Thank you Bridget for that wonderful introduction.
Good morning—thank you so much for having me here today. I am truly honored to be here at this historic institution—Morehouse College.
Before I begin, I want to recognize a few people this morning:
President David A. Thomas
Mr. Henry Goodgame
Dr. Said Sewell
Ms. Bridget Baggett
Dean Kevin Booker
Dr. Pricilla Hubbard
Mr. Michael Smith, Jr.
Ms. Christina Womack
Ms. Janice Campbell
Mr. Imar Hutchins
I feel blessed to not only be here at Morehouse College, and to have the benefit of being able to enjoy this wonderful and talented faculty and student body, but to also have present here today students from Spelman College, and Clark Atlanta University.
These three institutions are recognized as among the elite in our great nation, and internationally. I am excited to be here with all of you—again—thank you for having me and giving me the opportunity to engage with you.
There are four things I would like to cover with you this morning.
First – I want to tell you our purpose for being here.
Second – I want to tell you a little about FinCEN, who we are, what we do, how we do it, and what it means.
Third – I want to mention some hot topics of interest that we work on at FinCEN - topics that have a profound effect on all of us.
Topics that I think many of you would be interested in, or at least should be: Virtual Currency, Cyber Crime (theft), Terrorism Crisis Response, and Human Trafficking.
Finally, to conclude my remarks, I would like to make a joint announcement and then move into some questions from the audience.
First, why is FinCEN here today?
Why are we here?
Simple—We need your help.
We are here to ask you to consider FinCEN when you are thinking about a career, a fellowship, or an internship that may someday lead to a permanent job with us or another government agency involved in the financial sector or other federal employment.
We need the best and the brightest to protect and help continue to develop our financial system, its domestic and global reach, its profound effect on the welfare and safety of our people.
We need talented people like you to help protect our communities, neighborhoods, and families from harm—to protect our national security, and develop our future.
We need your intellect, ideas, experiences, perspective, and dedication.
Without these things, we cannot hope to reach our full potential of success, not only as an institution, but also as a nation.
Without what all of you can bring to the table, we cannot hope in a true way to bring new and creative approaches to the challenges we all face, that our nation faces, now and in the future.
Challenges that touch on every aspect of our society and our future, where our financial system will undoubtedly have an effect and profound influence on the lives of millions of people, some of the most vulnerable, and most talented.
So, what do you get out of it?
What do you get in return?
You get access and exposure—access and exposure to one of the most powerful and influential sectors ever created by humans—the financial sector. Its breadth, reach, power, and influence cannot be overstated.
You get access and exposure to the federal government and national security sectors as well and the ways in which it works with the financial sector to keep it safe, root out illicit activity while at the same time protecting privacy.
FinCEN, and other agencies in the financial sector, both public and private, are possible pathways for many of you who want to be titans of industry, bankers, CEOs, CFOs, business owners, hedge fund operators, entrepreneurs—whatever you want to be.
Working with us may help you gain some experience and a better understanding of this sector. I am not saying we are the best way or the only way, of course not; but we are a way, and we are an organization interested in bringing on qualified people, like many of you here today, for opportunities that may open doors for you in the financial sector.
You will learn about an industry that affects people’s everyday lives, well-being, and futures.
Much of what we do protects people from harm, or helps them move forward in their lives.
What we do helps to prevent criminals or other bad actors from taking away people’s future or their hard-earned success.
There is a huge and important world waiting for you to explore, learn, be a part of, and use to make a difference in the lives of many, including your own.
To make a difference for the futures of many generations to come.
That is what you get out of it, frankly.
That is what we all get out of it if you take this on.
One of the many things I learned in my 30-year career, and my life experiences, is that access and exposure to the financial industry is a critical factor in being able to be a part of it, understand it, benefit from it, and use it to accomplish the great and creative things many of you may aspire to do in life.
So, that is why we are here today—your involvement in the financial sector makes us all stronger and better, both as an institution, and as a nation.
To start, I would like to give you a brief overview of FinCEN.
FinCEN’s role is twofold: One, FinCEN is the U. S. regulator for financial institutions in the area of anti-money laundering (AML) and countering the financing of terrorism (CFT); and two, FinCEN is the Financial Intelligence Unit (FIU) for the United States.
These are two very important and critical components of our financial system, the largest and most powerful in the world, and of our national security apparatus—what keeps us all safe.
As the U.S. regulator responsible for anti-money laundering and countering the financing of terrorism, FinCEN ensures that financial institutions like banks, as well as non-bank financial institutions, like casinos and payment systems, have appropriate systems in place.
These systems help prevent criminals, terrorists, and other bad actors from gaining access to, or using, our financial system to launder money, commit other crimes, or finance terrorism.
FinCEN also ensures that financial institutions fulfill other legal obligations such as the reporting of suspicious activity happening through their accounts or transactions, among other important obligations they have under our legal system.
FinCEN stores and keeps safe this sensitive financial information that financial institutions are required to file, and we use it to protect our financial system from abuse, our communities and families from harm, and our national security.
Bottom line, we ensure that financial institutions provide us the necessary information to keep us safe, and when they fail to do so, we take action against them.
We are not only a regulator; we are also the Financial Intelligence Unit (FIU) for the United States.
That is a big deal.
FinCEN is one of the largest and most important FIUs in the world. Acting both domestically and internationally, FinCEN plays a critically important role in protecting the financial system, our national security, and our families from harm.
We do some cool stuff.
We have over 250 million sensitive financial records stored and protected by FinCEN. FinCEN uses, analyses, and shares this information, when legally appropriate, with other regulators, law enforcement, financial institutions, and foreign counterparts through secure domestic and international channels of communication.
We follow the money and the money trail.
Our employees track-down, find, and expose criminals, criminal groups, cartels, networks, rogue states, illicit bank accounts, money, assets, and terrorists.
We also identify and take action against bad banks globally, such as those that wittingly or unwittingly become conduits for money flowing to or from criminals, terrorists, rogue states, and other bad actors.
We do all this by looking through the financial information we collect as a regulator, matching it with open source information, or other sourced information, including law enforcement information, and connecting the dots.
Our work takes us all over the United States and to every corner of the world. When you work with and help protect the world’s most powerful financial system, it is no easy task—it is a national security issue.
I want to move now to some examples of topics we deal with that you may be interested in hearing more about. These topics will also provide some flavor for what we do at FinCEN.
The four topics of interest I would like to discuss are Virtual Currency, Cyber Enabled Crime, FinCEN’s response to terrorism incidents, and Human Trafficking.
I want to discuss very briefly some of the work FinCEN is doing in this important and dynamic space.
Innovation in financial services is a great thing, from ATMs and online banking, which are some examples of early fintech innovation, to more recent automated services and mobile payment applications.
Virtual Currency is also an example of early fintech innovation, and we are seeing and experiencing the broader potential for blockchain technology, which underlies virtual currency systems.
That statement feels particularly relevant standing here at Morehouse. Shawn Wilkinson was a student at Morehouse in 2014 when he came up with the idea for Storj, with the aim to disrupt cloud storage based on blockchain technology. His 2017 token sale raised about $30 million in 7 days. So, others seem to think it was a pretty good idea, too.
There is no question that the technologies being developed in this sector have the potential to fundamentally change traditional payment systems, other forms of doing business, and people’s everyday lives.
However, we must remember that as industry evolves and adopts these new technologies, financial crime evolves right along with it, or indeed sometimes because of it, creating opportunities for criminals, terrorists, and bad actors.
Like any financial institution, payment system, or medium of exchange, virtual currency products have the potential to be exploited for money laundering and other crimes and bad acts including terrorism.
As a regulator in this space, and a protector of our national security, FinCEN is in front of the curve and vigilant to ensure that innovative products and services such as virtual currency payment systems are not exploited to support and facilitate terrorism, or used by criminals to harm others.
As a regulator in the virtual currency space, to date, we have focused on exchangers and administrators engaged as businesses involving convertible virtual currency.
FinCEN was one of the first to issue regulations and provide guidance covering virtual currency back in 2011 and 2013, respectively, and six administrative rulings since then.
FinCEN regulates individuals and entities engaged in the business of accepting and transmitting currency, funds, or anything of value that substitutes for currency (to include convertible virtual currency) from one person to another or to another location.
Our regulations apply equally to domestic and foreign-located convertible virtual currency money transmitters, even if the foreign located entity has no physical presence in the U.S., as long as it does business in whole or substantial part within the U.S.
Logically, of course, we cannot just issue regulations; we need to ensure that they are complied with and followed. Examining and supervising the entities that fall under our regulations is critical to our efforts to mitigate potential illicit finance risks associated with virtual currency, so we do that as well.
FinCEN, working closely with the IRS, has launched a series of supervisory exams of virtual currency money services businesses.
Our examinations have included a wide array of different types of virtual currency businesses, such as exchangers of currency, virtual currency trading platforms, administrators, virtual currency kiosk (or ATM) companies, crypto-precious metals dealers, and individual peer-to-peer exchangers.
We are recognized as world leaders in this area, providing training around the world, and helping to develop international standards with our foreign counterparts.
We also work with our own Congress and with financial institutions and law enforcement to make sure we are all on the same page in this dynamic and ever-evolving space.
Cyber-Enabled Crimes and Threats
FinCEN’s efforts to combat the rise of large-scale cyber theft from U.S. citizens and businesses, as well as cyber threats to financial institutions themselves, is another important area where we have been a leader.
FinCEN received over 70,000 reports from financial institutions on cyber-enabled financial crime in 2017 alone.
The financial intelligence we house and use plays a unique role in combatting cyber-enabled financial crimes. Our goal is to connect cyber investigations with financial investigations—using financial information as yet another tool for identifying and disrupting cyber threats.
To better address these threats, we have been building a Cyber Unit that brings together the technical knowledge of cyber investigations—computer intrusion, cybersecurity, blockchain analysis—with FinCEN’s traditional knowledge of financial crime.
For example, individuals and businesses across the country are being targeted by a variety of cyber-enabled financial crimes whose perpetrators seek to gain unauthorized control of accounts or effect unauthorized payments.
Many of these criminal activities do not receive much attention, but they can have a significant human cost.
We have seen real estate agents compromised, where scammers redirect the money families were using to buy a house.
We have seen small business accounts suffer Business Email Compromise (BEC) and face collapse due to the challenge of absorbing a loss of hundreds of thousands of dollars, jeopardizing the livelihoods of their employees, and disrupting their communities.
Financial institutions themselves face a steady stream of cyber threats, targeting their infrastructure and employees.
We have received reports on intrusions into ATM and card systems in “ATM Jackpotting” schemes—where cards are compromised, limits removed, and then cloned cards are used to drain cash out of ATMs in an organized wave of withdrawals.
And we continue to see attempts to steal large volumes of customer information from financial institutions and businesses – information that can then be exploited to steal identities, gain access to accounts, and steal funds.
Emerging financial technologies are certainly not immune from these cyber threats. Virtual currency businesses have faced targeted intrusions that have stolen hundreds of millions of dollars worth of virtual currency—from Mt. Gox in 2014, to Bitfinex in 2016, to Coincheck in 2018.
Using the critical data reported to us by financial institutions, FinCEN, over the last 3 years, has worked to support over 75 U.S. law enforcement cases that involved such cyber threats.
For example, many of the individuals that were identified in these cases included career criminals with ties to organized crime groups, drug trafficking, and terrorist financing.
When cyber thefts have occurred, FinCEN has also been able to work through our network of peer agencies around the world to freeze and recover funds—over $315 million since 2014.
FinCEN’s Rapid Response Program is a collaborative effort among U.S. law enforcement, the financial industry, and an international network of FIUs that allows for quick dissemination of information regarding suspected financial fraud tied to BEC.
I now want to mention just briefly two other areas that you may find interesting.
Terror Response Team
Whenever there is a terrorist attack anywhere in the world, we have a team at FinCEN that responds 24/7, even on holidays.
This team comes into the office, connects with law enforcement domestically and overseas to receive information, and then uses our vast databases to connect people, places, countries, businesses etc.
They work in real time to build out a network connected to the terrorist act—the location, cars, houses, streets—in order to better understand and paint a picture of the crisis at hand. They help identify who might be involved or who is connected in some way to the ones involved, what their financial records show they have done in the past or just recently, where, and with who.
By doing this, we are providing vital information, real time, that allows law enforcement and others to understand the crisis better, its potential scope, find those involved, locate others that may be associated with the bad actors or perhaps giving them shelter, find other bad actors before they can strike, and hopefully prevent the harm from spreading.
Fighting the problem of human trafficking is not just about stopping criminals; it is about protecting people, families, many of the most vulnerable in our society—it is about saving lives.
FinCEN has a unique role in fighting human trafficking in that we can help financial institutions detect and report suspicious financial activity that may be related to human trafficking.
Financial institutions, large and small, play a critical role in identifying and reporting transactions related to these unlawful activities based on their observations when interacting with customers.
Recognizing this, FinCEN wrote an advisory (kind of an alert) to financial institutions to help them identify what to look for (red flags) in the financial transactions that they see that would indicate or show signs of possible human trafficking.
We ask financial institutions to report that information to us so that law enforcement can be made aware of the activity, prevent the trafficking from happening, rescue the victims, and bring the guilty parties to justice.
For example, FinCEN highlighted for banks that a potential red flag of human trafficking is unusual, sudden, high amounts of cash deposits into U.S. banks, followed by wire transfers to countries such as Guatemala, El Salvador, or Honduras in a manner inconsistent with the type of activity you would expect of that bank customer.
Telling banks what to look out for helps them tell us when there might be suspicious financial activity. FinCEN then helps law enforcement identify and track the activities of human traffickers with the data we receive from those banks.
As I conclude my remarks, and before we go to some questions from the audience, I want to announce that we hope to hold an annual financial crimes symposium here in Atlanta with Morehouse, Spelman, and Clark Atlanta.
Our goal is to engage with the faculty, student body, and alumni of all three institutions, drawing not only on experts from FinCEN, but speakers and panelists from other government institutions and private industry to address a specific topic or related topics of interest in the financial sector.
We think this yearly event will showcase the sophisticated and important work being done in the financial sector, in government, in private industry, in academia, while inspiring others to get involved, be interested, and help make a difference in people’s lives through the work being done in this sector.
Thank you for giving us your time today and for listening to some of my thoughts—my pitch for why getting involved in the financial sector is important, exciting, and worthwhile.
You can have a profound effect on people’s lives, including your own.
We look forward to taking questions from you—the panel will include Ms. Bess Michael, Ms. Marsha Hunt, and Ms. Nicole Hall.
They will introduce themselves and give you a little background of their wonderful careers and what they are doing now at FinCEN.
We also have for you today a FinCEN pamphlet, prepared by Mr. Alex Bracey in our graphics department, that briefly describes FinCEN and provides links to information if you are interested in applying for a paid internship position, fellowship opportunities, and other employment opportunities.