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Looking Back on 9/11: Eric Feldman – How 9/11 Changed the Role of the IG

This coming Saturday is the 20th anniversary of the attacks upon America on September 11, 2001. Like most Americans, this was the seminal event in the history of our country. I have been thinking a lot about that date and the anniversary; even more so with the fall of Afghanistan and the evacuation from Kabul. I wanted to do something to commemorate this anniversary, so I decided to do a podcast series featuring the personal stories of persons in the compliance field with their thoughts about what the date of 9/11 means to them, how it changed our profession and their thoughts looking back some 20 years later. The lineup for this week is:

  • 6 – Gabe Hidalgo
  • 7 – Juan Zarate
  • 8 – Alex Dill
  • 9 – Eric Feldman
  • 10 – Scott Moritz
  • 11 – John Lee Dumas

For this episode of Looking Back at 9/11, I visited with Eric Feldman, Senior Vice President and Managing Director at Affiliated Monitors, Inc. (AMI), a company that deals with monitoring large and small companies in government contracting, construction, engineering, manufacturing, and financial services. AMI is also the sponsor of the Looking Back on 9/11 podcast series. Feldman also conducts assessments of corporate ethics and compliance programs across many countries. Eric talked about the impact the events of 9/11 had on the role of Inspector General (IG) at the CIA.
On the morning of September 11, 2001, at 7:30 AM, Eric was in the morning staff meeting at the CIA. Then Director George Tenet was en route to the Headquarters. An assistant of Director Tenet came into the conference room and announced that a plane had just hit the World Trade Center. Feldman related that although it “was unclear what was going on at that point before the second plane hit, everyone in that room was quite certain what was going on because of reporting that had gone on before that.” From that point it was “battle stations and you had never seen people snap to attention and leave as quickly as that.”
Feldman went back downstairs back to his office where he watched the second plane hit the World Trade Center. At that point, Feldman was scheduled to be heading to the White House for a meeting of agency IGs to meet on the President’s Council on Integrity and Efficiency. As he could not get in touch with anyone at the White House, he got into a car and drove down. As he was driving down George Washington Parkway, he could see the smoke coming out of the Pentagon. Feldman said, “it was clear we needed to go back, and we made a U-turn on the cross, the median on the GW Parkway, which is a quite a feat, and headed back toward CIA headquarters. As we’re coming into the compound, people are rushing out of the compound on foot, which was somewhat disconcerting. At that point, of course, there were all kinds of rumors, about the next plane, which ultimately crashed in Pennsylvania, but they thought would, could potentially be hitting the agency. It was chaos.”
9/11 greatly changed the role of IGs. Feldman noted, “it was the most informative time of my career, and the careers of many other Inspector Generals. It was a refocusing moment for everyone.” Feldman got to work within the oversight function, but as part of the mission he was overseeing. “That focus on mission was it for me”. Feldman went to work for John Brennan in an operational role which Feldman said helped make him a better IG, “as part of the mission that we were overseeing, and it gave me a renewed sensitivity to why we’re there in the first place, IGS, auditor’s, compliance officers need to understand the mission and the organization that they are overseeing.” Feldman believes that IGs all over the world became more concerned with looking at the broader picture of how funds were being used at their agencies to fight the war on terror, instead of the minutiae of looking at time and attendance reporting.
We then turned to the how the IG role changed post-9/11. Government IGs became “part of the team” in different ways. This new focus fostered more collaboration across the agencies that IGs oversee. There is also independence: Eric expressed that there must be a balance between collaboration and independence. IGs are especially important as they ensure that the dollars being spent on the war and mission are being spent properly. Feldman believes there can be both collaboration and independence by IGs, that these “are not mutually exclusive terms. I think that IGs across the government became more collaborative and, therefore, I think much more effective in doing what they’re doing.” He also said that the other thing that happened, particularly in places like the CIA and Defense Department and even within the greater defense community, is that the IGs became very important in ensuring that all of the dollars that were needed to be spent on the war and related mission expenditures were spent properly.
We concluded by Feldman reflecting back on 20 years after the initial attacks on 9/11. He reflected that 9/11 was a wake-up call for the United States. The country came together, and there was a level of unity and patriotism, as well as a sense of duty that overtook politics. It was so good to see. He said, “I think we’ve lost that. And I wish that we could get refocused without another catastrophe on what’s important in this country and the tribalism, as we all know, is just way out of hand. And I yearn for that feeling, that we were one country, solidly behind a single mission to defend ourselves.” He hopes that the people can return to that unity without another catastrophe.
Please check out each of the podcasts this week. They will post at 6 AM CT on the Compliance Podcast Network and JDSupra and midnight on Innovation in Compliance, YouTube, iTunes and Spotify. Tomorrow Scott Moritz will join me to discuss how the mission of the FBI changed, literally overnight.

Categories
Compliance Kitchen

Sudan Sanctions Violations


In this episode, we look at Bank of China (UK) Limited’s (“BOC UK”) agreement to pay over $2.3M to settle its potential civil liability for violations of the (now repealed) Sudan Sanctions Regulations.

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Great Women in Compliance

Lisa Looks Back on 9/11


Welcome to the Great Women in Compliance Podcast, co-hosted by Lisa Fine and Mary Shirley.
Today is a special GWIC episode in remembrance of the 20th anniversary of 9/11. Lisa was in Washington, D.C., and she shares some of her personal recollections of that day, including the chaos as the day unfolded, the contrast of the beautiful sky that day and the fear, and the sense of community while at the same time knowing things would never be the same.
It has also been on her mind over the past year, especially after living through the insurrection on January 6, and the similarities and differences between the events in 2001 and in 2021.
Lisa also reflects on how these two events have shaped her path and particularly about how she thinks about ethical decision-making and compliance. In particular, how global issues can be local, and how can we improve our local community – whether that is inside or outside our organizations.
The Great Women in Compliance Podcast is on the Compliance Podcast Network with a selection of other Compliance related offerings to listen in to. If you are enjoying this episode, please rate it on your preferred podcast player to help other likeminded Ethics and Compliance professionals find it. You can also find the GWIC podcast on Corporate Compliance Insights where Lisa and Mary have a landing page with additional information about them and the story of the podcast.
Corporate Compliance Insights is a much appreciated sponsor and supporter of GWIC, including affiliate organization CCI Press publishing the related book; “Sending the Elevator Back Down, What We’ve Learned from Great Women in Compliance” (CCI Press, 2020). Thank you to all those who have taken the time to rate the GWIC podcast and book, it’s much appreciated.
If you’ve already read the booked and liked it, will you help out other women to make the decision to leverage off the tips and advice given by rating the book and giving it a glowing review on Amazon?
As always, we are so grateful for all of your support and if you have any feedback or suggestions for our 2021 line up or would just like to reach out and say hello, we always welcome hearing from our listeners.
You can subscribe to the Great Women in Compliance podcast on any podcast player by searching for it and we welcome new subscribers to our podcast.
Join the Great Women in Compliance community on LinkedIn here.

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Looking Back on 9/11

Looking back at 9/11: Alex Dill – Patriot Act: The AML Response to Terrorist Threats


Alex Dill is Tom Fox’s guest on this episode of the Looking Back at 9/11 Series. Alex is a scholar and professor specializing in financial regulation, risk management and compliance. He also has corporate experience in ​​the ethics of business practices in finance, bankruptcy, bond covenants, and debt markets. He joins Tom to talk about The Patriot Act’s impact on responding to terrorist threats.
Listen to the Episode Now:

How 9/11 Changed AML
Before 9/11, AML regulations were very lax and backward looking. The focus was on prosecuting crimes that were already committed, and prosecuting money laundering, more so than the financing of terrorism. Banks weren’t engaging in meaningful customer due diligence as they felt the process invasive. After 9/11, this all changed. Law enforcement agencies and financial institutions revamped their policies and procedures to take a more preventive approach to AML and financing of terrorism. This led to The Patriot Act.
The Financial Response
Tom asks Alex if he saw a similar regulatory response with non-financial institutions with respect to Patriot Act AML procedures post-9/11. “There was a huge amount of rulemaking that had to be done,” Alex responds. He adds that public companies adopted customer due diligence, and that it was applied more broadly to different sectors, but with a risk-based approach. Companies now had to file suspicious activity reports, not just banks. Customer identification was also introduced. “The Patriot Act sought to encourage cooperation among law enforcement agencies, and among the financial institutions themselves to share information and obtain information from foreign law enforcement authorities,” Alex tells Tom.
The Challenge With The Patriot Act 
Alex explains to Tom that there are challenges with the Patriot Act. A major challenge is detecting the financing that goes into these attacks. Funds that finance these actions are sourced from both legal and illegal means, and that is a major issue. The transaction amount can be small, and this might pose a risk to some compliance officers. 
Technology in Anti-Terrorism
Alex remarks that technology is very important moving forward in the fight against terrorism, as it has changed the way we function in our world. The downside of technology is that it has also helped create some of the compliance issues we have today. Social media platforms have helped to create polarization in the society, and programs like cryptocurrency have been used by criminals for money laundering, and financing terrorism. However, Alex ends with a positive note stating that the AML act of 2020 has been doing the work to help curb these issues.
Resources
Alex Dill | LinkedIn | Twitter

Categories
Career Can D0

The Importance of Connection with Tricia Benn


 
In this episode of Career Can Do, Mary Ann Faremouth chats with Trica Benn, Chief Community Officer and Executive Vice President of The C-Suite Network. Tricia supports c-level executives and other entrepreneurs to achieve professional success.

The C-Suite Network is a platform for executives, business owners, investors, and influencers. They are committed to creating access across all their networks, and they offer professional services such as media, TV, radio, digital content, and their very own marketplace to accelerate the success of the audience they serve. Tricia’s role in all of this is to lead that success. She shares the four principles that C-Suite is run by, which are: relevancy, reach, reciprocity, and respect.
 
Rather than the journey or the destination, what’s most important in life is the people you meet along the way, Mary Ann comments. She praises Tricia for her dedication to celebrating people and helping them grow and expand. Tricia credits this to her “understanding that we’re all people striving to do something great.” 
 
Resources
 
Tricia Benn | LinkedIn
 
Faremouth.com
 

Categories
Compliance Into the Weeds

High Calories Compliance Lessons from Kraft Foods


Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. This week Matt and Tom take a deep dive the recent SEC enforcement action involving Kraft Foods. While the subject matter of the enforcement action was fraudulent expense recognition, it turns out the real culprit was a corrupt culture. Some of the issues we consider are:
·      What were the underlying facts?
·      What does tone at the top really mean?
·      How does management cost cutting mantra lead to corruption?
·      Why is incentive based comp so deterius?
·      What did SEC Commissioner Crenshaw say about this enforcement action?

Resources

Matt in Radical Compliance

Food For Thought From Kraft Foods

Categories
Daily Compliance News

September 8, 2021 the ABC Fight in Central America edition


In today’s edition of Daily Compliance News:

  • Raytheon under FCPA scrutiny. (WSJ)
  • Why the Kraft Foods SEC settlement is like Wells Fargo. (Radical Compliance)
  • Obstacles in anti-corruption fight in Central America. (Univision)
  • Lack of diversity in PE directors. (NYT)
Categories
Blog

Looking Back on 9/11: Professor Alexander Dill – Patriot Act: The AML Response to Terrorist Threats


This coming Saturday is the 20th anniversary of the attacks upon America on September 11, 2001. Like most Americans, this was the seminal event in the history of our country. I have been thinking a lot about that date and the anniversary; even more so with the fall of Afghanistan and the evacuation from Kabul. I wanted to do something to commemorate this anniversary, so I decided to do a podcast series featuring the personal stories of persons in the compliance field with their thoughts about what the date of 9/11 means to them, how it changed our profession and their thoughts looking back some 20 years later. The lineup for this week is:

  • 6 – Gabe Hidalgo
  • 7 – Juan Zarate
  • 8 – Alex Dill
  • 9 – Eric Feldman
  • 10 – Scott Moritz
  • 11 – John Lee Dumas

My guest today is Professor Alexander Dill. Professor Dill is a scholar specializing in financial regulation, risk management and compliance. He also has corporate experience in ​​the ethics of business practices in finance, bankruptcy, bond covenants, and debt markets. He joined me to talk about The Patriot Act’s impact on responding to terrorist threats. On 9/11, he worked in lower Manhattan.
He recalled Tuesday, September 11, 2001, was a beautiful Tuesday morning. When he got out at his subway stop for work there was a big crowd of people and they were talking about a single engine Cessna, which had accidentally hit the North Tower. That turned out not to be true. He never did make it in his building. He solemnly said, “I think I was lucky because there were people in the corner office watching people as they jumped out of the top floors. I looked down in the ground at a street corner and I saw an engine from one of the American airlines planes which I later saw in the 9/11 Museum.” He saw the South Tower collapse and he related, “I was frozen in my tracks, I just couldn’t move. Then an EMS worker was running up the street and yelled at me, get moving. There was a big cloud of dust chasing her. So, I did finally did start running.”
Dill said that prior to 9/11, anti-money laundering (AML) regulations were very lax and backward looking. The focus was on prosecuting crimes that were already committed, and prosecuting money laundering, more so than the financing of terrorism. Banks were not engaging in meaningful customer due diligence as they felt the process invasive. After 9/11, this all changed. Law enforcement agencies and financial institutions revamped their policies and procedures to take a more preventive approach to AML and financing of terrorism.
Financial institutions also changed their attitudes. Banks had previously considered customer due diligence to be overly invasive in the business model. Whether it was in deposit taking, wire transfers or payouts, they resisted meaningful customer due diligence. All that resistance crumbled in the wake of 9/11. These became the core attributes of the Patriot Act, as federal authorities had long wanted to introduce meaningful customer due diligence and they were finally able to do so in the form of the Patriot Act, which had strong, bi-partisan support. It was this desire for a more preventative, proactive approach led to the Patriot Act.
We also considered the similar regulatory response with non-financial institutions with respect to the Patriot Act AML procedures post-9/11. Dill said, “There was a huge amount of rulemaking that had to be done.” He added that public companies adopted customer due diligence, and that it was applied more broadly applied to different sectors, but with a risk-based approach. Companies now had to file suspicious activity reports, not just banks. Customer identification was also introduced. “The Patriot Act sought to encourage cooperation among law enforcement agencies, and among the financial institutions themselves to share information and obtain information from foreign law enforcement authorities.”
Yet even with the Patriot Act there are still challenges. A key challenge is detecting the financing that goes into these attacks. Funds that finance these actions are sourced from both legal and illegal means, and that is a major issue. This brought other sectors within the ambit of the Patriot Act. Dill said, “they brought in broker dealers, what I call the capital markets from broker dealers, mutual funds and the futures industry, pool operators, commodity brokers, and so on. A customer identification program was introduced. Another problem is trying to prevent future terrorist acts, which complicates design of a system for detection and prevention. Of course, firms also rely on the government’s list of known and suspected terrorists. Finally, is the basis of a risk-based approach, which is usually the transaction amount. Many terrorist-based transactions are relatively small, and this might pose a risk to some compliance officers.”
I concluded by asking Dill to reflect back on what the last 20 years had brought to the world of AML and compliance. His view is that the advent of technology has been the key in AML and the terrorism financing fight, in AML and terrorism financing regulation and in AML and terrorism financing compliance. But technology advances are much broader than simply in combating terrorist financial. Dill pointed to social media which he said has a “creative and productive side, but also kind of a dark side or a negative side.” Cryptocurrency has expanded investment opportunities if you want to get into that value title asset class, “but it is also increasingly used by criminals for money laundering and financing of terrorism.” Finally, there is “AI and machine learning, where this tech can offer very efficient compliance solutions, but the models are often black boxes. They can’t be properly validated, and this increases model risk.” Dill ended with the Anti-Money Laundering Act of 2020, which he said, “really does a good job of enhancing, attempting to enhance innovative technologies to help achieve the law enforcement objective.”
Please check out each of the podcasts this week. They will post at 6 AM CT on the Compliance Podcast Network and JDSupra and midnight on Innovation in Compliance, YouTube, iTunes and Spotify. Tomorrow Eric Feldman will join me to discuss the change in an Inspector General’s (IG’s) role in the wake of 9/11.

Categories
Compliance Kitchen

OFAC Settlement on Syria & Iran Sanctions


The Kitchen takes a closer look at a recent OFAC settlement with First Bank and JC Flowers & Co. in regards to Iran & Syria Sanctions.

Categories
Looking Back on 9/11

Looking Back at 9/11: Juan Zarate – The Treasury Department Responds


Juan Zarate is the Global co-Managing Partner and Chief Strategy Officer at K2 integrity. On 9/11 he was a prosecutor at the Treasury Department working on international enforcement issues, anti money laundering, anti-corruption and anti-terrorist financing. He joins Tom Fox to commemorate the 20th anniversary of 9/11. They discuss how his role changed, the Treasury Department response and what the tragic event means for him.
Listen to the Episode Now:

A Change of Mission
9/11 changed the mission of the Treasury Department. Juan tells Tom, “We went after terrorist financing to try to disrupt and dismantle Al-Qaeda’s terrorist networks and infrastructure, and disrupt how illicit financing was flowing through the international system.” He recalls where he was on the fateful day and how seeing the smoke from the Towers and the Pentagon affected him emotionally. Something very different was happening, he recalls; the country was under attack.
He outlines the strategic, departmental and tactical changes implemented after 9/11 to fight terrorism. The President declared that we were now at war. “The attitude and the strategic direction of the government was [that] we now have to prevent terrorist attacks,” Juan recalls. “We have to disrupt and dismantle terrorist networks. And that led to an entire preventative paradigm for the counter-terrorism approach to the government.” The new mission of the Treasury Department was the following areas, Juan remarks: “How do you use financial information more aggressively? How do we think about the use of tools and authorities that the Treasury has, like sanctions, anti money laundering rules? How do we think about the relationships internationally with central banks, finance ministries? How do we get the world on board to disrupt terrorist financing, to rip these organizations out of the legitimate financial commercial world?” The Patriot Act was one tactical change, among others, that was implemented to achieve the new mission of fighting terrorism.
What 9/11 Means
Tom asks Juan, “What are your reflections now as we come up on the 20th anniversary of the day of 9/11, and really what it meant for America and for you 20 years later?” Juan responds that he has mixed emotions. He thinks about the victims and their families first of all. That day changed history, he says. “It changed the way that the U S government viewed the world. It changed the way that we operated our strategy. And it changed the sense of our vulnerability.” The recent events in Afghanistan make the 20th anniversary even more difficult for Juan. “I have very mixed emotions coming on the 20th anniversary of 9/11,” he concludes, “but I’m very proud of the work that we did. I’m proud of the people I served with and my sympathies go out to the victims and their families.”
Resources
Juan Zarate at K2 Integrity