threat finance – how financial institutions and governments can choke off financing of national...

Thursday, February 6, 2014 | 9:00 - 10:00 AM

Speakers:Jim Bischoff, George Prokop, Don Semesky, Bill Ward

Threat FinanceHow financial institutions and

governments can choke off the financing of national security threats

Managing Director, Threat ManagementPwC

Washington, DC

George Prokop

Chief, Counter Threat FinanceUS Special Operations Command

Tampa, FL

Jim Bischoff

OwnerFinancial Operations Consultants

Baltimore

Don Semesky

EVP and Head of Financial Crime Risk ManagementUnionBank

San Francisco

Bill Ward

Managing Director, Threat ManagementPwC

Washington, DC

George Prokop

Threat Finance…

The financing of illicit economic activity by threat

actors – e.g., terrorist organizations, militant

groups, organized crime, state/non-state actors.

• Today’s threat actors use licit channels of commerce…

• …to raise, move, deploy and store funds…

• …through the international financial system…

• …and multi-national corporate supply chains.

Examples of how this wide-ranging threat manifests itself in corporate transactions…

High-Tech

Correspondent bank

accounts

Supply chain transactions

Digital currency

Low-Tech

Stored value cards

Invoice manipulation

Trade facilitated

transactions

No-Tech

Physically transfer $$

across border

Front companies

Fabricating shipments

PwC

Financing Sustains Threat Actors’ Ability to Disrupt…

Communicate

Provide for “safe-havens”

Bribe public officials

Conduct recruitment, indoctrination, and trainingPay for general operational expenses, equipment

Provide logistical support

Increase organizational infrastructure

Pay operatives’ families

Fund humanitarian efforts

Pay for other sundry items

Threat Actors’ Need Financing to…

Operate in relative obscurity

Utilize close-knit networks

Move funds through opaque and

unregulated markets and environments

Threat Actor Objectives…

Companies should seek out their weakest links…

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• Go beyond “check the box”…

• Peel back layers to find the connections, the financing, and the relationships of vendors and counterparties…

• Unexamined connections become the weakest link, and therefore create the greatest risk and highest exposure.

Traditional Measures

Enhanced Measures

Questions…

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George W. ProkopPwC | Strategic Threat Management

Managing Director+1 703 918 1148

george.w.prokop@us.pwc.com

Chief, Counter Threat FinanceUS Special Operations Command

Tampa, FL

Jim Bischoff

PrincipalFinancial Operations Consultants

Baltimore

Don Semesky

Convergence of Field Intelligence with Big Data Exploitation

• The smart bad guys aren’t in Big Data• But their connections are

• Where are the weak spots in the terrorist/criminal organization?• Criminal activities = vital service providers• Vital service providers = opportunities for

exploitation

Vital Service Providers

• VSPs may service multiple criminal and terrorist organizations

• Widespread impact with one investigation

• Weak point of criminal or terrorist organization

Big Data Exploitation

• Identify threats• Identify hot spots• Identify methods and techniques• Design algorithms and analytics

Finding the Needle in the Stack of Needles

• Situational awareness and protective intelligence• How can your institution be exploited• Products, people and location• Build counter measures

• Build relationships of trust with L/E

War Gaming Your AML System

• Real or create virtual accounts, transactions• Shopping exercises• Assess results• Modify counter measures

EVP and Head of Financial Crime Risk ManagementUnionBank

San Francisco

Bill Ward

Your Questions

Please Join Us In the Exhibit Hall for a Networking Break

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