Select Case Studies
AML/CFT Evaluation for Bank Addressing a Non-Traditional Market
A unique large-scale assignment included the independent AML/CFT evaluation of a bank, owned and operated by a large retail group that services a non-traditional market in Mexico and that is considered a pioneer in that industry. In conducting this assignment, a CSMB senior consultant applied detailed methodology that included research, interviews with key personnel, identification of existing internal controls, and stress tests in sensitive areas of the financial institution. These processes lead to the identification of material weaknesses that could have resulted in regulatory violations and possible monetary sanctions. The client was alerted to the noted weaknesses on a timely fashion and with our assistance was able to mitigate its risk by applying immediate corrective actions.
In this assignment, a multinational risk assessment was completed for a financial institution headquartered in the Caribbean and operating in Europe. The assignment uncovered material weaknesses that alerted the client on a timely manner to manage its risk by terminating the relationship with a respondent bank prior to the public announcement of regulatory sanctions and revocation of their banking license for alleged money laundering and fraud.
Forensic Investigation Case Studies
Forensic Review of High Risk Accounts
CSMB was contracted by a mid-sized Miami based community bank to conduct all aspects of the forensic review of over 550 high risk accounts, which was mandated by the FDIC, with the objective of identifying incidences of suspicious activity. Through a thorough account activity review, CSMB identified numerous incidences of suspicious activity that included Medicare fraud of over US$90MM, money laundering of approximately US$5MM, and an informal money transfer scheme that resulted in the transfer of over US$3.5MM to Pakistan. As these transactions warranted the filing of Suspicious Activity Reports (SAR), CSMB documented all its findings to assist the bank’s senior management with reporting requirements, as well as assist law enforcement agencies with the necessary documentation for prosecution.
Government - Fraud & Corruption
CSMB was contracted by a multinational business intelligence firm to participate and assist in all aspects of an investigation of alleged overbilling by a contractor on government projects costing the central government of an island nation US$130MM. CSMB Assisted law enforcement officers in the preparation of production orders and information for search warrants; participated in the execution of search warrants with Anti-Corruption Investigations Bureau to assist with the identification, logging and extraction of documents; assisted in the development of calculations demonstrating over billing in excess of US$10MM through exhaustive examination of contracts, contractor invoicing and production cost data, and interviewed dozens of individuals. Finally, we reported our findings to the tax authority for perusal in collection of evaded taxes. These efforts resulted in the arraignment and incarceration of a high-level government official and conviction for tax evasion of at least one business entity and its principal shareholder.
Forensic Audit – Theft Investigation & Remediation of Policies
CSMB was contracted by a multinational security and intelligence firm to conduct all aspects of a limited forensic audit and investigation for a multinational trade association that entailed the identification of risks associated with alleged misappropriation of internal resources, instances of non-compliance with internal policy, and developing recommendations of risk mitigating factors to prevent future occurrences. Additionally, we conducted a forensic analysis to quantify loss revenues over a five-year period. Through a process of discrete interviews as well as analysis and application of processes, CSMB identified numerous internal control weaknesses, both procedural and technological, as well as possible additional internal complicity that were sufficiently material to support allegations of misappropriations. A detailed analysis of over 10,000 records served to reveal evidence of malfeasance over the entire five year period under review and investigation, accounting for possible loss revenues of nearly $600,000 as opposed to the nominal amount originally suspected by the client. Our findings provided the client with assertion to investigate further possible personal gains by the employee and basis for future litigation support.
Fraud – Multi Jurisdictional and Government Fraud
CSMB was contracted by a multinational risk management firm to participate in the investigation of an alleged fraud involving the issuance of worthless GDRs through The Bank of New York (BONY). The alleged fraud involved the valuation of shares that were inflated in order to claim approximately US$250MM in financial assistance from the Central Bank of a foreign country and to capture over US$50MM in deposits from the country’s general public. CSMB conducted numerous exercises of transaction reconstruction, developed flowcharts detailing the flow of funds and final destination, and reported findings, which ultimately led to the issuance of arrest warrants and extradition of the individuals involved in the scam.
Training Case Studies
Professional Course Development
CSMB was contracted by an internationally recognized banking association to provide academic advisory support, as well as training services for two major industry certifications in anti-money laundering. In the initial phase of the engagement CSMB supported the organization in the revision of training material, and ultimately training on both certification courses throughout Latin America and the Caribbean. As a result of CSMB’s participation, the courses have gained a greater level of awareness as an industry standard of education, and the client has increased its annual revenues.
Annual Certification - Risk Management, Anti-Money Laundering / Anti-Terrorist Financing
CSMB was contracted by a multinational organization to develop and conduct all aspects of its annual Risk Management and Anti Money Laundering / Anti-Terrorist Financing training seminar. The seminar took place in Miami, Florida, U.S.A. over a period of two days and more than 30 financial institutions from Mexico, Latin America, and the Caribbean were in attendance. The seminar provided the financial institutions in attendance with the material and certification to meet its annual compliance training requirements, and the multinational client accomplished its customer service and compliance commitments for the year.
Forensic Review Training Seminar
CSMB was contracted by a mid-sized Miami based bank to develop and conduct all aspects of a “forensic review” training seminar for its compliance staff. The bank was under an enforcement action due to, among other things, maintaining high risk accounts while not having sufficient knowledge to properly manage the risks associated to their clients’ industry; nor the skills to review pertinent account activity, which later proved suspicious. The Bank’s regulator recommended targeted training for the compliance staff, specifically in forensic reviews. At the Bank’s request, CSMB developed specific training material on forensic review subject matter, which was recognized by the bank’s regulator as a qualitative and valuable tool for the purposes intended.
Business Consulting Case Studies
Procurement Process NAFTA Compliance
CSMB was contracted by a multinational investigation firm to review all aspects of the procurement process of a large multinational manufacturer of electronic equipment that assembles, under the NAFTA treaty, consumer electronics in Ciudad Juarez, Mexico. CSMB developed a model to ensure compliance with federal regulations and created a schedule for destruction of scrap material in order to prevent penalties and possible violations of environmental laws. The model provided for easy analysis of different scenarios and allowed for immediate updates of calculations based on proposed adjustments that resulted in eliminating approximately US$5MM in fines.
Foreign Corrupt Practices
CSMB was contracted by a multinational business intelligence firm to collaborate with a multifunction team including, prosecuting counsel of the Ministry of Legal Affairs of government, in an investigation whereby fraudulent schemes were uncovered. Conspiracy theories and allegations of public official corruption were established through the examination and cataloguing of over 800,000 documents and interviews of over 100 individuals. Our methodology included tracing the flow of funds with the objective of determining the ultimate beneficiary of the proceeds of crime. Throughout the investigation, we assisted in drafting information for production of records requests from foreign jurisdictions under Mutual Legal Assistance Treaties and reported our findings detailing the flow of funds through multiple jurisdictions. Our investigation efforts resulted in criminal convictions of at least three high ranking foreign government officials.
Corporate Fraud – Employee Malfeasance
CSMB was contracted by a multinational manufacturing company to lead in the effort of quantification of inventory losses after an employee was found stealing raw materials that were destined for destruction and selling them to a vendor for use in their factory to build crates, which were later purchased by the employer from the same vendor. Together with IT personnel, we developed reports to detail 100% of lost inventory at replacement cost and also identified purchasing managers that were involved in the scam, as well as the most recent purchase invoices. Our collaborative efforts resulted in enhanced security systems and the re-structuring of the company’s purchasing policy.
Establishment of New Financial Services Business Unit
CSMB was contracted to lead in the development and supervision of all aspects of establishing an investments division for a large multinational insurance company. We assisted in the development of investment products and promotional material, as well as selecting key personnel to run the operation. As a result, the company launched a private label mutual fund that increased annual profits by over US$10MM.