In my previous shop, I had the pleasure of working in an organization where fraud and Bank Secrecy Act (BSA) were separate teams but reported up through a chief anti-money laundering (AML) officer. I was assigned to the fraud side of the house, where my team filed fraud and hybrid fraud/AML suspicious activity reports (SARs). What was encouraged was the idea to “look deeper.” Alerts happen for a reason, even if that reason is not immediately apparent. Suspicious activity comes in many different forms and in many different ways. BSA and fraud teams can view their missions as separate, even though they carry out similar work. Both teams engage in investigations centered around discovering patterns that may indicate a risk or the identification of bad actors. BSA and fraud programs share similar policies and procedures. We use similar tools and protocols for completing workflows and resolving cases. You see, it is not so different after all.

The Starting Point: AML

I remember one instance when a fraud investigator assigned to bank fraud came to me and asked if I would read one of her reports. She was not an overly experienced investigator at the time, and our team had only been operational for a few months, focusing on credit cards. This investigator had a lot of fraud analyst experience when we hired her from a credit card company. This was her first role as an investigator filing SARs. She had a very proud look and said, “Ray, I really think I have a good money laundering case here. Would you please look it over and see if I’m going down the right track?” Seeing her enthusiasm made me smile while simultaneously making me ask myself, “If she was able to clear the fraud concerns, why did she continue to investigate?” Being a fraud shop that was heavily focused on alerts and case production gave me a bit of pause.

After shaking off the “fraud manager” mindset, I reset and remembered that our job is not to “just clear the fraud” but to report all observed suspicious activity. I often have these quiet conversations with myself. Here is the big secret: A good number of AML investigations start with simple fraud. This seems like a fairly logical concept, but it sometimes gets lost in the traditional roles and responsibilities between fraud and BSA teams, which brings me to communication and how important it is. When she was very young, my daughter once asked me why her pet hamster did not talk to her. I told her that the hamster speaks a different language and that she just has to listen closely.

While writing this article, I realized that effective communication and “speaking the same language” are crucial for collaboration and understanding differences. For instance, consider the terms of a subject/suspect. Even this seemingly simple descriptor can pose a challenge for the two teams to understand, highlighting the need to bridge this communication gap by “speaking the same language.”

Communication

How do we improve communication and understanding? It is not enough to send emails; you have to actively engage and be persistent. Hold joint meetings and discuss definitions, strategies and theories. Ask simple questions like “How do you define fraud?” Believe it or not, sometimes this definition is hard to explain and can cause a misunderstanding. I like this definition: “Fraud involves deceit with the intention to illegally or unethically gain at the expense of another.”¹ It is simple, clean and easy to understand. Use the definition of fraud as a starting point and build from there. This will place you on the road to “speaking the same language.” Team focus groups, where BSA investigators and fraud investigators can share ideas and philosophy, also give the two teams an opportunity to get to know each other and foster a spirit of respect.

Cross-Training

Cross-training is also very important and can lead to a great understanding of each team’s roles and responsibilities. Cross-certification is also recommended to ensure that investigators from both teams are able to recognize and take action on red flags from fraud and AML. One of the things I am a huge fan of is short “tours of duty,” meaning an investigator exchange for a short period of time. When I was coming up through the financial crime world, I had the opportunity to complete a short “prisoner exchange” with the AML and Office of Foreign Assets Control teams. I am sure my counterpart felt similar as he was going to fraud. I was not so sure about what to expect about the shift in focus, but I soon discovered that I was assigned to great people who were invested in my growth and were willing to show me all about AML.

Aligning BSA and Fraud

In the BSA world, an investigator would almost always have a subject/suspect, the customer who owns the account. A BSA filing would have a name, social security number, date of birth, address, telephone number and all the personal identifying information listed in the account they would review. On the other hand, fraud deals with outside actors (third-party fraud) the vast majority of the time. A fraud investigator may only have a single piece of the puzzle to work with, like an external account number, IP address, device ID or email. A case of person-to-person fraud serves as an excellent example. This type of fraud occurs when a Zelle, Venmo or PayPal transaction is sent out of the customer’s account as a result of an account takeover or account giveaway, as I like to refer to most of them. In this scenario, the fraud investigator may only have the external account number and financial institution (FI) name after completing the investigation. Is this useful information to law enforcement? Yes, of course it is. Does it align with the spirit of the Financial Crimes Enforcement Network rules? Of course, it does. The idea of filing on a single nondescript data point is foreign to a good amount of BSA investigators. Aligning expectations and creating subject identification requirements are of paramount importance, covering both BSA and fraud needs and “speaking the same language.” Accomplishing this alignment is as simple as realizing that fraud and BSA are vital to the organization. The roles and responsibilities are different but aligned at the same time. Neither team is more important than the other. Great collaboration and understanding can occur once this realization happens and the dialogue takes place.

The biggest take­away for synergy between fraud and the BSA team is cross-training and open communication

Now, back to my fraud investigator and her money laundering case. The case alerted to a high-volume automated clearing house activity being sent out of the FI, which was a possible account takeover. Money is coming in, and almost immediately, money is being sent out with little or no money remaining in the account. Classic funnel account, right? To the uninitiated fraud investigator, this activity may be overlooked or underreported to the BSA team, which needs this activity vetted. The biggest takeaway for synergy between fraud and the BSA team is cross-training and open communication.

Ray Olsen, SVP director of Enterprise Fraud Management, Wintrust Financial Corporation, Rosemont, IL, USA,

1. James Chen, “Fraud: Definition, Types, and Consequences of Fraudulent Behavior,” Investopedia, June 2, 2024,
   https://www.investopedia.com/terms/f/fraud.asp