The “Big” Picture Surrounding BSA/AML: Issues of Concern

1. The “Big” Picture Surrounding BSA/AML: Issues of Concern Presented by Mary Meile, President The Anti-Money Laundering Assoc.

2. Different Era • A world of financial instability. • Weaknesses in our nation’s security tracking systems. • Cyber security attacks. • American born extremists within our nation seeking to perform Jihad, and • New terrorist strategies to bring America down.

3. US DOJ HEADLINES • Pennsylvania Woman Indicted in Plot to Recruit Violent Jihadist Fighters and to Commit Murder Overseas • Two Charged with Terror Violations in Connection with New York Subway Plot • Najibullah Zazi Pleads Guilty to Conspiracy to Use Explosives Against Persons or Property in U.S., Conspiracy to Murder Abroad and Providing Material Support to Al-Qaeda • Tahawwur Rana and David Headley Indicted for Alleged Roles in India and Denmark Terrorism Conspiracies

4. US DOJ HEADLINES • Umar Farouk Abdulmutallab Indicted for Attempted Bombing of Flight 253 on Christmas Day • Nigerian National Charged with Attempting to Destroy Northwest Airlines Aircraft • Terrorism Defendants Sentenced in Atlanta • Chicagoan Charged with Conspiracy in 2008 Mumbai Attacks in Addition to Foreign Terror Plot in Denmark

5. New Terrorist Strategy • Terrorism expert Bruce Hoffman, was quoted as saying, “the attack on the CIA base in Khost, Afghanistan, as well as the al-Qaeda-backed attempt to blow up a U.S. airliner on Christmas Day, show that the international terrorist movement has substantiallychanged its strategy compared to attacks like Sept. 11 which were designed to "deliver a knock-out blow. Instead, Hoffman said, "al-Qaeda's leadership has now adopted a 'death by a thousand cuts' approach."

6. Hoffman Expert Warning • “Death by a thousand cuts” means slow and subtle.

7. Hoffman Expert Warning • Hoffman warned that al-Qaeda is trying to confound U.S. efforts to connect dots of intelligence by: overwhelming, distracting and exhausting us. They seek to flood our already information-overloaded national intelligence systems with myriad threats and background noise. They hope we will overlook key clues.

8. Can You Relate? • Many BSA and AML Officers are overburdened and exhausted.

9. Hoffman Expert Warning • Hoffman states, “oddly enough for a terrorist movement supposedly on its last legs, al-Qaeda (December) launched two separate attacks less than a week apart -- one failed and one successful -- triggering the most extensive review of U.S. national security policies since 2001.

10. Hoffman Expert Warning • al-Qaeda is covetously seeking recruits from non-Muslim countries who can be easily deployed for attacks in the West. • Citizens of countries that participate in the U.S. visa-waiver program are especially prized because they can move freely between Western countries and blend easily into these societies.

11. Hoffman Expert Warning • al-Qaeda is shrewdly opportunistic. It constantly monitors our defenses in an effort to identify new gaps and opportunities that can be exploited. Its operatives track our congressional hearings, think-tank analyses and media reports, all of which provide strategic intelligence. By coupling this information with surveillance efforts, the movement has overcome many of the security measures we have put in its path.

12. Hoffman Expert Warning • Hoffman states, “Remarkably, more than eight years after Sept. 11, we still don't fully understand our dynamic and evolutionary enemy. • He explains how we need to break the cycle of radicalization and recruitment that sustains the movement.

13. Expert Warning • Bruce Hoffman continues, “With our military overcommitted in Iraq and Afghanistan and our intelligence community overstretched by multiplying threats, a new approach to counterterrorism is essential”.

14. New Threat Coming Of Age March 9, 2010- Colleen R. LaRose, aka "Fatima LaRose," aka "Jihad Jane.” Jihad Jane

18. New Threat Coming Of Age • Woman from suburban America • Agreed to carry out murder overseas and to provide material support to terrorists. • Appearance an asset- can travel safely without notice or suspicion-blends in. • Used Internet to establish relationships and communicate plans.

19. New Threat Coming Of Age • Charged with: Conspiracy to provide material support to terrorists. • Conspiracy to kill in a foreign country • Making false statements to a government official. • Attempted identity theft.

20. New Threat Coming Of Age • Her Story: Jihad Jane and 5 others scattered across the globe recruited men to wage violent jihad in South Asia and Europe, and recruited women who had passports and the ability to travel to and around Europe in support of violent jihad. • Plans for martyring themselves, soliciting funds for terrorists, soliciting passports and avoiding travel restrictions (through the collection of passports and through marriage) in order to wage violent jihad.

21. New Threat Coming Of Age Demonstrates the following: • Emerging trend in homegrown terrorism, virtual highway of internet makes easy access, increase in potential lone wolf operatives, and terrorists are openly speaking about their pleasure and interest in the actions of such independent actors. • We can not assume a terrorist based on appearance.

22. Homegrown Jihadist

23. Najibullah Zazi • Zazi is a legal permanent resident of the US from Afghanistan • Zazi is a resident of Aurora, Colorado • Zazi admitted, he and others agreed to travel to Afghanistan to join the Taliban and fight against United States and allied forces

24. Najibullah Zazi • The Justice Department announced that Najibullah Zazi pleaded guilty in a "conspiracy to use weapons of mass destruction in the United States," in connection with al-Qaeda. His main attack targeted the New York subway system. • America is being penetrated by a network that is producing the Jihadists

25. Terrorist Identities Datamart Environment (TIDE) • TIDE is the US Government’s (USG) central repository of information on international terrorist identities as established by the Intelligence Reform and Terrorism Prevention Act of 2004. • Supports the USG’s various terrorist screening systems or “watchlists” and the US Intelligence Community’s overall counterterrorism mission.

26. Terrorist Identities Datamart Environment (TIDE) • Consolidated watchlist a critical tool for homeland security, supports screening processes to detect and interdict known and suspected terrorists at home and abroad.

27. Terrorist Identities Datamart Environment (TIDE) • As of January 2009, TIDE contained more than 564,000 names, 500,000 separate “identities” because of the use of aliases and name variants. • U.S. Persons (including both citizens and legal permanent residents) make up less than five percent of the listings.

28. Terrorist Identities Datamart Environment (TIDE)

29. Christmas Day Attack • On Dec. 25, 2009, Nigerian Umar Farouk Abdulmutallab boarded Northwest Flight 253 in Amsterdam and attempted to detonate plastic explosives he had hidden in his clothing. • Father alerted authorities he was concerned about involvement with religious extremists.

30. Incident Report • The US had enough intelligence prior to the failed attempt to destroy an airliner bound for Detroit on Christmas Day to indicate such a plot was under way, and to disrupt it, according to the administration review of the incident report released Jan. 7. The problem was that intelligence in essence fell through the cracks.

31. Incident Report • Not a failure to collect or share intelligence. • Failure to connect, integrate, and understand the intelligence we had. • Need to modify the existing policy standards for inclusion on lists.

32. What Went Wrong? • "We didn't know they had progressed to the point of actually launching individuals here," said John Brennan, the president's chief counterterrorism adviser. • The government's counterterrorism operations had been caught off guard by the sophistication of an al-Qaida cell in Yemen, where officials say the plot against the United States originated.

33. LIST • Abdulmutallab's name was in TIDE database but his name was not added to the shorter lists of possibly more dangerous suspects, such as the no-fly list maintained by the FBI’s Terrorist Screening Center. • That list includes about 3,400 names.

34. Future Plan of Action • In laying out directives in four areas, the president spoke of “assigning clear lines of responsibility.” Specifically, he underscored the need to: • Act aggressively when leads arise. • Distribute intelligence reports more rapidly and widely when threats become known. • Strengthen the analytical process to allow security agencies to “connect the dots” of possible threats. • Strengthen of the criteria used to add individuals to terror watch lists, especially no-fly lists.

35. Cybersecurity Cybersecurity Coordinator, Howard Schmidt

36. Cybersecurity • President Obama has declared that the “cyber threat is one of the most serious economic and national security challenges we face as a nation” and that “America's economic prosperity in the 21st century will depend on cybersecurity.”

37. Cybersecurity • Cybercrime cost Americans more than $8 Billion dollars for a 2 year period (2009 and 2008). • A growing threat that encompasses national security and public safety. • Computer networks deliver our oil and gas, our power and our water.  • Public transportation • Air traffic control  • Yet we know that cyber intruders have probed our electrical grid and that in other countries cyber attacks have plunged entire cities into darkness.

38. Cybersecurity • Our Nation’s cybersecurity strategy is twofold:  • (1) improve our resilience to cyber incidents and • (2) reduce the cyber threat.  • President has established a plan of action.

39. Cybersecurity • Federal agencies spend $6 billion a year on cybersecurity to protect the government's IT infrastructure and $356 million on research, according to the Office of Management and Budget. • Despite that funding, a government review of its cybersecurity efforts last year concluded that they are not adequate to prepare the country against cyberattacks.

40. OPERATION PHISH PHRY-FBIMajor Cyber Fraud Takedown • The defendants in Operation Phish Phry targeted U.S. banks and victimized hundreds and possibly thousands of account holders by stealing their financial information and using it to transfer about $1.5 million to bogus accounts they controlled.

41. OPERATION PHISH PHRY-FBIMajor Cyber Fraud Takedown • The FBI claims that the phishers' modus operandi was the following: hackers in Egypt would gather personal information and banking details from the victims and pass them on to their U.S. comrades. The latter would then use the stolen credentials to access the accounts, steal the money and send part of it to their associates in Egypt.

42. OPERATION PHISH PHRY-FBIMajor Cyber Fraud Takedown • It took two years of investigating and the involvement of Egypt authorities, but the FBI has reached its goal: 100 people have been finally charged for their participation in a multinational phishing operation.

43. Albert Gonzalez (aka “Segvec”)

44. “TJX” CASE • September 11, 2009 • Secret Service uncovered the theft and sale of more than 40 million credit and debit card numbers from numerous U.S. retailers. The potential losses associated with this case total more than $21 billion.

45. “TJX” CASE • Mastermind behind the elaborate fraud scheme- Miami, Florida, pleaded guilty to 19 counts of conspiracy, computer fraud, wire fraud, access device fraud, and aggravated identity theft. • Allegedly sold some of the credit and debit card numbers, via the Internet, to other criminals in the United States and Eastern Europe.

46. “TJX” CASE • Briefly an informant to the Secret Service before he allegedly returned to commit even bolder crimes. • Threw himself a $75,000 birthday party and at one point lamented he had to count more than $340,000 by hand because his money counter had broken.

47. Barclays programmer jailed over TJX hack • March 15, 2010: Humza Zaman laundered between $600,000 and $800,000 for Gonzalez, who is awaiting sentencing after pleading guilty to a string of cyber-attacks on several firms, resulting in the theft of tens of millions of payment card details.

48. Penalties • Humza Zaman was sentenced to 46 months incarceration and three years supervised release as well as given a $75,000 fine by a court in Boston after pleading guilty to one count of conspiracy last April. • Gonzalez is facing a minimum 17-year prison sentence after pleading guilty to a string of attacks on several firms, including TJX and Heartland Payment Systems.

49. Co-Conspirator • In 2009, another of his co-conspirators, former Morgan Stanley software engineer Stephen Watt, was sentenced to two years in prison for developing the software used to capture payment card data.

50. FinCEN-Regulatory FinCEN Director Freis provides remarks on emerging issues: • Trade-based money laundering (TBML) systems, such as the Black Market Peso Exchange (to transfer value across international borders in attempts to disguise the illicit origins of the criminal proceeds) are still prevalent. • Fraud