-: Good morning.
And welcome to
the 2020 ABA/ABA Financial Crimes Enforcement Conference.
It's great to be with you to kick off things this morning.
This is the 32nd year we've partnered
with the American Bar Association
to bring you this conference,
which we've taken virtual for the first time.
And I hope only time.
And I wanna thank each and every one of you
for taking time out of your busy schedules
to attend this event.
Whether you're a banker, a lawyer, a service provider,
or a member of the regulatory
or law enforcement communities,
the next few days we'll deliver everything you need
to prepare for what I'm sure will be an extremely busy year
coming up in 2021.
This morning you'll hear from our in-house pandemic expert,
Paul Benda,
who will provide an update on all things COVID-19
from the latest news on vaccines
to trends in pandemic-related fraud.
You'll also hear from my good friend and former colleague,
Juan Zarate, who will offer his thoughts
on the Bank Secrecy Act
which turned 50 years old this year.
Juan will offer his predictions on where he sees
AML/BSA Reform heading.
We are thrilled that FBI Director, Christopher Wray
is able to join us this year.
He will wrap up the day later on this afternoon
with remarks in the Bureau's efforts
to fight financial crime.
And later this week,
you'll hear from FinCEN Director, Ken Blanco
and Jim freeze, the self-described last CEO of Wirecard,
who discovered a massive internal fraud
at a global payments processor
and played an instrumental role in fixing it.
These keynotes compliment a program that is jam-packed
full of rich, informative content, and insights
from top banking, legal and regulatory experts.
And of course, there will be ample opportunities
to network with peers and vendors.
You'll have access to all of the conference content
through this online platform until February 28th.
So you can go back and revisit sessions
as many times as you wish between now and then.
Before we jump into all that,
I thought I'd kick things off
with a brief industry update.
I'll touch on where things stand
with regard to some legislative priorities
and discuss the importance of collaboration
between the banking industry, regulators and law enforcement
in the fight against financial crime,
which as you'll see is one of the major themes
of this year's conference.
And I'll conclude with some thoughts on what we can expect
from the incoming Biden-Harris Administration.
I'll start with AML/BSA Reform.
As we speak Congress,
we hope is putting the finishing touches
on the National Defense Authorization Act.
It must pass bill that includes the first significant update
to anti-money laundering rules in two decades.
These reforms will be a critical step forward
in the ongoing fight to prevent bad actors
from accessing the financial system.
If passed, the bill will direct FinCEN
to establish and maintain
a new registry of beneficial ownership information,
something ABA has supported for many years.
Having this centralized registry
will make it significantly harder for criminals
to create shell companies and hide illicit funds.
And importantly, banks will be able to rely on this registry
when complying with customer due diligence requirements.
This provision, The Corporate Transparency Act,
which has been long championed by
democratic Congresswoman Carolyn Maloney of New York
has broad support from the private sector
and the law enforcement community.
It also enjoyed bipartisan support in Congress last year.
Its inclusion in the NDAA
is the culmination of a year's long advocacy effort by ABA
and the product of thoughtful negotiations
between progressive Democrats,
conservative Republicans, and the Trump Administration.
In addition to the registry,
the bill also makes several other improvements
and targeted changes to the AML/BSA rules.
It encourages expanded information sharing
between banks and law enforcement,
something we think will be enormously helpful
given the rapidly evolving threat landscape that banks face.
It also calls on FinCEN to analyze reporting thresholds
for currency transaction reports
and suspicious activity reports
to ensure that they still make sense for today's industry
and to recalibrate and streamline
the reporting where appropriate.
The bill also includes language
that directs FinCEN and other agencies
to encourage innovation.
This will enable banks to explore and adopt new technologies
such as digital ID technology
that can make it easier to validate legitimate customers
and identify fraudulent attempts to open a bank account.
The fate of the NDAA will be decided in the next few days.
And while there is a possibility
that it could face some additional speed bumps
for reasons unrelated to the AML/BSA provisions,
we remain very hopeful that it will pass
and ultimately become the law of the land.
Assuming it does,
ABA stands ready to work constructively with regulators
as they put pen to paper on the implementing regulations.
This significant milestone in the AML/BSA history
is a testament to what can happen
when there's an open, productive dialogue
taking place between the private sector government
and law enforcement.
Safeguarding our financial system against criminal activity
is something we all have a stake in.
And I'm encouraged to see that across the board
conversations have begun to shift,
to focus more on the big picture,
stopping actors from accessing and exploiting
the financial system.
That was evident in a recent advanced notice
of proposed rule-making from FinCEN
which sought feedback on potential changes to BSA rules
that would make banks, AML programs
more efficient and effective.
This is something ABA has been actively engaged on
for almost two years,
together with other members
of the Treasury's Bank Secrecy Act Advisory Group.
We think that banks should be empowered
to focus their resources more on the fundamental goal
of providing highly useful information
to govern authorities,
rather than on activities
that have a high cost or high time burden
and are ultimately of little use to law enforcement.
In that spirit, we're continuing to call on FinCEN
to review its current rules
and eliminate anything that's redundant,
unnecessary or outdated.
We're also urging FinCEN to begin publishing
a list of strategic anti-money laundering priorities.
Doing this will help banks better allocate their resources,
both from a capital standpoint
and a human resources standpoint
to ensure they're doing all they can to help law enforcement
track down bad actors.
That's a role I know all of you take very seriously
and I wanna highlight just a few examples this morning
of how banks efforts working in close collaboration
with law enforcement at the local and national level,
are having a positive impact.
Let's first look at pandemic-related fraud.
As of September, banks had filed more than 64,000 SARS
referencing COVID-19 and related stimulus programs,
according to FinCEN.
Around that same time,
the Department of Justice announced that
it had criminally charged a total of 57 individuals
with fraud related to the small business administration's
Paycheck Protection Program,
totaling 175 million.
And those figures have likely increased since then.
The DOJ acknowledged that banks were strong partners
in helping law enforcement detect and investigate
potential fraud connected to the PPP.
Banks also help safeguard taxpayer dollars by
freezing funds and accounts linked to suspected fraud cases.
In addition, banks have an opportunity to play a strong role
in a joint initiative currently underway between the DOJ,
the FBI, and the U.S. Postal Inspection Service,
and other law enforcement agencies,
the 2020 Money Mule Initiative.
Money mule scams come in many forms
from romance scams, to business email compromise,
to unemployment insurance fraud.
And they're often directed towards the elderly
and the vulnerable.
Money mules are individuals that fraudsters recruit
to help them monitor proceeds from fraud scams.
Money mules may be witting or unwitting participants,
but either way, their actions are always illegal.
Just last week DOJ announced that
as a part of this joint effort,
law enforcement agencies took action in October and November
against 2,300 money mules.
That included sending warning letters
to around 2,000 money mules
alerting them to the fact that
they could be facilitating fraud.
This is significant because
the DOJ has found that around 80% of the time
when individuals who are being used as money mules
are alerted to that fact, they'll stop.
That tells us how critical it is to educate consumers
about this type of scam.
To that end, ABA is proud to partner with the DOJ
in an outreach effort to help arm bankers
with the information they need
to both recognize the red flags of money mule scams,
and educate their customers.
And I hope all of you will join in that effort at your bank.
In fact, ABA just launched a new webpage
that we'll be updating frequently with consumer resources
on money mule scams.
Check it out by visiting the appropriate aba.com moneymules.
Aba.com/moneymules.
I like to share one other area where
collaborations between banks and law enforcement
have been powerful,
the effort to prevent human trafficking,
a widespread global problem
that generates an estimated 150 billion a year
in elicit revenue.
In October, the Treasury and State department
issued a report on how banks are involved in this area.
The report found that through Suspicious Activity Reporting
partnerships between banks, anti-trafficking non-profits,
and law enforcement,
and the use of Section 314(b) of the PATRIOT Act
for information sharing,
banks have been instrumental in helping detect
human trafficking at the transactional or teller level.
These are just a few examples of the critical role you play
in stopping financial crime.
And I think it's worth emphasizing
that you're not just stopping elicit cash flows,
you're helping save lives,
and that's the big picture we all need to focus on.
And that's the message ABA will continue to push
with policymakers as we move into 2021.
The new year will bring us
a new presidential administration,
and I'd like to offer a few thoughts
on what we can expect when President-elect Biden
takes office in January.
ABA has a long history of working constructively
with both Democratic and Republican administrations,
as well as lawmakers for both parties.
That will certainly continue to be our approach
over the next four years.
Our policy priorities will not change.
Some of the tactics and strategies we employ
may shift a little,
but our overarching goals of supporting
a common sense pro-growth policy agenda
will remain the same.
We'll position ourselves
as a resource to the Biden-Harris team
that involves educating them
on the complex issues facing our industry
while also highlighting the critical role
banks of all sizes play in driving our economy forward.
I'm happy to report that those conversations
are already underway.
Over the last few weeks,
ABA staff have met several times
with members of the Biden-Harris transition teams,
and those meetings have been very productive.
We've also had some significant news last week
with the President-elect announcing
several key members of his economic team.
There were some familiar faces, most notably,
Former Fed Chair, Janet Yellen
who will take over the top job at Treasury.
Yellen brings several years of experience
from her time at the Federal Reserve,
the San Francisco Fed and the Council of Economic Advisors.
I've in fact interacted with Janet Yellen
over a span of many, many years,
and have enjoyed those conversations
and really appreciate her deep knowledge
and her approach to issues.
Her long career of public service
and her deep knowledge of economic policy
have prepared her well
for the significant challenges facing the nation
as a result of COVID-19.
Without a doubt,
her top priority as Head of the Treasury
will be to address the extreme economic dislocation
brought on by the pandemic.
So we expect to see a lot of time and energy
devoted to the recovery effort.
But I can tell you,
having spent several years working at Treasury,
they are more than capable
of working multiple priorities at once.
So while AML/BSA Reform might not be front and center,
we certainly expect these important issues
to keep moving along on a parallel track
to the recovery work that's taking place.
We also expect that there will be some degree of continuity
within Treasury when the Biden Administration takes over.
Historically, the leadership at FinCEN and OFAC
typically don't change over immediately
when the new administration comes in.
We'll see what happens in this transition,
but we welcome that continuity.
After all, ensuring the integrity of our financial system
should be a bipartisan endeavor that rises above politics.
One thing I'll note from my own firsthand experience,
the Treasury career staff is second to none in government.
They are smart, skilled, and serve our nation well,
and I expect that the incoming Biden Administration
has probably already observed that.
Looking at some of the other agencies,
we also expect major changes at places like
the Fed and the FDIC to be more gradual.
I think it's very likely that both Yellen and McWilliams
and Jay Powell will serve out their full terms.
We'll wait and see what happens at the OCC come January,
where Brian Brooks currently is serving as
acting Comptroller.
He's been nominated just in the last few days
to serve in a permanent position.
Fortunately, many of the agency examiners and staffers
who work on AML/BSA policy issues
are less likely to change.
So there will be some continuity there as well.
Most importantly, we've had really productive talks
with agency staff at all levels
to improve the effectiveness and efficiency
of AML/BSA Compliance Programs.
And we fully expect that engagement to continue.
Change will take time,
but we look forward to continuing the dialogue
about how we can make our financial systems
stronger, safer, and more innovative.
I hope this conference will contribute to that conversation.
And if you're a banker listening today,
I also wanna encourage you to lend your voice
to those conversations.
If you're not already involved
with ABA's many Councils, Committees or Working Groups,
I invite you to consider doing so.
I urge you to consider doing so.
As your trade association,
we are most effective in our mission
and we have robust input from our banks of all sizes
and charters.
And as a member-driven organization,
we take our lead from you.
You are our eyes and ears on the ground
that can provide vital feedback on what's going on
and what isn't.
The pandemic highlighted in many ways
the critical role that America's banks play in this country.
I don't wanna steal too much thunder from Paul Benda,
who's on deck to do a deep dive on COVID-19 for you next.
But I'd be remiss
if I didn't acknowledge and thank all of you
for your extraordinary efforts
during these last nine months.
From the extra hours you spent
preparing for a safe, compliant launch
of the Paycheck Protection Program
to your vigilance, and detecting,
and thwarting COVID-19 fraud attempts,
you've demonstrated your commitment to helping families,
businesses, and local communities
survive this very challenging time.
We're certainly not out of the woods yet,
though there is hope on the horizon.
But I'm confident that the 2 million women and men
working in the banking sector will continue to do their part
to facilitate our nation's economic recovery.
And in the meantime,
we'll keep our fingers crossed
that we might be able to meet in-person
for this conference next year.
Thank you all for your time and enjoy this virtual event.