September 09, 2011

With the 10th anniversary of the Sept. 11, 2001 terrorist attack approaching, Bank Systems & Technology asked banking experts to reflect on how the industry has changed as a result of the attack. Below is a brief Q&A with Michael Zeldin, principal with New York-based Deloitte Financial Advisory Services and the global leader of its anti-money laundering and trade sanctions team. Because of his current work and his former role as special counsel to the criminal division for money laundering matters in the U.S. Justice Department, Zeldin is familiar with the Sept. 11-related regulatory changes that have affected the banking industry.

Bank Systems & Technology: What do you think has been the biggest impact on the banking industry of the terrorist attacks that occurred on Sept. 11, 2001?

Michael Zeldin: The biggest impact on the banking industry of Sept. 11 was the passage of the USA PATRIOT Act (Patriot Act). The Patriot Act and its implementing regulations enhanced greatly the compliance responsibilities of all financial institutions -- foreign and domestic -- doing business in the United States. The Patriot Act not only expanded the class of institutions covered by the money laundering laws of the U.S., but it empowered governmental authorities, including federal and state prosecutors' offices and bank regulatory agencies, to undertake more comprehensive and rigorous examinations of bank compliance programs.

BS&T: How has (or hasn’t) the banking industry changed over the past ten years as a result of the events of Sept. 11, 2001?

Zeldin: With respect to money laundering and sanctions (OFAC) compliance, the industry has become a lot more dependent on technology to help it undertake the monitoring, blocking and reporting responsibilities imposed by U.S. and global anti-money laundering requirements. Not only has banking become more global and, therefore, more complex, but new banking channels such as e-banking and mobile banking have made the concurrent responsibilities for financial services companies of knowing their customers and reporting suspicious behavior much more challenging. Additionally, the obligation of financial institutions to look for indicia of terrorist financing, an entirely different paradigm from money laundering, has added another layer of complexity.

BS&T: How has the aftermath of Sept. 11 affected you in terms of your way of working and focus?

Zeldin: Over the course of the past ten years, the AML compliance practice at Deloitte has grown from a handful of personnel residing and working within the United States to a global practice of over 400 people. Because of the complexity of the work we are asked to undertake -- and since AML compliance has now merged in substantial degree with other compliance disciplines in order to enable banks to gain a more holistic view of their compliance risks -- our practice group now consists not only of the same former federal money laundering prosecutors and former bank compliance officers and bank regulators as it did at its inception, but it now includes Ph.D. economists, information technology specialists, data programmers, privacy, anti-fraud and anti-corruption professionals.

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