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