Good afternoon folks, and welcome to this KYC360 AML Talk Show broadcast with me, Stephen Platt. I hope that you’re all staying safe and well during these very difficult times. My thoughts go out to everybody struggling in isolation and potentially with sickness and loss. These are dark days but we will, of course, prevail. Beyond the enormous human anxiety and suffering, the wheels of commerce continue to turn, albeit more slowly.

And believe it or not, crimes continue to be committed, and the proceeds laundered. There are some real scumbags out there, many of whom are ramping up their activities to take advantage of the pandemic, and of course lest we forget, there are of course people and businesses who because of the economic slowdown, may resort to desperate measures, to attract or indeed to retain business by cutting due diligence corners or may even be seduced by criminals to take their money. Now, I think is a time for everybody in the AML world to stay alert and to keep awareness levels high. Which of course isn’t easy during this unprecedented period of home working, which is why I hope this podcast will be distributed and listened to widely.

I’m absolutely delighted to be joined by a man who spent a career as an undercover agent immersed into the fabric of a number of criminal organizations including Pablo Escobar’s. The man, of course, is Bob Mazur. Bob’s incredible story of his time laundering for Escobar was told in his bestselling book, The Infiltrator which was made into a Hollywood blockbuster movie of the same name starring Bryan Cranston who of course played Bob’s character. And for those of you who haven’t seen the movie, use the opportunity of being stuck indoors to watch it. It’s a great movie about a true story of incredible skill and of course bravery. I’ve known Bob and his family for many years, and I count him amongst my closest friends. He joins us now live from his home in the United States. Bob, welcome. How are you doing, my friend?

Oh, I’m doing fine. And thank you so much for inviting me. It’s a great opportunity to share thoughts with all the professionals on the front line.

Well, it’s good of you to say so. Bob, I know how busy you are even during this period of isolation. So it’s extremely good of you to spare us the time. The weather where I am is pretty good. How is it with you?

We have a cold front here in Florida. It’s not going to get above 80 degrees, today. So it’s-

Bob, my heart bleeds for you clearly. Not above 80 degrees. Now Bob, look, what I want to do is I want to go back to really the beginning and explore with you how you got into law enforcement. And I guess more particularly, how you got into undercover work. And what I really want to try and understand is was there anything in your background or about your background that allowed you to empathise with the criminals that you were dealing with day in, day out whilst you were undercover? In other words, now what made you good at this? Because I sure as hell know I couldn’t do it. So what made you good at this? And can you give us a little bit about your background?

Sure. Well, I would say that I got into law enforcement literally by accident. I was in college. It was hard economic times in that time frame, and I went to the jobs board and was looking for a summer job and something during the semester so I could try to make ends meet. And I saw this opportunity for a co-op position with what was called the IRS Intelligence Division, now known as Criminal Investigation. And so I applied and got the position and I got into the office and it was a very small unit. Only a few thousand throughout the entire country. And I was in New York City, so the cases were rather impactful. And I was assigned to a group that was involved in looking into drug traffickers, corrupt politicians, major businessmen throughout the New York area who were involved in income tax evasion. But they were working closely with other agencies.

And so one of the cases they were working on became a movie. It was American Gangster, about a heroin trafficker. The biggest heroin trafficker in the United States who, from our perspective in the office where I worked as a co-op, they were looking at the bank side. This gentleman’s couriers were coming into an aptly named bank, Chemical Bank, for a drug trafficker.

Now that’s a great movie. American Gangster. Denzel Washington.

Yes.

And actually interestingly when I was recently out in San Francisco with Salesforce, I took the opportunity to go across to Alcatraz on a nighttime tour, and Bumpy Johnson who was the figure in … who is Denzel Washington’s sort of father figure in American Gangster? – I was very interested to see that he was imprisoned on Alcatraz because he was regarded as such a dangerous guy. So another great movie for listeners to watch.

Yeah. And he played Frank Lucas who was the-

That’s right.

… heroin trafficker. And as the money was being laundered in huge amounts through Chemical Bank, and I saw the power of the money at the highest levels of criminality. And being in an organisation that was focused on going after those types of criminals, I looked at my other alternative because I was business administration, finance and accounting major, do I want to be a CPA or do I want to do this type of forensic accounting work and go after the biggest of the big guys? And so that drew me. I got hooked. And as I got involved in it more and more, I think I got involved in law enforcement for the same reason just about every cop gets involved. And because you want to be a part of making a difference. And I perceived making a difference being as deep and enclosed in the trenches of the front lines as I possibly could.

Had no interest whatsoever in going into management. For me, making a difference is getting the evidence nobody else can get. Doing whatever it is you need to do, taking whatever risk you need to take in order to get the difference maker. And so as I got into this career after 12 years and got to understand a little bit more about the power of long-term undercover work, I volunteered to be a long-term undercover agent as we were beginning to try to attack the money launderers servicing Pablo Escobar. I felt like my background was such that it would be easier for me to be able to convincingly play that role because my background, here I am, a person with a business administrator, finance background. A lot of accounting work. I worked in a bank. I worked in a brokerage firm. I know the financial markets. And I’m from New York and the perception of money laundering in … usually, it was in the three major cities way back then. New York, LA or Miami were the main hubs.

I’m from New York. The less lies that you need to tell in your role, the better off you’re going to be. And so I was blessed with trainers who taught me scientifically how to develop skills, how to manage risk, and how to try to address the work of doing a long-term undercover agent. Without them, I would have crashed and burned. And I think the other thing that gave me a little bit of an advantage is … and I think I call this a sense of street. When I grew up, I didn’t come from privilege. My family lived in a second floor apartment. There were three families in a three bedroom house. And until … throughout the time of my young age, I lived in an area where there were a lot of people who were connected to Italian mafia. American mafia. And so I was in and around that quite a bit.

And as I mentioned in my book, there were some members of my family who were pretty close to that experience. And I saw that kind of stuff, but I had the greatest mom and dad, as we all do, in the world, who made sure that I didn’t get anywhere near any of that kind of stuff. But I did get to learn about that sense of street. And I think I just got lucky. I got lucky to have a background that lent to being able to play that role. Not just from an education standpoint, but from a personal life standpoint. And I had great trainers and supporters.

And one thing that’s so important for everybody to understand is, I was a part of a team. It’s the team that made this all happen. And if we didn’t have a well-built team who all collectively just like everybody who is listening right now, has a team within their AML teams, that all need to embrace the same goals and pull together. Without that, I would have never made it.

Now, on that point Bob about the criticality of a team, I mean, you refer to long-term undercover assignments. But I guess when you entered an undercover assignment, you didn’t know how long it was going to run for. The Escobar assignment ran for, I think, almost three years. How much of a strain did that put on your family? And how did you keep the family together? I mean, you get the glory, but your family members, your wife in particular, is in many ways sort of an unsung hero in this life story. Isn’t she?

Absolutely. One of the things that I think are key to the success for a long-term undercover agent is to not be in a position to have been chosen to do undercover because you either look the part or you speak another language and you don’t get the appropriate training. Part of the training is to recognise that your family is going to have a real stress put on them as you will as well. And it’s extraordinarily important for there to be a support base for your family while you’re going to be gone for extended periods of time. Luckily for me, I hadn’t been moved to a new city where we didn’t know anyone. I had been working in the Tampa area, oh, for probably seven years or so before that assignment.

My mom and dad had moved down because they wanted to be by their grandkids. My brother lived in the area. And my wife also had her own profession as an educator. Things that would keep her focused on family and career, and have the support of people around her. But the fact of the matter is, and you’ve met Evelyn. She is my best friend. She is the most trusted person in my life. She has been since I was 18. And those deep roots … she is the only reason that our family did not disintegrate. I give her 100% of the credit for that. I eventually became, I think, a victim, my own victim – I made myself a victim of an unfortunate thing which is, for me, information. Information became my heroin. I couldn’t exist without finding the next biggest secret. Without finding the next biggest piece of evidence.

Without … Being in that environment in the underworld, and being able to have a few conversations with someone and then passing that information on to your handlers and finding shortly thereafter a seizure of more than a ton of cocaine, is gripping. Finding out about who it is within governments who are corrupt, sitting in an office in the private client division of an international bank and watching drug traffickers, money launderers, terrorists, politicians walking through the same doors being serviced by the same people I was being serviced with. Recognising that there is this undercrust in the world that exists that most people don’t get to see. But I did. And I was drawn by it. I was drawn so much-

That must have been a hell of a rush. It really must have been.

I was so drawn I was willing to, at one stage, I was willing to if … and I correlate this with being … I was in the military but not on a battlefield being shot at. But I think that if … it’s the same type of feeling that you get. If you’re on a battlefield and you know that life and death is based upon your next move, you’re laser focused and you don’t have anything else in your mind. And the only thing that’s important is achieving the mission of the day. So if achieving the mission of the day meant walking, unfortunately not walking away, but losing your family, losing your career, you’re so focused that you don’t recognise you’re willing to take that risk, some people not until it’s too late.

Yeah. That’s incredible. Bob, what was the closest you got to being blown on that assignment?

Well, on that assignment you got to recognise you have a team and it’s an international team. So I had just gotten back from Paris where I had met with Pablo Escobar principle attorney and consigliere and some other very, very trusted people who would direct reports to him. And had negotiated a situation where we would have received about $100 million. A million to $2 million at a time. Most of it coming to us in New York. And of course the New York office felt a little differently than I did about the importance of having surveillance out there. They had this interest in seeing to it that the people dropping off the money were followed away. I was deathly concerned, fearful of that, because one thing you can never ever forget and when you do forget it, you’re not going to succeed, is that the bad guys are smarter than the good guys.

If you don’t keep that in the forefront of your mind, you are not going to succeed. And unfortunately despite my interest in not having it happen, there was a massive surveillance team out on the streets by the third or fourth pick up. And the Medellín Cartel had a counter surveillance team out there doing nothing other than looking for agents. And the word … they identified virtually ever surveillance agent out there.

And the word came back from Gerardo Moncada who was Pablo Escobar right hand man, that they were convinced that I had to be a DEA undercover agent because they saw all of that surveillance out there and they were really upset. And so I agreed to meet one-on-one with one of his trusted advisors in Miami. I begged my cover team, my contact in Miami, to have no surveillance, and we didn’t. And now my job was to talk this guy into a different thought than that I was an undercover agent. And I remembered what I was being taught by those former long-term undercover agents, which included the likes of Joe Pistone, who said, “Got to think, think like a bad guy. You cannot think like a cop.” So think like a bad guy as you’re walking into this meeting.

And if I was really a bad guy, my concern would be my lord, we need to get closer to work on this because we apparently must have a problem. I don’t know if it’s on my side or on your side, but whichever side it’s on, we need to eliminate it. And the one thing we need to do right now is stop business entirely. That meant I was walking away from $96 million.

Wow.

That’s a convincer. You know? A cop might have said, “Well, you guys must be the ones who brought the heat.” And pound your chest and you know, but that … luckily that wasn’t my instinct to do that. And that was basically due to training. And there were much closer times for me during that meeting. There’s a scene in the movie where my briefcase recorder malfunctions and the portion of the covering for the recording equipment is exposed. That happened, but it didn’t happen in exactly the same way. That happened at that meeting one-on-one, me and Escobar’s trusted person. Luckily I had the briefcase open. The insides facing me. He was on the opposite side of the table, so he could only see the back. And as I opened up the briefcase, the back of it … the inside fell down and the recorder was exposed, looking … I was seeing it.

And he was expecting me to give him some papers from some offshore corporations that a law firm had put together. And I was fumbling, trying to get it back together again. And got it back together and just as he came around the table. So, not only was I being accused of being a DEA undercover agent, I almost had the recorder-

Exposed.

… exposed. Which would have been a real problem.

Yeah. I mean, it’s important for everybody to remember of course that these were in the days where there was no wireless technology with wireless bugs and so on. You were carrying around this briefcase with a mechanical recording device as part of its interior fabric to record these conversations which is just, just, just remarkable. But also fascinating to hear that at the point where you were at the closest to being blown, you employed the power of reverse psychology. Demonstrating that you were prepared to walk away from the $96 million and that you were influenced in that decision by the training you’d received from Joe. And for listeners who don’t know Joe Pistone, for those of you who have seen another great movie about an undercover operation, Donnie Brasco with Johnny Depp and Al Pacino, that is the story of Joe Pistone. Another great friend.

And that is well-worth watching. Of course, Joe was undercover for, I think, almost five or six years in the Bonanno crime family. One of the seven crime families of New York. Another amazing, amazing story. Now, Bob, the level … I want to explore with you the level of sophistication of Escobar and his key people. Many people listening to this will probably rather like me be addicted to productions like Narcos on Netflix, which paints a picture of an extraordinarily talented but of course evil, evil man. You get the sense that if he’d been born on the other side of the tracks, he could be a Fortune 500 CEO. What anecdotes have you got from your own experience of dealing with these people? Is it as they’re painted in movies like The Infiltrator and Narcos? How would you describe these guys?

Well, I’d say both ends of that spectrum exists. A lot of the people that I dealt with were very well-educated, spoke several languages. Three, four languages. Were attorneys, bankers, corporate types. But then there was also the other side. There was the side that brought the type of activity that resulted in the death of my two primary clients. Gerardo Moncada and Fernando Galeano, where they were discovered by Escobar’s sicarios to have diverted some of the revenue of the Medellín Cartel, basically because the war tax that was being imposed by Escobar on the major leaders of the cartel just continually grew. It started off like 200,000 a month. Went to a million a month. And like most people who are overtaxed, they find a way to evade.

So, when that was discovered, he had them kidnapped. They were brought before him, tortured for a couple of days. They were hung by their feet. Clothes were stripped off. Blowtorches used to melt the skin off their bodies. Chopped up. Nobody ever found them. Then he went after everybody in their blood families and then everybody in their organisational families that he could possibly try to find. But on the other end of the spectrum, when I was in Paris with his principle attorney, Santiago Uribe, this is a guy who wrote a position paper for the massive number of corrupt senators in Colombia at the time based upon what he articulated to be violations of the constitution whereby it would be illegal for any of the extraditables, that was Escobar and the other leaders, to be extradited to the United States because it was an invasion of the sovereignty of their country. And they should be charged in Colombia only.

And he basically, as a result of his legal arguments as well as the fact that at least many of the people I knew claimed that about 80% of the senators who were on the take, the combination of those resulted in Escobar being basically untouchable for the longest period of time.

Yeah. And this is actually a story which is told incredibly well in probably one of the best books I’ve ever read about Escobar. Killing Pablo by Mark Bowden. He goes into a lot of detail about this. I know you’re also a fan of that particular book, but I would recommend it to listeners. But Bob, just to gain … focusing in on the sort of the human element of this story, when you’re literally a hair’s breadth away from being in the kind of danger in meeting a fate similar to the one that you’ve just described about those two individuals who obviously had a horrendous death, when you’re a hair’s breadth away from that and then the undercover assignment ends, what is the experience of coming down off that adrenaline high? I mean, that cannot have been easy. That must have been enormously difficult for you.

Well, I had a little bit of an unusual circumstance that kind of … as you’re describing that, I’m thinking about the first time that I was scuba diving off of Central America. And coming up slow and not coming up fast is going to keep you alive. And I came away from that somewhat slower than people might think. Yes. The undercover assignment ended on a given day, but within 30 days there was a verified contract on my life, which caused me to have to and my family to be … we left the country. We came back in. We lived under another identity. When I came to the UK to testify, I had an anti-terrorist squad of 12 people who were toting machine guns and driving me around the city at remarkably fast speeds, living at the City of London Police Department, and moving around the city in the tunnels that are underneath the buildings so that the supposed sicarios who wanted to kill me couldn’t kill me.

So after going through that for two years during trials and then I got recruited by the DEA to do another undercover assignment. By the time I got through DEA training which took about six months, four, five months plus time used to set up another undercover operation, I was back undercover again. So, and then that one was for two and a half years. So, the whole ride took maybe five years in the first operation, five years in the second operation. By the end of the second operation which very is, by far the closest I came to death, I was ready to hang up my spikes. It wasn’t like I was taken out of the undercover world and fought to get back into it and was not given that opportunity. Which sometimes happens in organisations. For me, it was kind of a decompression over 10 years period of time.

And oddly enough, even after I retired, and I’d been approached by publisher to write a second book about that second undercover operation and that ended. I went into the private sector. But even then it didn’t end because I was invited to come back to a very unique office within DEA that works closely with the CIA and military intelligence and others. And they were asking me about … and this is probably five years after I retired. They were asking me how I would approach a particular long-term undercover operation. And when I got done telling them how I would do it and which informants I would use, they said, “Well, why don’t you come back on contract and do the undercover assignment?” I said, “You know what? I’ve got six really good answers for why I’m not going to do it. Each one is a grandkid. And no. I’m not going.”

So I ended mine on my terms. If I had ended it … if it had ended on somebody else’s terms, I might have had some angst about it, but I didn’t.

Yeah. That’s interesting. Now, I want to come on now and explore what lessons we’ve learnt, if indeed any. And your thoughts really on whether or not you think AML compliance is failing despite the best efforts of … there are hundreds of thousands of AML professionals around the world and massive levels of expenditure on AML compliance by organisations. And I’m referring here really to the monotonous regularity with which we continue to see scandals emerge within the finance sector and record fine levels for AML breaches. And I note that in the decade since the financial crisis, $36 billion worth of fines, globally, have been levied for AML breaches. And $10 billion of that figure was levied in 2019. So, in the last 12 months or so, which seems to me to indicate that the problem is perhaps getting worse, not better; what are your observations on that?

Well, first, I don’t want to say anything that’s going to discourage those on the front lines that are listening here, to think anything other than every single day you make a difference. We are much more aware of the risk that exists in the financial community today than we were 30 years ago, 20 years ago, 10 years ago, 5 years ago, yesterday. So what you do is extraordinarily important. But I think we can do so much more with so much less. I think that one of the problems that I see is that I think we are so focused when we have these scandals to analyse them, and we look at the effect and not the cause. Let’s use the most recent one that came out in Swedbank. The analysis that was done was completely focused on the idea of reviewing the AML compliance systems. To me, that’s the second line of defence.

To me, I want to know: why did the institution bring those high risk, non-resident accounts oligarchs in? Why did that happen? It’s not compliance’s fault that they came through the door. They weren’t the ones who cracked the door open. We need to be so much more focused upon 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. Yeah. It’s important to know what compliance knew, but let me tell you. I’ve said this for a long time. Banks have two brains in my view. A compliance brain and a sales brain. In my line of work where I get the opportunity to share thoughts with people in compliance, I am so grateful that I am with the 99.999% of people in compliance who are trying to fight the good fight.

On the other hand, 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. But look at this. But look at that.” And unfortunately, all of their sound thinking does not get put into the equation. To me-

So Bob, sorry to interrupt, to cut across you there. So what you’re essentially saying is, look, it’s not why the defences failed. It’s why the defences were needed given the decisions that were made by people on the front line to bring that kind of business through the door in the first place. That’s the point you’re making?

Absolutely. And you can look at this case after case after case. And if you want to look it from a drug money standpoint, you can take three cases. Union Bank of California. You can take Wachovia and HSBC. Union Bank of California is dealing in correspondent banking with, casas de cambio. Money service businesses in Mexico. They get caught handling the hottest of the hot. What do they do? They sell that business off. Who buys it? Wachovia. Wachovia buys it, they deal with it, they get caught, they sell it off. Who buys it? HSBC. HSBC does it and they get caught and it goes on. But when you look at those types of cases and a good example, I think, is the Wachovia and the HSBC situation; when you look at Wachovia, Wachovia had no branches in Mexico whatsoever.

What they did is they sent account relationship managers from Philadelphia and Miami into Mexico to solicit business with a casas de cambio. They took in, in less than three years, $14 billion in US currency. $14 billion that they shipped in armoured cars across the border to accounting house in San Diego where the banks counters counted it all out. Got it into the accounts for those casas de cambio and the money got sent all over the world. And clearly, when you look at the profile of that money, it was spent for drug traffickers. Now, think about this. $14 billion. I was a money launderer undercover and I can tell you that that money generally comes in fives, 10s and 20s. But let’s make the package smaller and say it was all 20s. In $14 billion in $20 bills, is 780 tons.

You tell me how in the world 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 their anti-money laundering compliance program wasn’t doing the proper job? Give me a break. And then just quickly, look at it with HSBC. They repatriated … and you can find this in the Senate subcommittee report. $106 billion in US currency. $106 billion in less than three years from different parts of the world. A lot of it coming in from Mexico. If it was $20 bills, it’s 5,830 tons of currency. I’m telling you, that doesn’t happen because the anti-money laundering compliance program failed. That’s happening for other reasons.

Prosecutors need to focus on that. Regulators need to focus on that. And the problem we have is that we find these things years after they happen. So much time has gone by. What’s key to a money laundering prosecution? The knowledge of the person who carried out the transaction. Because if they knew that the money came from an illicit source and they did anything to conceal or disguise the money, that’s a money laundering offence. Now, three years after the fact, there’s so much plausible deniability you could wrap yourself with that it’s difficult to be able to say beyond a reasonable doubt what the person knew. You need to be there sooner and that’s why there are things that law enforcement, in my view, law enforcement is dropping a ball big time by not getting proactively involved in these cases.

I mean, what you seem to be suggesting, Bob, is that these are all sort of greed motivated cases that people knew what they were doing. That in some cases organisations and the people stewarding them were actively encouraging people to take this business. I guess it’s just an example, another example of moral hazard. I mean, if the risks don’t outweigh the potential rewards of doing this business, then organisations are going to continue to be tempted to do it?

Absolutely. If you look at the Clifford Chance report concerning Swedbank you’ll find quotes from e-mails. This is what I think tells you the story. Here’s a quote, “This has been a long-term client and very profitable for us.” As they’re evaluating whether to keep the account or not. Another one, “The banks makes a lot of net income from the client. I suggest allowing to continue working with this client.” That’s really what it’s all about. It’s a matter of really figuring out whether or not you want to take that risk. The appetite for risk, in that instance I think, was extraordinarily high. And in most of these cases with fines, extraordinarily high.

Okay. Fines are all right. But individual responsibility? Pinning individual responsibility … banks do not launder money. People launder money. And the bottom line is: getting people to be individually accountable is much more important than punishing the shareholders with huge fines. Huge fines are basically a cost of doing business, and that … there’s no way around it. You look at the HSBC situation that $1.92 billion fine that they wound up getting I think came to about 10% of their pretax profits for that year. That’s a cost of doing business.

Interesting. Interesting. I was very interested to see that there was a collective sort of in take of breath on the part of CEOs and senior directors of financial institutions when the Swedbank CEOs severance package was cancelled because the bank said that that person needed to effectively share responsibility for what had happened at the bank and that it was unconscionable that they should be paid off in that way. As if that was some level of punishment that fitted the crime. I think that pretty much tells us all.

Yeah. You know, and one of the things that I found very interesting, in that report, was that they claimed that they did not identify any evidence of criminal conduct by the bank employees, and there was no evidence of any employees receiving kickbacks. Well, you know, kickbacks, if you didn’t have kickbacks paid, what does that tell you? First of all, I defy anyone to suggest that a bank that moved hundreds of billions of dollars is in a position to be able to tell whether or not the oligarchs who have many, many hundreds of billions of dollars all over the world ever gave any money to any of the employees, but let’s assume that that’s a correct statement, that they were no kickbacks. At BCCI, there were no kickbacks made by any of the criminals that banked there to the officers.

Why? Because it was an institutional plan. Because the institutional plan was that we need deposits. Deposits, deposits, deposits. And when they got those deposits in, as employees, they were rewarded by the bank. They were given a greater line of credit. They were given promotions. They were given all types of perks. And so that, to me, is more telling than if … if you’ve got a dirty bank employee who takes money under the table and defrauds the rest of the people within the bank into thinking that these are reputable account holders when they’re not, that’s a completely different story than when you have an institutionally-based greed plan to go out and identify high net worth, non-resident oligarchs who you are going to solicit money from in order to facilitate their transactions and hide the beneficial owner of the accounts. That’s an institutional plan and that’s worse, in my view, more evil, than an individual employee. It goes much more deeper into the institutional conscience of the bank.

Yeah. No, I see that. I see that. I mean, look Bob, as you acknowledged, there are a lot of people out there working very hard to do the right thing in quite difficult circumstances often with the wrong tools, legacy AML systems and so on that really aren’t up, necessarily, to the challenge. And we’re never going to stop this entirely despite our best efforts. So what do you think the metrics for AML success should be within a financial organisation?

Well, you know there have been some things that have been done in the recent past that are very, very positive and are very, very helpful. I know in the United States under the Patriot Act, it’s Section 314(b), financial institutions are able to share information with one another under a centralised platform. A secure sharing environment. That is a huge, important step, because when you have a situation … and I’m not suggesting that all major scandals come because the bank went out and intentionally went to find it. There are very sophisticated money launderers out there who wrap themselves in plausible deniability, and try to convince an institution that they are something that they’re not.

And one of the biggest problems that the institution has is they only get one piece of the 2,000 piece puzzle in order to be able to determine whether or not what they’re doing does carry money laundering risk. Now, on a sharing platform with an ability to be able to do that lawfully, it’s a very, very big advantage. I think one of the other things that we’re coming to recognise in the AML world is that you can’t throw money at a problem and not recognise that you need to have experienced people involved in the AML process. Professionals who are overseeing it. We’ve seen many claims. And I’m not trying to pick on HSBC, but it is a fact that there have been whistleblowers who have come from their compliance department, especially the one in Delaware, who talk about the fact that employees who were one month before working in the credit card department had a wand that was waved over their heads and they became AML officers responsible for being a part of lookback operations, trying to identify suspicious … excuse me, suspicious activities.

There’s so much more that goes into that than just having a warm body sitting in a chair. And I think that that has kind of disturbed me because I get to see that from a unique perspective. I’m a retired law enforcement officer in three retired agents associations and I can tell you that a lot of the lookback resources come from retired federal agents. You find people who used to be higher up in the government who go to the directories of those retired agent associations and they hire retired agents to come in and do participate in lookbacks. That sounds like it might be effective because you’re getting people with some type of experience.

But what really happens is that the monitor puts up crazy requirements that an alert needs to be resolved within two and a half hours. Or whatever the time frame is. And any person who’s employed, federal agent or otherwise, former federal agent, has to maintain that pace. And when they don’t maintain that pace, guess what happens? They get fired. And most of these guys and gals who really know what they’re doing, recognise they have to stay longer in order to be able to truly work the alert out and they’re the first ones that are taken out. And the ones who will move the stuff quick are the ones that stay in. So recognising that these types of problems are there and trying to improve them, getting the opportunity to share information back and forth, using more professionals and of course as part of your equation of AML, having the advantage of artificial intelligence and very sophisticated programs that are going to be able to help you to identify risk so that we use our limited amount of resources where the highest risk exists.

These are all things that have become more common in the industry and are making things better day by day. But I still do believe that the law enforcement community needs to change their attitude and become a bigger player here. We can’t be finding these things long after they happened through regulatory reviews. We need to be there when they’re happening so that we can identify knowledge which is the most important thing when it comes to the issue of trying to assess whether or not we truly have an intentional criminal act or we have a failed anti-money laundering compliance program.

Yeah. That’s fascinating. And I’m grateful to you, Bob, in particular for highlighting the importance of information sharing between industry participants. I mean, I, for many years now, have been referring to the way in which, for example, the aviation sector, shares information about the causal factors of aviation disasters within industry so that all participants can learn, improve. Whereas, in the finance industry, it seems to me that we’ve got an appalling collective industrial memory. The anatomy of these scandals is the same time after time after time, and I think one of the reasons for that is because regulators, law enforcement agents, industry participants themselves are not disseminating the lessons so that we can continue to improve. Every failure is an opportunity to do things better and differently moving forward.

And so I really want to echo that point that you’ve just made. Now, in your answer, Bob, you referenced Delaware. And I know a lot of people around the world certainly that I speak to on my travels, are troubled by what they see is U.S. hypocrisy. You know, on the one hand the U.S. shows great leadership on AML when everybody is petrified of doing anything illicit in relation to US dollars because of the long arm of U.S. jurisdiction. But on the other hand, the United States still seeks to attract large capital flows into UBO-disguised companies in places like Delaware, Wyoming, Nevada and so on. What are your observations and thoughts on that?

Well, unlike many Americans, I’m blessed with the opportunity to travel the world and to get to meet AML professionals in every corner of the world. The U.S. likes to be number one in a lot of things, and my global experience tells me they are number one in hypocrisy. And the reason that I say that, it began when … a simple story that I tell in The Infiltrator book, as I’m sitting there with a corrupt, high level bank official who over some cocktails at a social club says, “Hey, do you know who the biggest money launderer in the United States is?” And me, the young, eager agent – my rush is going through, I’m figuring I’m going to get a name, this is going to be great! – And he goes, “Well, it’s the Federal Reserve, of course.” And I said, “What?” He said, “Bob, let me tell you the reality of this. We bank in Colombia. We have 400 and some branches there. I’m telling you that today there is a window at the Central Bank in Colombia that’s called the Sinister Window. The anonymous window.

Now you cannot, at the time, have a US dollar account in Colombia. But the Central Bank has offered to select people the opportunity to go to the anonymous window and to turn over as much US currency as they want in exchange for a very high exchange of rate for Colombian pesos, no questions asked. And he goes, “What do you think is done with that cash after it’s collected? A couple of hundred million dollars every week that’s coming into there?” He goes, “They put it on pallets. They shrink wrap it. They put it on a plane. They fly it to the United States, and guess what, it’s deposited at the Federal Reserve on behalf of the Central Bank of Colombia. Don’t you think”, he said to me, “That there’s someone at the Federal Reserve with enough smarts to realise that they’re getting untold amounts of US currency from a country that has banned their citizens from having US dollars? Where do they think that money is coming from?”

You know and I’m sitting there, I’m putting my life on the line as my colleagues are who were working on this large undercover operation, and the enemy is within. I’ve looked at cases that involve the criminal prosecution of bankers in the United States. And do you know who really does that extremely well? It’s the Department of Justice tax division. Now, they’re working on criminal cases that involve banks that are helping U.S. citizens to evade taxes and to therefore negatively impact the treasury of the United States. Why-

 – It’s all about motivation, Bob!

Well why in the world can they find the evidence to prosecute criminally the individual bankers involved in those schemes? But when it comes to exterior capital being brought into the United States, a la the HSBC, Wachovia Bank, Union Bank of California, it’s an institutional problem. It’s not an individual problem. And individuals don’t get prosecuted. That, to me, is very, very troubling. That, to me, says a lot. Especially when you take a look at our own attorney general said when the Wachovia Bank deal was made that they took into consideration the financial impact that would have occurred had they decided to bring a criminal charge against HSBC US. They didn’t want to potentially cause them to lose their license because of the negative financial impact that it would have. And Senator Elizabeth Warren from the United States, if you Google her name with HSBC hearings, I think hit the nail on the head.

You’re sitting here telling me, government, that banks that intentionally took in nearly a billion dollars for the Sinaloa Cartel, and the Norte de Valle Cartels, that they are going to pay a fine when individuals with smaller amounts of cocaine arrested two times are going to spend 10 years behind bars. It’s a complete hypocrisy.

Yeah. Well, three strikes you’re out. You’re in for a lifetime. I mean, actually you refer to Wachovia, Bob, and our good friend Martin Wood submitted a question in advance of this broadcast. And Martin, if you’re listening, hi. And Martin’s question is, if I made you the head of FinCEN today, what would be your first action that you’d take and why?

Okay. So if I’m running FinCEN, one of the things I have to recognise is that I can’t do it alone. I have to do much more with much less. I think that some of the FinCEN activity is like throwing a big net into the ocean, trying to catch fish and 99% of the time, they’re catching a smaller fish. I want to see FinCEN initiate a complete change of attitude within the law enforcement community. When I first came on and I was working back in the days of the narco cases I was talking to you about, there was a thing in the United States called the Strike Force. It’s been disbanded but we at the time, our biggest threat was from the U.S. Italian mafia. It was controlling parts of our government.

It was controlling all types of things. So we put together a thing called a Strike Force. And the Strike Force had two or three agents and analysts from each and every single agency who would be able to work under a separate umbrella. They didn’t work for their agencies. They worked for the Strike Force. That was led by Strike Force attorneys. Their sole job was to share information, work together, and go after the biggest of the big. Mafia guys. We need to do that same type of thing with a joint money laundering task force. And I wrote an article that you had published in KYC360. It’s dated January 21, 2019. A Plan to End Global Money Laundering. I stand by that. I think that that’s the plan that we need to be doing.

We need to be identifying the 10 top … and I’m telling you, the information is there. When I was in DEA, you know what, I just got this idea one day. Let me put in the name of this Swiss bank and see what comes out of the Narcotics Intelligence System. I had a print out that was probably five inches thick. And in there, it identified every case around the world where that bank was mentioned, and who the account holders were who were bad guys. What an unbelievable piece of potential evidence do we have there. We can now take those convicted bad guys who had links to those financial institutions, bring them before a grand jury, give them immunity …

That was done during the Strike Force days. They’d bring in the biggest mobsters. They’d give them immunity. They knew that they could … the mobsters couldn’t say anything because they’d get killed. So they would refuse to answer questions. They’d throw them in jail until they would answer questions. We’ve got to take the gloves off, and we have to focus on the biggest of the big bad guys. There are a lot of things that we can do to identify the financial institutions that are moving this type of money. I’ll give you a quick example. Lebanese Canadian bank. The Ayman Jumma case. Listeners: take a look at that particular case.

Had somebody been at the Federal Reserve looking at the repatriation of cash from the central bank in Lebanon to the Federal Reserve, they would have seen a spike, a doubling of the U.S. currency that was coming in from Lebanon. That should have made the red sirens go off. Somebody should have been looking more closely at what bank within … that was banking with the central bank was actually bringing that money in. And then we should be forcing those institutions, since they’re dealing in US dollars, we should be forcing them through their U.S. representatives to respond to subpoenas under the Patriot Act to give us information about who is bringing that cash in.

There’s a lot of things that we can be doing that are simple. For some reason we don’t do them.

Bob, we are getting close to needing to wrap up. Can I ask, what are you spending your time doing now? I mean, I know that obviously you’re in isolation as we all are, but during normal times, what do you find yourself doing professionally?

Well, obviously my speaking appearances are nonexistent right now, and been scheduled for … actually, October we’re going to supposedly be getting back on to it. So I’m using this time to develop some new presentations. I’ve done one that relates to the arts of persuasion and negotiation. You know, I dealt in undercover schools with psychologists and former long-term undercover agents who had a very scientific approach toward how you can develop your ability to persuade and negotiate. This is going to be applicable not just to the AML world, but to people in any type of business. So I’ve put that together and I’m also collaborating at times with ICIJ to contribute to some of their reporting.

I did that on the dos Santos case. And I’m doing that on another case with them now. And I’ve also been approached by a publisher to write a book about the two and a half year undercover operation that comes after the story of The Infiltrator. If my desire becomes the case, the name of the book will be The Betrayal, because one of the undercover agents who was working with me, unbeknown to me, was on the take of the Cali Cartel, at the same time that we were trying to infiltrate the Cali Cartel, he outed me and nearly got me killed. I almost got kidnapped in one instance, and was three minutes from getting whacked in another one. So I’m hoping to be able to, during this year, convert that book proposal into a book and see where that winds up going.

Well, that would be great. If you could devote this period of isolation to getting that out, I’m sure that like me, very many people around the world will be very, very interested to read that story, Bob. Bob, we could easily continue to talk for hours but I’m afraid that we’re up to our time limit. I want to thank you on behalf of all of our listeners and KYC360 members for taking time out to share your experiences and thoughts with us. I always come away from every conversation with you feeling enriched and having learned something new. So thank you very much indeed, Bob.

Thank you. And I just want to say to everybody out there that you can achieve the impossible. I am no different than you. You’re probably more skilled than me. I was a B student throughout my entire career, but I always tried as hard as I possibly could. And there’s no doubt in my mind you can make a difference and I thank you from the bottom of my heart for the work that you do in an effort to try to make not only do the right thing for your employer but to make this a better world.

Well, thank you, Bob. And for those of you listening, if you’d like to benefit further from Bob’s expertise, he can, as he mentioned, be persuaded to deliver conference speeches as I know, and even massively impactful internal training workshops as well as consultancy assignments if they’re sufficiently interesting. I know the world is now full of so-called anti-money laundering experts, but Bob’s experience of laundering cartel money and investigating organised crime on the frontline really is unique.

I’ve been in this space for almost 30 years and I can tell you straight that in my opinion, there is nobody else that has Bob’s depth and level of expertise in drug money laundering, and to see him lecture on the topic and to explain narco trafficking methodologies, for me certainly was a profound educational experience. So for further details about Bob’s services, you can find out a lot more at www.robertmazure.com. I’ll repeat that. That’s www.robertmazure.com. And don’t forget to read the book and watch the movie if you haven’t already done so. If you like what you’ve heard today, spread the message about KYC360 and the AML Talk Show. This recording will be available as a podcast on KYC360 as well as on a number of other platforms in the next few days.

Our next AML Talk Show guest will be the former U.S. senate lead investigator Jack Blum who is currently the chairman of the Tax Justice Network USA. Jack, he is a fascinating character. Also with a huge depth of knowledge and expertise about AML. And that interviews air on the 17th of April. For now, stay safe, stay well and stay alert. Thank you for listening and good bye.