treasury’s war - idob cummings... · treasury’s war. iowa division of banking 25th annual day...
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Paul CummingsDirector of Compliance Review ServicesHamby & Hengeli, LLC
TREASURY’S WAR
Iowa Division of Banking
25th Annual Day with the Superintendent
April 12, 2018
New Texas Department of Banking Mission Statement
Death From Above!
Shock and Awe!
Go ahead, Make our Day!
Alternative Suggestions for mission statement!
• Director of Compliance Review Services for Hamby & Hengeli, LLC based in San Angelo, TX
• Deposit Operations Audits
• Loan Operation Audits
• Bank Secrecy Act Audits
• IT Audits
• Fair Lending Reviews
• Loan Reviews
• Training
• Senior Special Agent with the U.S Department of Treasury and the U.S. Department of Homeland Security
Paul CummingsCFE, CRCM, CAMS, CCBCO, CBAP, BA, MPA
San Angelo, Texas
(No Mountains, Trees, or Snow!)
TREASURY’S WAR
Presented by James P. Cummings, JrDirector of Compliance Review Services
Hamby & Hengeli, LLCSenior Special Agent (inactive)
Department of Homeland Security
Robert Morris
• Wealthiest of the Founding Fathers
• Real Estate Developer
– Bought most of upper New York for $333,000.00
• Investment Banker
• Owned several Customhouses in Colonies
• Prolific writer and extremely opinionated.
• Chief Financial Officer for the Continental Army
– Financed Continental Army with own money duringperiods of the war.
Robert Morris Resume
Robert Morris of 2018?
• Centralized Banking System
– Idea to Jefferson and Hamilton through correspondence.
– Chosen initially by Washington to be the first Secretary of the Treasury.
• “This country’s financial system will become its greatest asset”
• “Future wars will be fought with economic means…”
Robert Morris Contributions
1920s Prohibition
Alfonso Capone
• $1,157,250,000.00 Net Worth using inflation to translate into today’s figures.
• Over 600 criminals employed in various activities
– Illegal liquor
– Prostitution
– Gambling
– Over 5000 murders directly attributed to related criminal activities
Eliot Ness Special Agent Department of Treasury
• Use normal law enforcement techniques to attack Capone criminal organization.
• Those techniques prove ineffective.
• New concepts of financial crime were developed and used.
• Violation of 26 USC 7201 Income Tax Evasion was used to finally put Capone in prison.
• Capone became one of the first cases on record to use financial information as the bedrock of the criminal case.
Treasury Department Strategy
Narcotics Trafficking 1970 - Present
Robert Mazur Special Agent U.S. Treasury Department
Pablo Escobar/Bob Mazur
• 420 million dollars a week in revenue
• Expensed $2500.00 per month in Rubber Bands
• 7th Wealthiest Person in the World in 1989
• US Most Wanted #1
• Miami Federal Reserve Bank held approximately $8 Billion in reserve cash…Over half of the nation’s cash surplus
Escobar and Son visit White House in late 1980’s
• Again the Treasury Department used financial techniques to attack the narcotics trafficking organizations.
• Congress passes several laws to include:
– Bank Secrecy Act
• Currency Transaction Reports
• Suspicious Activity Reports
• FinCEN is created in 1990
– Financial Crimes Enforcement Network
Impact of Narcotics Trafficking
War On Terrorism
• After 9/11 Congress passes additional laws to help in the combatting of Terrorism and violent criminal activity
• USA PATRIOT Act
– Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
• OFAC
– Office of Foreign Asset Control (1940)
• Financial Intelligence Unit is created by the Department of Treasury to support the Department of Defense and Central Intelligence Agency.
• Special Agents are embedded with direct action units in Southwest Asia (Pakistan, Afghanistan, Iraq).
• These agents provide actionable intelligence using primarily financial information gathered from sources both domestically and internationally.
Financial Intelligence Unit
Kabul, Afghanistan 2003-2004
Pakistan/Afghanistan Border 2004
Afghan President Karzai Protection Detail
Training Patrol – North West Afghanistan
Return to US after last Overseas Deployment to Southwest Asia
• I began using those same law enforcementstrategies that the Treasury Department hadused against Al Capone, Pablo Escobar, andterrorists around the globe.
• Primarily using intelligence reports written bybanks within my Area of Operations (68Counties)
• These intelligence reports are more commonlyknown to the Banks as SARS or SuspiciousActivity Reports.
Suspicious Activity Reports
• Suspicious Activity Reports by depository institutions
–958,537 SARs filed in 2016
–86,544 SARs filed in Texas (2016)
–Rank 4th Nationwide (2012-2016)
–California, New York, and Ohio?
Suspicious Activity Reports in Texas
• Multiple Transactions below the CTR threshold
– Structuring
• Suspicion concerning the source of funds
• Transactions with no apparent economic, business, or lawful purpose
• Transaction out of pattern for customer
• Suspicious EFT/wire transfers
Types of Activity Filed on SARS
• The stories you are about to see are true…Only the names have been changed to protect the innocent and guilty.
• All search warrants, Title III court orders, arrest warrants, and Grand Jury subpoenas were reviewed by senior AUSAs and signed by U.S District Court Federal Judges.
• Individual Constitutional rights were respected at all times.
• No animals were harmed by Federal Agents in conducting any of these investigations.
Disclaimer
• All suspects were involved in violent criminalbehavior committing multiple violations ofFederal and State law.
• None of the suspects were under any type oflaw enforcement scrutiny before the filing ofthe SAR.
• A SAR was filed on the suspect’s financialactivity, the SAR was read by law enforcement,and then various LEGAL enforcement activitieswere conducted which resulted in arrests,indictments, seizures, and convictions.
Commonalities of Cases
Lubbock, Texas
Weapons Trafficking
San Angelo, Texas
6 pounds Crystal Meth
San Angelo, Tyler, Abilene, Texas
Alien Smuggling/Gambling/Tax Evasion
San Angelo, Texas
Tire/Rim Shop
Midland/Odessa, Texas
Illegal Cockfighting Operation
Del Rio, Texas
Cocaine/Marijuana Drone Run
Sonora/Fort Stockton, Texas
400 Pounds of Cocaine
San Angelo, Texas
Smuggled Iraqi Artifacts
Tyler, Texas
2000 pounds Marijuana
Fredericksburg, Texas
4000 pounds Marijuana
Abbottabad, Pakistan
Robert Morris
“The new era of financial warfare thatbegan after 9/11 will continue to evolvein the future … a hidden war striking atthe heart of America’s enemies … a warthat has been expanded and continuesto this day on multiple fronts aroundthe world.”
“……………….This is Treasury’s War.”
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