London Attacks Trivialize Bankers Post911 Complaints Security Expert Says

By Suzy Valentine
Bankers should reconsider criticizing filing procedures in light of the terrorist attacks on London two weeks ago, an anti-money-laundering expert says.

Charles Grice, director of money-laundering and financial-services programs at consultancy Kroll, said that whatever complaints the industry had about post-9/11 regulatory burdens before July 7, "we simply didn’t do enough."

Speaking at a conference in Buenos Aires hosted by Miami-based Kroll Latin America, Mr. Grice said, "Whatever complaints banks had two weeks ago will fall on deaf ears. Whatever burdens the players felt were placed upon them were not sufficient to prevent individuals funding the attacks on the British capital."

Alex Sanchez, president of the Florida Bankers Association, said the industry supports the stronger regulations instituted after the 9/11 attacks in the US but has only asked for clarification.

"Our No. 1 goal is catching terrorists and money launderers," said Mr. Sanchez. "All we’ve said is to give us clear guidelines so we can be compliant."

Mr. Grice shared a colleague’s comment about how the world has been transformed after the recent terrorism incident. "He said, ‘We all live in Jerusalem now.’"

"After 9/11, we realize that we live in a different world," said Mr. Sanchez. "It’s more a case of having clarity in filing procedures. The Bank Secrecy Act, for example, wasn’t clear. Some Miami banks were subjected to cease-and-desist orders, but with new guidelines, those problems should be resolved."

All US banks are required to comply with a raft of legislation including the Patriot Act, up for review this fall. They also must file suspicious-activity reports. In addition, Greater Miami is designated as one of the country’s danger zones, called High Intensity Financial Crimes Areas.

Mr. Grice complimented Europe on its tougher regulatory framework.

"In Britain, the law is clear about rebutting presumptions that large sums of money may not have a legitimate source," he said. "In the US, it isn’t the same legal model. Banks tend not to act unless the money is tied to something suspicious."

It is flawed logic, said Mr. Grice, to base suspicion on ethnic origin. "Racial profiling is ineffective and erroneous," he said. "There is more dirty money flowing through New York City than anywhere else. We should be very self-conscious in the U.S. A bank in New York City maintained an account for Chilean dictator Gen. Augusto Pinochet."

A bank’s greatest asset, said Mr. Grice, is its staff.

"There’s no one smarter than a bank employee," he said. "The question is how we make sure that all bits of suspicion are joined together and presented to the compliance officer – anything such as how a customer treats a teller."

Employees should be particularly sensitive, he said, to a changing face of terrorists. "Organizations are not using single 24-year-old men anymore to make their deposits."

Mr. Grice cited three aspects to an anti-money-laundering policy: protection, detection and disaster recovery.

"The last is probably the most important," he said. "It looks at how normality may be maintained."

Mr. Grice pointed out that the London terrorists’ choice of a target borders a banking center similar to Miami’s Brickell Avenue. "Aldgate East is in the financial center," said Mr. Grice. "The terrorists weren’t successful in upsetting all financial activity. There was some disruption, but economic activity continued. Wires continued to move around the world."

The bombings in London should prompt a cautious response, he said. "Low-tech attacks," said Mr. Grice, "require very elaborate measures. Minor unusual transactions need to be monitored. Banks must keep their eyes open to anything unusual."

Regulatory requirements, though expensive and time-consuming, he said, are proportionate to risk. "There’s much talk about the cost of compliance," said Mr. Grice, "but we’ve simply not done enough. We need to try harder."

Mr. Sanchez said too much pressure is applied to banks. "It takes a full complement of resources to fight the perpetrators," he said.

"All the weight seems to fall on the banks, but we also need good intelligence and immigration and naturalization services. I wonder whether they know where all those people overstaying their visas are."