There is a dirty little secret in Washington that directly impacts our “stalled” war on money laundering and terrorist finance.  At the very highest levels, there is a revolving door between high level personnel at the Department of Justice, Department of Treasury, and the private sector.

Since the time of the dismantlement of  the enforcement arm of Treasury and the corresponding creation of the Department of Homeland Security, Department of Justice officials have taken some of the highest positions at Treasury including TFI, FinCEN, and OFAC.  After serving time at Treasury, many then leave for lucrative positions in the private sector.

While some think this is business as usual in Washington, I believe this incestuous relationship has serious consequences.

DOJ officials populating the Treasury management team bring DOJ's  way of thinking, outlook, and methods of doing business with them.  Most are attorneys.  They have a misplaced faith in laws, rules, regulations, sanctions, designations and other legal and procedural maneuvers that have been increasingly employed to combat financial crimes and terror finance.  This is not the space to debate the efficacy of these actions but I will say that in my opinion they have been over emphasized. Simply put, it is sometimes difficult for our legalistic policymakers to understand that much of the rest of the world does not operate by our rule of law.  Our adversaries are adroit at going around legalistic “counter-measures.”

Another consequence of the DOJ influence on Treasury is that it exacerbates the Washington management syndrome of “group think.”   Treasury should bring to the interagency and interdepartmental table its unique skillsets, expertise, and insights.  Today, for the most part, that’s gone. The incestuous DOJ/Treasury relationship breeds the same way of looking at a problem and the same worn “solutions.”

The real kicker is that when some of these same officials leave Treasury they land jobs in the private sector, particularly the financial services industry. Why does this matter?   There are ethics issues.  There are appearance issues. And there are “old boy” network issues.

Earlier this year a major bank received a comparative slap on the wrist settlement for turning a blind eye and laundering billions of dollars of drug money.  There were also other serious crimes.  Yet not one bank official was held accountable. (Meanwhile some low-level drug users face mandatory prison sentences).  The individual that played a large role in negotiating the bank settlement used to work at Justice.  He then worked at Treasury at a very senior level.  One-and-a-half years before the record settlement was announced, the former government official started to work at the subject bank in the office of General Counsel.

This is probably the most egregious example but it is not an isolated incident. As a proud former Treasury employee, I’m embarrassed. 

Unless this kind of behavior is changed, it will continue to be business as usual. Congressional oversight committees, the concerned cabinet secretaries, and departmental chief counsels must get involved.  The next steps in my seven step plan will suggest other steps to reinvigorate our "stalled" efforts to combat money laundering and terror finance. 

My first step in my seven-point plan to revitalize our anti-money laundering and counter-terrorist finance (AML/CFT) efforts is to develop a plan.  Step two is to hold agencies/departments/and management accountable for implementing our national strategy.  As described in my last blog, our 2007 National Anti-Money Laundering Strategy has been mostly ignored.  Likewise, most concerned agencies and departments that I am familiar with all have “Five Year Plans.”  The plans articulate clear and concise goals which the agencies and departments pledge to accomplish.  These plans also play an integral role in the formation of budgets. 

In 2006, my first book Hide & Seek: Intelligence, Law Enforcement, and the Stalled War on Terrorist Finance was published (Potomac Books).  The final chapter in the book is called “Steps Forward.”  The steps were prescient and just as timely today.  One of the steps was headed, “The Federal Work Force is Crying out for Accountability.”  I will quote just a few sentences from the pages I wrote under accountability; “The present federal workplace culture, which allows managers to shirk responsibility, encourages the intellectual and moral cowardliness that contributed to September 11.  At the time this book is being written, much of the original leadership of al Qaeda has been destroyed.  They are gone. However, some culpable federal managers in place before September 11 remain. While America’s adversaries are learning and adapting, many failed federal management syndromes continue (preoccupation with turf; lack of imagination; fixation on form over substance; dearth of common sense, groupthink, etc.).”

Congress is equally responsible.  It has increasingly ignored its important oversight duties.  An easy and well over-due “fix” is to hold simple hearings.  Call federal managers and directors before the appropriate oversight committees and simply ask them to articulate what they have done to fulfill the promises their agencies made in the 2007 Anti-Money Laundering Report.  If that is too difficult, Congressional staffers should write pointed letters to the concerned departments and agencies asking the same tough questions.   For example, “Agency X, you promised to do this and that in the 2007 Strategy Report and your xxx Five Year Plan.  Show us the proof that you accomplished what you stated you would do.  If not, why not.”  I volunteer to help Congressional staff peer through and decipher the agency double talk and misleading statistics that are so commonly used in response to these types of queries.

Congress should then hold the concerned managers accountable and slash the departments’ and agencies’ budgets for not fulfilling their promises.  That will get their attention. 

Per my last blog entry, I would like to propose a simple and realistic seven point plan to re-invigorate our “stalled” anti-money and counter-terrorist finance countermeasures.

The first step is to develop a strategy.   Fortunately, we already have one.  It is the 2007 National Anti-Money Laundering Strategy.  It is an inter-departmental/inter-agency effort signed by the Secretaries of Treasury, Homeland Security, the Attorney General, etc.  The report can be found here: http://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/nmls.pdf

The strategy report does a good job of identifying the perceived threats in 2007; for example, the growing issue of mobile payments, trade-based money laundering, bulk cash smuggling, regulatory challenges in the gaming and insurance industries, capacity building, and imposing meaningful “measureables,” and others. The plan lays out fairly comprehensive steps forward and gives appropriate government entities such as Treasury’s FinCEN specific tasks to accomplish in order to achieve the enumerated goals.

Unfortunately, for the most part nothing was done.  The National Anti-Money Laundering Strategy Report has been ignored.  The concerned agencies and departments have not accomplished what they were obligated to do.  In large part, ignoring our own strategy is why we have under-performed in the anti-money laundering arena over the last five years.

Currently, there is talk within the U.S. anti-money laundering community about developing a new strategy report.  Undoubtedly, additional threats will be identified such as social media and cyber.  But there is no need to re-invent the wheel.  We simply have to dust-off and update the 2007 strategy. However, unless there is accountability, this will once again become a political and bureaucratic feel-good exercise that will have few meaningful results.  Accountability is step two in my plan.  Stay tuned.

On September 19, I was invited to participate on a panel sponsored by the Congressional Black Caucus at the Washington D.C. Convention Center.   Attorney General Eric Holder and Representative Maxine Waters (D – California) gave opening remarks.  For the most part, I am on the opposite side of the political spectrum they represent.  However, I fully support the premise of their arguments; i.e. mandatory minimum sentencing for non-violent and first time drug offenders is not smart and not just -  particularly when compared to recent “slap on the wrist” settlements that large banks such as HSBC received for laundering incredible amounts of narcotics proceeds. 

During the panel, others discussed the inequities of mandatory sentencing.  I focused my remarks on our failed war on drug money laundering.  I also briefly mentioned ideas to revitalize and re-prioritize our efforts to successfully combat money laundering. During my next few blog entries, I will I will summarize my seven step plan.  

If anybody has additional ideas, let me know.  There is some discussion right now within the interagency community about taking a hard look at our anti-money laundering (AML) policies - something I have been advocating for years.

On September 11, I gave a presentation on terror finance to the World Affairs Councils of Kentucky and southern Indiana in Louisville.  I’ve given a number of presentations to World Affairs Councils over the years and I have always enjoyed the events.  I was also invited to give a presentation at the local Collegiate school earlier that afternoon.  My remarks focused on possible careers in the federal government particularly the law enforcement and intelligence communities.

The folks in Louisville were very welcoming.  We had a large and enthusiastic crowd.  My wife and I stayed over for an extra day to see the sights.  I was impressed with the vitality of the city.  We definitely want to go back to the beautiful state of Kentucky! 

If anybody would like me to speak at their event let me know.  Check out the public speaking section on this website.  Thanks!
John

Demons of Gadara is now out on Kindle!  As I said in my first blog, I would let you know how the self-publishing experience goes.  I used CreateSpace, an Amazon company, to publish the hard copy version.  I also used the company to coordinate uploading and formatting the e-book with Kindle (also an Amazon company).   It was a hassle-free experience.  I did have to pay CreateSpace a nominal fee but for a tech challenged person like myself it was well worth it.  It took about ten days before I was notified the manuscript was converted into Kindle format. CreateSpace then walked me through a series of  administrative questions and prompts regarding selections on price, international markets, etc.   

I sent some advance copies out to colleagues in anti-money laundering/counter-terrorist finance (AML/CFT) community and a few reviewers.  I hope to start hearing back from them in a week or so.  If anybody in the publishing or communications industry would like a book to review let me know.  So far I have six reviews posted on Amazon.  I am both pleased and humbled that they have all been outstanding.   If you read the book, please send me a quick note with feedback - positive or negative.  And thank you in advance for taking the time to read the book! 

John

I do some part time consulting work for SAS – the analytics company.  A few days ago, SAS
published the following interview/review in their online publication; the SAS  Knowledge Exchange.  The link is
here: http://www.sas.com/knowledge-exchange/risk/fraud-financial-crimes/demons-of-gadara-terrorism-financing/index.html    The text of the interview follows:


SAS:  John, Congratulations on your new book.  What is it all about?
 
John:   Thanks!   Demons of Gadara is set  against a backdrop of the next intertwined Middle East crisis. A U.S. Special  Agent assigned overseas happens upon a terrorist plot.  Terrorists
are sent to Europe with plans to detonate a “dirty bomb” at an international economic summit that will also be attended by the President of the United  States. The Agent simultaneously battles the bureaucracy while racing to  intercept the attack. His only clue is to follow an underground “value trail.” 

SAS:  Why did you write it? 

John:  I’m very  concerned about what the US military calls “asymmetric warfare” and “threat
finance.”  After my non-fiction   books, I was searching for a new teaching medium.  I have found that some relate better to stories.   So  I decided to write an entertaining novel and at the same time surface important issues that I feel must be confronted in our on-going War on Terror.

SAS:  Was it hard to write a novel? 

John:   They always say “write what you know.”   I wanted to write something that was real and authentic.  I  knew the subject matter and I’ve lived or worked in most of the locations
described in the book; the Middle East, South Asia, and Europe.  Some of the events and characters are composites of what I have encountered.  In fact, the heroes, villains and cultures, including cultures of the bureaucracies involved, are all too real.    

SAS:  But this book is fiction.  

John: Yes.  And  initially that was the hard part.   During my career, I was trained to reports facts clearly, concisely, and in the first person. So, for  example, writing dialog was initially a bit of a challenge.   But when I decided to tell the story primarily from the vantage point of  the Special Agent, the story began to flow.  In fact, I found it was a lot of fun to develop the characters and plot.

SAS:   During the story, the need for advanced analytics becomes apparent.  

John:  The book  vividly describes real world challenges of proliferation and terror
finance.   I tried to combine knowledge gained primarily by being a former “street” agent assigned overseas with some of the things I have learned during my association with SAS.

 SAS:  For example?   

John:  Well in the US approximately 20 million shipping containers enter this country every year or
about 650,000 every day. Obviously, most of that is legitimate commerce. But some of those shipments could involve trade-fraud, trade-based money laundering, the smuggling of contraband, or even hiding a weapon of mass destruction.  The challenge for customs and law enforcement is to strike the right balance between facilitating  commerce and enforcement.  How do  we assign red flags? With limited resources, which container do you physically inspect?  Outside of human source
information or other forms of intelligence, advanced analytics is the only viable answer.

SAS:  You mentioned  following the “value trail.”  What do you mean by that?

ohn:   We   always talk about “following the money.”   That’s true.  But sometimes
money takes different forms.  For  example, it is easy to transfer value between a buyer and seller or an importer  and an exporter by over-and-under invoicing.  It’s simple invoice fraud.  This
is commonly done in business, tax and tariff evasion, and trade-based money  laundering.   In the area  where the story takes place, value transfer is commonly used to provide  “counter-valuation” in underground finance.   Criminals and terrorist organizations  commonly use this technique. Using  intelligence, data, and analytics we might be able to enter these underground
financial networks through the back door of trade.  

SAS:   So you  think analytics is the key for law enforcement? 

John:  It has to be.  Both law enforcement and the intelligence communities are struggling with being tasked to do more and more  with fewer resources.  Big data and sophisticated analytics, what SAS specializes in, is potentially our force  multiplier.  We are going to have  to turn to analytics just to keep our heads above water. 

SAS:   The   story is very realistic and entertaining. It’s a page-turner. I also learned a lot.

John:  Thank  you!   That was the  idea.

The “official” release date for Demons of Gadara is still a few weeks away.  In the interim, I have worked with CreateSpace to have Demons also converted to an e-format.   It should be available on Amazon’s Kindle by August 27.

I’ve been told by others that the younger crowd prefers to read e-books.  I’ve tried them but my preference is still flipping paper pages.  Anyway, at least there is an option.

I’ve got three advance reviews posted so far on Amazon.  I’m really happy with the ratings and the narratives.  It is always a little nerve wracking to get feedback.  I would love to hear yours!

John

August 12, 2013 

Is anybody else frustrated with traditional publishing houses and literary agents?

I was told that if I wanted to publish another non-fiction book that there would be interest.    However, I wanted to try to write a novel.

When I finished the manuscript for Demons of Gadara, I used an outside professional to help copy edit.   Then I dutifully did my research and identified a number of agents and publishers that accepted unsolicited query letters for the genre of action/suspense.   Out of about two dozen well-constructed queries, I did not receive one response or even acknowledgement.  I don’t care how busy somebody is, that just strikes me as rude.  I think the industry should do better.

So I decided to explore self-publishing options.  As opposed to just a few years ago, the stigma associated with self-publishing has about disappeared.

After more research, I finally decided to use CreateSpace; an Amazon company.   So far the CreateSpace experience has been a good one.   With CreateSpace, I chose the kind of interior format I wanted and gave the design team an idea for the kind of cover I envisioned.    After some back and forth with a couple of proofs sent to me for review, I think we are ready to go.  

The book will soon be available for both soft cover and e-version purchase via Amazon, CreateSpace, and other media outlets in the United States and overseas.  I’ll let you know how that works.

One frustration is that CreateSpace doesn’t allow for advance copies to send to reviewers, etc. 

I’m also going to set up a Demons of Gadara Facebook site.  I weighed hiring a publicist but was told by some friends that went down that route that afterwards they felt it was a waste of time and money.  So if anybody has some good ideas for marketing a new book I would appreciate hearing about them.  Thanks!   John

I’ve got a new book coming out in a few weeks so I thought I would share the experience.   I’ll be candid.  And I would appreciate your feedback.

When I wrote my first book Hide & Seek, I think I had unrealistic expectations.  I still think it is a very good book and gives a lot of insight into the “culture” of the bureaucracies that helped facilitate September 11.  The book is also kind of prophetic but it didn't get any publicity and never really caught on.  I thought my job was finished when the writing ended.    I thought the publisher would take care of the publicity.  I was  wrong.   However, within the “community,” Hide & Seek continues to get a lot of positive feedback. 

My next book, On the Tail of Terror Finance, is more of a text book and it has a niche market.  I do a lot of teaching at the federal, state, and local levels plus sometimes international.  There was a lot of confusion about terror finance.   So I wanted to write something primarily for law enforcement and intelligence professionals that was clear, straightforward, and concise.  I teamed with Avi Jorisch – a former Treasury official.  Although we have had some online sales, most sales have been at seminars and to government agencies and departments.  I’m happy with the results.

I know the word “passionate” is overused, but it describes my view about the importance of anti-money laundering and counter-terrorist finance.  

I wanted to see if I could write a story and teach at the same time.  I've found some relate better to stories rather than text books.  I was also tired of reading unrealistic suspense or action novels that portrayed the world and the government protagonists in ways that I found contrived.  I wanted to write a realistic story, incorporate issues of concern and try to make people think. 

I never wrote fiction before.   The hard part for me was writing dialog.  Law enforcement and intelligence officers are trained to write their observations in the first person.   We report facts and observations.   So in Demons of Gadara I decided to tell much of the story through the vantage point of a Special Agent.  I also wanted to develop the characters of the terrorists and give their perspectives.

Once I got going, it was a lot of fun. I lived and worked in most of the areas described in the book.   Many of the characters in the story are composites of people I have dealt with.  They always say “write what you know.”   That’s what I tried to do.

If anybody out there has ever thought about writing a book, I strongly encourage it.  The discipline of writing is a great leaning experience.  Even if you just write it for yourself or for close friends and family, do it!  

More to come. . .