What Do AML Analysts Do?
A primer for the prospective analyst
Questions about Michael Cohen’s finances — especially his payment to Stormy Daniels — dominated the headlines for much of 2018, and at the center of the media frenzy around Trump’s former attorney was a little-known federal document called the Suspicious Activity Report (SAR). Employees at First Republic Bank filed a SAR with the US Treasury Department after discovering suspicious transactions connected to Cohen’s shell company:
Cohen set up the First Republic account for Essential Consultants in October, 2016, shortly before the Presidential election, in order to pay the adult-film actress Stephanie Clifford, who performs under the name Stormy Daniels, a hundred and thirty thousand dollars in return for signing a nondisclosure agreement about her alleged affair with Donald Trump. First Republic’s compliance officers later began flagging Cohen’s transactions in the account as possible signs of money laundering. Among other potential violations, the documents cite “suspicion concerning the source of funds,” “suspicious EFT/ wire transfers,” “suspicious use of multiple accounts,” and “transaction with no apparent economic, business, or lawful purpose.”
SARs, and the anti-money laundering (AML) professionals who produce them, are crucial to the uncovering and prosecuting of financial crimes, but many prospective compliance professionals aren’t aware that the industry even exists. This piece is meant to encourage those people to learn more about AML and to be a resource for those who want to enter the field. It will attempt to answer four questions: What is money laundering? What do analysts do? Who are they? What is the career outlook?
What is money laundering?
Money laundering is the process of making the proceeds of a crime appear legitimate. The underlying crime may be drug dealing, embezzlement, cybercrime, or any crime involving money/value, and the methods for laundering are constantly evolving, but money launderers’ intent is to use dirty money without being discovered.
The most common framework for understanding money laundering breaks up the process into three parts: placement, layering, and integration. I’ll let Saul fill you in:
In order find and stop criminal activity, governments have instituted a range of regulations and processes to find money laundering. The anti-money laundering community includes public bodies (e.g. police departments, intelligence agencies, and the United Nations), but it also includes financial institutions (e.g. banks, payment processors, precious metals dealers, and casinos), which are well-situated to spot laundering. In the US, those institutions are required to monitor and report suspicious activity to a division of the Treasury Department called FinCEN.
Most institutions have software that looks for activity with certain attributes (large cash deposits, for example) and creates alerts when activity matching those criteria appears. Analysts then review that activity to determine whether it is suspicious and should be reported (via a SAR). The activity is not always limited to money laundering, though most institutions separate money laundering and fraud or sanctions work.
What do analysts do?
When most people hear “anti-money laundering,” they immediately think “accounting” or “finance.” In reality, AML work has very little overlap with those fields; instead, analysts are predominately investigators, splitting their time between reviewing internal bank data, including customers’ transaction history, and conducting online information gathering using social media, Google, paid databases like LexisNexis, and other tools.
Here is an example of what an alert investigation might look like:
The analyst logs into the bank’s AML system and opens up an alert, which usually contains information about which “rules” triggered the alert (excessive cash activity, wires to high-risk countries, etc.), the underlying activity, and customer information (address, SSN, phone number, etc.). The analyst will then open up the customer’s transaction log and look at the alerted activity in context. If the alert generated for cash deposits, what was the money used for? Do they have other income? Do they have an unexplained uptick in volume this month?
The transaction review generally answer some questions and create new ones. For example, if the customer is a 20-year-old fast food worker that deposited $10,000 cash into her account, from where did that money come? Is she selling drugs on the side, or did she receive a birthday gift from a wealthy aunt? That’s when the fun begins — the analyst attempts to answer those questions using the internet and other information sources. (Here are some of the sites I use.) They could search the fast-food worker’s social media profiles — are there references to drugs or other illicit activity? They could search for her phone number and email and see whether it appears on any suspicious ads or pages. They could research the individuals and businesses she is transacting with — are they legitimate, or are there any suspicious relationships?
After gathering as much relevant information as possible, the analyst writes a narrative introducing the customer and activity and presenting their case for escalating or dismissing the alert. Then the narrative, the transaction listing, and other relevant documents are attached to the alert in the AML software which is closed or escalated as necessary. This process is repeated anywhere from 3–30+ times a day depending on the institution.
Who are they?
AML investigations do not require specialized training, and analysts come from many different educational and career backgrounds. Nearly all analysts have at least a bachelor’s degree, however, and many have JDs, MBAs, or other advanced degrees. Prior experience in banking, business, compliance, or law is highly valued, as is prior law enforcement or intelligence experience, especially at the national level (think FBI, CIA, DEA, etc.). Experience working for a regulatory agency (FinCEN, Treasury, IRS, OFAC, etc.) is the crown jewel, and most compliance executives at large banks have worked for such organizations. Certifications like CAMS (Certified Anti-Money Laundering Specialist), CFE (Certified Fraud Examiner), and CFCS (Certified Financial Crimes Specialist) are not required, but they’ll help you stand out and provide good networking opportunities.
Credentials will help you get hired, but a good resume does not always make a good analyst. The most important attribute for AML analysts is a hearty intellectual curiosity. Almost no one in the field studied financial crimes or compliance in school, and most new analysts do not have direct experience with those topics (unless coming from government service as discussed above). There will be a lot to learn! Great analysts put in extra time learning, reading relevant news and books or listening to AML-related podcasts. They are also curious about the entities they are investigating. They love tracking down the key bits of information and find enjoyment in learning about supply chains and spending habits. Those who aren’t curious usually don’t enjoy what they do and they aren’t great at it.
Open-source intelligence (OSINT) skills are also key, for obvious reasons. Those with good OSINT abilities will have a strong head start, since in my experience the workforce is currently pretty far from exploiting all the information available to them on the web. Sometimes that last hidden bit of data makes a huge difference for the investigation, and you’ll get a lot of respect if you can find it.
AML analysts are, obviously, analysts, and critical thinking and analytical writing is fundamental. Prospective analysts should also realize that the work, like any, can be overly bureaucratic or quota-driven. Keep that in mind if you’re a free spirit.
What is the career outlook?
Failure by financial institutions to fulfill money laundering obligations can mean massive fines, deep reputational damage, and sometimes death. In February, for example, the US Treasury Department accused Latvian bank ABLC of facilitating money laundering and cut off its access to the US dollar. The announcement triggered a run on the bank and the bank announced it was shutting down within the week. New multi-million dollar money laundering settlements are announced almost weekly, and enforcement pressure outside the US is increasing.
This is bad news for banks, but good news for prospective analysts. The job market is strong, and each regulatory action causes financial institutions to open new positions. Regulation also covers non-traditional institutions, including payment apps like Venmo and cryptocurrency exchanges like Coinbase, creating new and unique AML jobs.
There are some geographic hubs for AML work, including New York City, Jacksonville, Miami, Phoenix, Omaha, and Chicago, but there are job opportunities anywhere financial institutions have corporate operations. Using “AML,” “BSA,” “compliance,” or “financial crimes” as search terms on any job board should get you where you want to go. You may also want to look into AML-adjacent jobs, such as sanctions, anti-bribery and corruption (ABC), and fraud monitoring (each job has its plusses and minuses vis-a-vis AML).
