreign accounts which is incredibly important.

Then another important element of the patriot act from a financial standpoint was we call section 3.14, which we allowed us to share information and like you in the UK, we have significant privacy considerations when it comes to financial transaction information and so 3.14, 3.14A allows law enforcement to make requests through our financial intelligence unit FinCEN to banks and all financial institutions and non-bank financial institutions and allows us to go out and request information, or request identifying information, which enables us to get further process and 3.14B enables the banks to share information between themselves and it gives them a safe harbour, for being able to share that information. So that information was really, really helpful. Over time, 3.14 has been a real good asset. But all of those different things, collectively have really given the government, the US government tremendous capabilities that we didn’t have before.

To your earlier question about the levels of legislation and things so, this really helped us quite a bit. I’d like to just, if I may, go on about the Patriot Act, because there was a misnomer regarding the financial components regarding the act. A lot of those elements in those sections, that came out in the patriot act, were already in congress in different forms. For instance, as chief of the financial crimes section, I worked very closely with certain senators and their staff, to help them enhance money laundering statutes, like Senator __ at the time was a big proponent of anti-money laundering and so he had proposed a number of different legislative amendments and additional legislation. So, a lot of what was in the Patriot Act was already in the pipeline, to be approved, it least from a financial investigative standpoint. So, I think a lot of banks and a lot of people, when the patriots act came out, were concerned that it was a knee-jerk reaction and that congress rushed to just go in and act this legislation haphazardly and from a financial perspective, that wasn’t the case. Because so much of what was in the Patriot Act was already being considered for legislation. So, that just rushed that process along considerably.

Amos Wittenburg:

How directly did your work, and your team’s work, influence the drafting of the act?

Dennis Lormel:

I think, as I said, a lot of the act was already under consideration and from a financial crime standpoint, my team had a lot to do with what was going on, as did other agencies, who were involved in money laundering. After 9/11, clearly what we were doing certainly enhanced and justified what happened, in terms of congress passing legislation. I testified before a congressional committee, the house financial services committee and I believe it was October 1st 2001 and they specifically asked me to testify what were the vulnerabilities in the financial services industry and I testified about beneficial ownership, being a vulnerability. I testified about correspondent banks being a vulnerability. I testified about wired transfers being a vulnerability and certainly the Patriot Act addressed correspondent banks and it also addressed due diligence and other considerations like that. So, I do believe that we had an impact on the Patriot Act and certainly the justification for the patriot act.

Amos Wittenberg:

How effective would you say the Patriot Act has been in in preventing the financing of terrorism in the US and abroad?

Dennis Lormel:

I think overall, I’d give the patriot act very good grades. As I said, it tremendously enhanced the bank secrecy acts, so I think its’s very difficult to provide bench marks here, but I think it’s undisputable the patriot act has had a tremendous impact and has had tremendous successes. That said, it’s still very difficult when it comes to terrorist financing, identifying terrorist financing and I look at it and break down terrorist financing on three levels, the first level being an organisational level and that’s money that flows from donors to an organisations or form other sources, through the organization itself, from their criminal activities or whatever. So, I think at this level, this is where we’ve had the greatest impact from the Patriot Act, because we’ve had the best disruption and deterrence. Because, wealthy donors basically disappeared after 9/11, when we started sanctioning them based on the Patriot Act. So the second level is from the organization, to operations and that money, you know the first level is… you can envisage money flowing to an organisation which would range from just a few dollars or a few euros to millions of dollars or euros. So the bandwidth there was tremendous. You get that to that second level and that second level is basically money flows to the organization, from the organization to the operation and that’s going to be generally through a facilitator. That’s going to range in the thousands to the hundred of thousands. Now again the patriot act has had success in disrupting it at this level. The problem then, the biggest challenge, is the third level and that goes from the facilitator operation to the actual operators on the ground, and so that’s where you have much more minimal amounts of money. That’s like where the 9/11 hijackers had their money coming through and that’s very difficult… I don’t care what legislation you have, it’s very unlikely that you’re going to identify initially. Without other intelligence information that you would identify those individuals, or money in that type of flow. Now today, we have the new dynamic where it goes in the other direction where we have the home-grown extremists and the foreign fighters and they’re pretty much self-funded. So, the money isn’t coming from the organization and in that case, it’s even less likely that you’ve going to identify them. Where the Patriot Act helps there, is in the due diligence sections of the Patriot Act, that’s where that would be helpful. But certainly, on that level, it’s a lot more challenging. As good as the patriot’s act is, it’s very difficult to have an impact there. That comes down to dealing with the banks and having the banks be more proactive where they can and to be more urgently reactive and responding when a home-grown violent extremist is identified. Generally, and unfortunately it’s after an attack, is to run the negative news and other alert mechanisms through the financial institution and that’s where they come up with it. So, in the training I give and the speeches I give, I talk about having to be urgently reactive and responding as quickly as possible and getting that information, either through suspicious activity reports or whatever channel you can, to our financial intelligence unit and certainly to the FBI.

Amos Wittenberg:

That’s definitely a point I’d like to come back to…

Dennis Lormel:

Definitely

Amos Wittenberg:

…Around the drafting of the acts, I don’t know about specifically in the relation to financial crime, but there were concerns that it might impede certain individual liberties, I wondered if you share any of those?

Dennis Lormel:

Yes and I specifically again, because we had the benefit of the financial provisions and the patriots act and certainly that was less intrusive. The areas that you\re talking about that were very controversial, were the wire-tapping and monitoring of communications. Sometimes the lines got blurred there, between the monitoring of communications and the monitoring of transactional activity and financial information and unfortunately that did get blurred. But I was able to, and people I worked with, were able to stick within the financial channel and much as possible, we circumvented the overhears and the what they call Fi-Sur, which is the surveillance of… and the wiretaps basically. The intelligence wiretaps. That’s what was controversial and there needs to be a healthy debate about how far do we go, because I can see like in Europe with you guys, with the attacks and I kw in France they’re considering additional safeguards to counter terrorism, to help counter terrorism. So at what point are we surrendering civil liberties, to accomplish then, of course, with president bush there was a controversy of the interrogation tactics that the CIA were involved in. We in the FBI specifically stayed away from that. We did everything according to our regulations and criminal investigative process. Which we meant that we read the Miranda rights to people, we didn’t interrogate and participate in that. We did everything lawfully through the court system. But going back directly to the point on the financial side, what we were able to do was again stay within the criminal framework as much as possible and use criminal legal process as much as possible, so we avoided a lot of the controversy. You have to consider that the two biggest vulnerabilities that terrorists are financing communications, so the reasoning for having the enhancements in both the banking side and in the surveillance side, was to give us better capabilities and better leverage to be able to intercept those communications and finances, to help disrupt and prevent terrorist acts. That was the whole purpose to disrupt or to prevent as much as possible. So, again from the financial standpoint, we were pretty safe, because we could navigate around the controversy.

Amos Wittenberg:

The financial services that we use on a day-to-day basis, in light of mobile technology, in light of block chain to some extent, are not the same as they were in 2001. I wonder how you rate the life expectancy of the act.

Dennis Lormel:

Well I think, in the context that you put that, I don’t think that the patriot act has a limited life. I think the patriot act is very robust, I think that it will continue to provide some, some really good coverage and leverage for the government. In terms of the innovation, you mentioned Blockchain, or let’s just go with a virtual currency and the internet itself. Clearly, there are going to be impediments there that law enforcement is going to have a difficult time getting around. So, going forward there may need to be future enhancements of the law, whether it’s the patriot’s act or other legal legislation that comes forward, something’s going to have to happen and I think the US senate and the congress are considering enhancements or changes or updates to our financial legislation now, as we are having this interview. So it’ll be interesting to see how they are able to do that. I think going back to the basic question, I don’t think there’s a limited life to the patriot act, I think the patriot act will continue and it’ll continue to serve law enforcement well.

Amos Wittenberg:

A month ago or so, you wrote a fascinating piece for ACAMS on the AML context of the Manchester bombing. I wondered if you’d mind giving us a quite overview of your insights?

Dennis Lormel:

Yes thank you. So what happened there was, I frequently write for ACAMS in response to terrorist incidents and I did it last year or a few years ago after Brussels and Paris. What I try to do is put it into context from an anti-money laundering perspective. What I want to do is get out of the financial service industry and to the banks in particular and the MSBs, how important they are and how the financial intelligence they have and the transactional data they have can contribute to the investigation in all of these major attacks and talk about the importance of financial information and responding – again as I mentioned earlier, I use the term urgently reactive. To go ahead and to monitor or to run your systems for negative news, as soon as the names are known of the attackers and to look in your system to see if you have any types of hits, any transactional activity. Any type of account relationship and to report that information immediately. I think it was really interesting to me, was that right from the start and I believe over in the UK, your financial investigators are outstanding and I believe that right in the initial phases as evidence is being collected, you were on top of financial intelligence. I believe that financial intelligence helped drive the investigation, it do so with the London bombings a few years back, I think it was in 2007. We certainly saw that here in 9/11, picking up the financial fragments and as we picked up those fragments, you start to develop a much more robust picture and so I really want the financial services industry, banks to know how important that is and how important their role is and they need to hear it. In that regard, one of the things that I encourage and it’s in this assessment, was the fact that I think financial institutions need to establish a critical response team; teams that are specially trained to deal with terrorism or major issues, like the Panama Papers or like the FIFA scandal. Things like that where you have a team that can rally very quickly and certainly in the larger institutions, it’s a lot easier, in larger institutions here in the United States have that process in place now an they have those resources in place. In smaller institutions, its more challenging, because you don’t have the resources. But to me, I don’t care what size your institution is, you can be touched and whether it’s one person or a whole team of people, you need to have those capabilities and you need to have established contact with the proper law enforcement channels, in the United States that would be with the terrorist financing operation sections. Certainly, in the UK you’ve got your investigative units that deal with finance, terrorist finance and I’m sure they have that relationship. In fact I know, because I’ve dealt with them- that they’ve got those relationships with the financial services industry as well.

Whilst it was clearly on a vastly smaller scale than 9/11- the UK in Manchester bombing, in the context of recent terrorist attacks in Europe, was sophisticated, involving a terrorist network, regular trips to Libya and a relatively high-tech explosive device. In the last months, London has seen two attacks; whilst both devastating, were far less sophisticated. I wonder if there is simply a level of attack which we can’t be expected to be protected, not by financial controls, but perhaps not by any means?  

I think that’s an unfortunate reality, I think you’re right about that. However, I do believe there have been attacks or potential attacks that have been averted and in some instances because of financial leads and reporting, suspicious activity reporting or suspicious transaction reporting in the UK- I do believe that from time to time that does happen, but the unfortunate reality is that a lot of these people fly under radar, we don’t have the capability or capacity to investigate them and I think likewise, many of these people until they get radicalised, there’s no reason for us to identify them through suspicious activity or transactional activity. They haven’t done anything outside of the norm until they attack. That’s where I talk about that urgent reactiveness, because we have a better opportunity- unfortunately, once they are successful in their attack (or getting stopped before they are able to perpetuate their act) and their names come out. That’s when financial institutions run them through the systems and invariable, financial institutions are going to find that they’ve got some sort of relationships with these individuals and they need to report that as urgently as possible, to the appropriate law enforcement channels.

 On a related point, I wondered to what extent ISIS has changed the CFT landscape, both interims of its finances as a pseudo-state, but also in inspiring lone-wolf attacks.  

Their ability to use the internet and if I may just digress a little bit on that point for a second, that it’s incredibly scary to me is that someone like Anwar Al-Awlaki is today one of the primary recruiters for ISIS and for Al-Qaeda and he was killed in a missile attack in 2011. So for his message to live on in the internet, it’s very compelling and it’s very concerning that folks like that are still out there that can recruit even after they’re dead. It just demonstrates that we have to do more over the internet, to try to offset and to de-radicalise people that are prone to get radicalised and I don’t think the government- at least here in the United States- we haven’t done a good enough job yet and we know that and there are some model programmes in the United States. For instance, an example is in Minneapolis area, we have a large Somali population there and the Somali community, the leaders in that community have worked with the FBI, the Justice Department in the Government to have de-radicalisation programme in place. It’s that type of opportunity and that type of initiative that we need more. The government needs to give more of a concerted effort, all governments need to, to be able to de-radicalise- because that’s going to continue to be an overwhelming problem and a very big challenge for all of us.

As a special agent in the FBI, how did you end up specialising in financial crime?  

Well, I have few things… I joke about that sometimes. I joke about what a terrible shot I was on a firearms range, so they handed me a visor and a pen and said here, you’re going to work financial crimes. But in seriousness, my background, I came into the FBI as an accountant and so I immediately, when I came out of new agent training, I went to the New York division of the FBI and we had specialised squads and anyone that was an accountant went to those financial crime squads. Through my whole career, I found financial crimes to be very challenging and very rewarding in terms of investigating those types of activities. Especially, I had the opportunity to investigate some really proficient fraudsters. So, kind of the competition in dealing with those folks, I really enjoyed and over time, I developed an expertise then in financial crimes. So, I was always an accounting geek.

I wonder if having been in the hot seat in the aftermath of 9/11- if it was in a way a relief to have left the service before the financial crisis?

You know, it was basically a matter a time. My time had come, so to speak. I certainly missed, for a number of years, the having been in that position- I’d have loved to have been there in the financial crisis and dealt with the challenge. I was there around 9/11 when we had the Enron Scandal, that was one of the cases that certainly bought on the financial crisis. So I actually picked the agents that went over to work Enron and help them set up the task force, in the investigative direction and I would have loved to have had that opportunity in the fanatical crisis, when so many of those other companies came up. I vividly remember following the Madoff case and when I heard that Madoff got arrested he went to, he was… he appeared before a magistrate for his initial appearance and he stated to the magistrate that he knew this day was coming for a long time. I was jumping up and down saying I wish I was an FBI agent again, because I’d like to get a room with him and ask him, at what point did you make the realisation? Because I guarantee at that point, he changed doing things he was doing before. I like to think that a good fraudster has an exit strategy and so, I wanted to know… in my mind I would have been asking him or I would have been trying to investigate what his exit strategy was and what he did differently, from the point that he realised that he was going to caught going forward.

Amos Wittenberg:

The firm that you’ve set up since leaving government service DML Associates, advises a wide range of organizations, including government, on financial crime. I wondered what key recommendations you’d make to the UK government in relation to terrorism financing?

Dennis Lormel:

Well, I think first… I thank you for the, for asking me that. But I believe that the UK government does a really good job and what I would advise them is what they are already doing! It’s to maintain the relationship with the financial service industry to have outstanding liaison and to bring them in, whenever there’s a case and work and share information to the extent you can. I think that’s really important, you’ve got to handle public/private partnerships and to me, part of that is you have to understand perspectives. So, when I was in the government it’s incumbent that I understand the perspective of the banks, in terms of what they can share and what they can’t share and what their priorities are. So, in law enforcement my perspective is the, is when it comes to criminal matters, is to put people in jail and to get sustainable prosecutions and on the banking side… and certainly in counter terrorism it’s to disrupt and prevent terrorism. So, on the banking side they certainly want to see that happen, but most importantly, they have to ensure that they protect the integrity of their institution, they protect their institution from financial loss. Sometimes those perspectives work against each other, so we have to be able to understand each other’s perspectives and work to establish, maintain and sustain viable partnerships, that can collaborate to develop proactive initiatives.

If you go back to the 9/11 commission report, the only area that got a good gradient is terrorist finance and that’s because we could be proactive. That’s in terms of sanctioning, that’s in terms of financial investigations, we did some tremendous things, proactively and I’m sure in the UK , you guys are doing the same things that we were doing, or very similar. So those relationships, it’s establishing the public/private partnerships and having a sustainable relationship, that I encourage to the UK government to keep working and to enhance. And likewise, I encourage the US to do the same thing and I’m always talking to my former colleagues, because when I sat in the seat that they’re in, I didn’t necessarily appreciate perspective, the way that I do today. Now that I’m a consultant on the outside who works closely with the bank, I see their perspective so much better than I did when I was in the government. So, I would encourage the UK government and the US government, those people that are still in those seats to really understand the perspective of the private sector.

Amos Wittenberg:

On that point and coming back to what you said about encouraging firms of all sizes to recognise how important they can be in the fight against financing terrorism- we tend to think of AML, CFT basically in relation to banks and relation to big firms, but many regulated firms are a hell of a lot smaller; I mean, independent real estate firms, or firms selling expensive jewellery, for example. Can they do anything to tighten AML controls in relation to terrorism financing?

Dennis Lormel:

Yes, they can and they absolutely should. I think this is a great question, because you really hit on an area that really needs to pay attention to these problems. How likely that a real-estate agent or a gold-dealer or jeweller is going to encounter terrorism? They’re going to think: ‘no, that’s not likely’. But they are very likely to deal with money launderers and I know specifically in… I do a lot of work for instance with the regulated coin dealers and jewellers and gold dealers, who have to have a programme. Part of the big challenge, these companies who now in the United States, a lot of these entities are covered by the Patriot Act (going back to our discussion on the Patriot Act). They’re mandated by the Patriot Act to have an AML programme. But I don’t know that they put the vigour into the AML programme that they should. I think the take it for granted, that you know we aren’t a… ‘we’re a jewellery  business’, ‘we’re real-estate’- we’re not somebody that’s going to be engaged like a financial institution in money laundering- and that’s a bad perspective to have. They have to have the perspective that they can be used as a facilitation tool. One of the things I talk about throughout the industry, and It’s applicable here, then banks and MSBS and all these firms, jewellers, real-estate agents, they can even be a facilitation tool or a detection mechanism. So, I don’t like the idea of them facilitating money launderers or terrorists… and they need to take money laundering a lot more serious than they do!

Amos Wittenberg:

I wonder if you think that small firms in particular, are properly incentivised at the moment, to take it seriously?

Dennis Lormel:

Probably not, I think… it is difficult and it can be costly, there’s no question about that. It could require resources that they don’t normally have (or have the expertise for) and they have to go out get it. Nonetheless they still should be required and they still should pay attention for it and to take the steps.  To your point about incentive, If they’re regulated and in the United State, some of those companies would be regulated by the Internal Revenue Service, if the Internal Revenue Service came out and did some kind of examination, then certainly your incentive is that you don’t want to be fined. More importantly though, I think of from the stand point of doing the right thing- that they should have these programmes and that should be incentive enough. When you see a 9/11, when you see a Manchester, when you see attacks like that, if somehow your institution or business could have touched that and been a flesh-point of sorts, then I think it’s incumbent that we all have those kind of programmes in place.

Amos Wittenberg:

I don’t want to lead you to hubristic statements, but as a final question: do you think those changes have been significant enough, that an attack like 9/11 could not happen again?

Dennis Lormel:

No, unfortunately I do believe that we’re going to have another 9/11 attack. How it’s going to happen and where, I’m not sure. But I certainly think that regardless of whatever safeguards we have, that people who are looking to do bad things like that, can circumvent the controls in place and they’re not going to be concerned about any type of prosecutive (sic) deterrent. They obviously have a different mind-set and ideology and because of that I believe that we are at risk and regardless of how strong our systems are- at some point our systems are going to be breached!

Amos Wittenberg:

So remain vigilant.

Dennis Lormel:

Absolutely, you have to be vigilant. Always vigilant.

Amos Wittenberg:

That was Dennis Lormel, former chief of the financial crimes section of the FBI, since leaving government service, he’s run DML Associates LLP which provides expert consultancy on financial crime and related issues. That’s all for today, but keep up to date with us at KY360.com for daily updates, expert insights into the mind of money laundering methodologies and emerging financial crime risks.