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Binance Podcast: Fighting Financial Crime in the Digital Era (Preview)


Binance Podcast had the privilege to interview Rick McDonell, Former Financial Action Task Force (FATF) Executive Secretary and Executive Director at the Association of Certified Anti-Money Laundering Specialists (ACAMS). 

Rick is a lawyer by training and has had extensive experience as a federal prosecutor and in conducting complex investigations including being in charge of many investigation task forces into organized crime cases both nationally and internationally.

He was the Executive Secretary of the FATF from 2007 to 2015. He previously worked at the United Nations Office on Drugs and Crime (UNODC), where he was Chief of the UN Global Programme on Money Laundering. 

In the latest episode, Rick shares his perspectives with Binance CFO Wei Zhou on how fighting financial crime has evolved over the last 30 years around the world and how blockchain technology can help to fight financial crimes in the crypto space. Here are some excerpts from that interview.


WEI: I would imagine in the early days the regional activities and focuses were very different, right? How has that evolved since you've been working in this space? 

RICK: There are differences and similarities. In terms of crime, criminals are as inventive in one region as they are in another. But in a more interconnected world these days, and the capacity to remove funds and value so quickly, there's a lot of commonalities. So essentially yes, there are regional differences, in what types of crimes, where, the way in which the justice agencies are set up in their capacity. So there are those kinds of implementation and enforcement differences. 

But frankly, I would say that these days, the major types of crime ... are pretty much the same all over the world, whether be drugs, white-collar crime fraud, embezzlement, cyber, all of those things are fairly prevalent. So the purpose and the common standards of the FATF and the common examination standards of the countries show a lot of similarities in terms of crimes.

WEI: Maybe in the early days there are regional differences, they are converging per se, so that the rules have become much more applicable on a global basis with less differentiation and less regional biases?

RICK: Yeah, I think convergence is a good word because that's happening across the board, not only because of a smaller world we live in now but because of greater efficiency if I can put it that way, of organized criminal groups in particular. Although the standards applied to all crimes and all people who commit proceeds of crime generating crimes, you can see over the last 10-15 years major international crime groups themselves converging as, I say, a marriage of convenience depending on what kind of criminality they're expert in. 

WEI: What is the most interesting case that you come across, or the biggest impact that you see in some of the cases or the organizations if you've been involved with or taken down? 

RICK: Well that ranges across a number of different areas. I've done investigations with police task forces and specialists over the years, What might be roughly described as ethnic-related criminal groups, of which there are many stemming from certain countries, are now global. They’re involved in drug trafficking, and that also sometimes involved different investigations into large-scale fraud, sometimes in the range of hundreds of millions of dollars. 

For me, I think the interesting thing has been the spread of the types of crime, the interconnectedness of the criminals in the sense of how professional they can be, and the difficulty of getting information to conduct a case and bring it in prosecution. So in some senses, that problem is becoming a little less problematic because the capacity to exchange information by government agencies has increased many-fold. But the capacity to hide your money has also increased. It's a constant struggle.

So for me, I've always enjoyed the chase if it's an international case in particular. 


WEI: Maybe 10 or 20 years ago before the internet, before you have transparency, and before you have Instagram and Facebook, people can spend their ill-gotten gains in other regions and not be noticed. And that doesn't really exist nowadays, so it makes it much harder.

RICK: It does. but you'd be surprised,  especially in new products coming up, including virtual assets. This is an area where there's potentially a lot of vulnerability, and that’s why the rules have to apply to the new world of digital, as well as the old world of cash.

WEI: What do you see is the biggest challenge facing anti-money laundering professionals today? As the executive director of your organization, you have to be an advocate for your members because I think they're dealing with challenges that probably didn't exist five years ago.

RICK: Yes, exactly, and some that [have been] popping up on almost a weekly basis. I think one of the biggest challenges at least in in terms of financial crime generally, not just money laundering, is the use of cyber to attack systems [and] the men in the street might be familiar with identity fraud and theft from their accounts, but that equally applies to organizations and banking institutions you've seen.

For example, over the last few years, several banks have been hit, and money was gone instantaneously in very devious and clever ways, so I think one of the biggest challenges is how to keep your IT systems up to speed to protect from not just hacking but cyber theft and identity theft. 

WEI: If that’s the case, then education would be a big part of that process, because it's not just organizations protecting themselves, as individuals, they have to protect themselves as well. I know one of the biggest things we face that Binance is that a lot of the hacks and frauds happen on an individual basis, because of the ability for perpetrators to find weaknesses and behavior habits, and sometimes just in the telco networks. 

RICK: Yes that's right. I don't know anyone's actually done a survey, but if they can find the data to see how many people in the world have been hacked individually I think it'll run into millions. But on the other side of the coin is the capacity and capability of individual criminals, and more so organized criminals, to have a capacity to attack individuals and institutions with a growing level of skill. So I think that, yes, individuals are hacked but who's doing that is not necessarily one individual criminal to another innocent party. It's an organized system of hacking and theft and your firewalls and other protection has to be up to speed. So yes, education and ensuring that the systems are as protected as possible is a niche growth area for professionals in this area.

Listen to the full interview here!