10 Apr 2020
During his time as an undercover agent investigating Pablo Escobar and the Medellin Cartel, Robert Mazur kept two lessons from his training in mind: think like a bad guy, and remember, the bad guys are always smarter than the good guys.
Mazur, who recently spoke to RiskScreen CEO Stephen Platt for the latest episode of KYC360’s AML Talk Show, believes a similar lesson could help defend banks from an influx of dirty money: focus more on the corrupt individuals within an institution rather than on any regulatory failings by compliance officers.
“We are so focused, when we have these scandals, on analyzing them that we look at the effect and not the cause,” said Mazur, citing the recent publication of a report by the law firm Clifford Chance on the anti-money laundering (AML) compliance failings of Swedbank. One question left unanswered by the report is why the Swedish bank opened high-risk, nonresident accounts for oligarchs and others in the first place, according to Mazur.
“It’s not compliance’s fault that they went through the door. They aren’t the ones who cracked the door open,” he said. “We need to be so much more focused on what did the relationship manager know at the time that this account was opened and during the time that they facilitated the transactions that occurred, and what did management know.”
The distinction that needs to be better drawn, according to Mazur, is between the “two brains” of any financial institution: the sales brain and the compliance brain.
“How many times do those people find themselves in a situation where they are being refereed by management with a view toward what sales says about these accounts and compliance trying to argue but ‘look at the risk’?” he said.
In some money laundering scandals, it becomes difficult to argue that the “sales brain” was unaware that the institution was processing illicit funds, according to Mazur, who noted that Union Bank of California, Wachovia Bank and HSBC all handled large sums of cash linked to Mexico’s high-risk currency exchange firms, known as casas de cambio.
Before admitting in 2010 to processing $378.4 billion in suspicious transactions between 2004 and 2007—violations that ultimately cost the now-defunct bank $160 million in forfeitures and monetary settlements—Wachovia took in some $14 billion in US currency from casas de cambio. That sum likely equated to more than 780 tons of cash, according to Mazur.
“How in the world can an institution can take in 780 tons of currency from some of the hottest areas in Mexico, from the highest risk-type businesses, and have done this because because their anti-money laundering compliance program wasn’t doing a proper job?” Mazur said. “Give me a break.”
In a wide-ranging interview, Mazur also discussed the experiences that led to his book The Infiltrator, which was made into a movie in 2016, as well as his observations on the anatomy of drug cartels and their implications for finance professionals.
Listen to the full podcast here
RiskScreen: Eliminating Financial Crime with Smart Technology
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