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Banking on experience

An interview with Jennifer Shasky Calvery, Global Head of Financial Crime Threat Mitigation at HSBC

Jennifer Shasky Calvery, the recipient of the 2017 ACFE Cressey Award, fought fraud for 20 years in the U.S. federal government — most recently as the FinCEN director. Now she uses her experience to tackle money laundering and other crimes in the international banking world.

On the wall of Jennifer Shasky Calvery’s office are a photo of her grandfather, his police shield and a medal of St. Michael the Archangel — the patron saint of law enforcement. “I keep these things close to me to remind me to follow in his footsteps,” Calvery says, “and to do my best to do the right thing for the right reasons each and every day, no matter what is happening around me.”

She says her grandfather inspired her from an early age to be interested in a career in federal law enforcement and intelligence. He was an entry-level policeman who walked a beat on the streets of Minneapolis, she says, then became a homicide detective and ultimately the city’s chief of police.

“When he was still a mid-level supervisor, he was invited to attend the FBI’s National Law Enforcement Academy when J. Edgar Hoover was still the director,” Calvery says. “There he learned the importance of using training and professionalism as tools to confront the corruption that was endemic in so many police forces across the U.S. at that time, and he ultimately put those lessons to good use as the police chief. He passed his admiration for federal law enforcement and intelligence onto me, and together we navigated a route in which a focus on foreign language [she holds a graduate certificate in Russian Affairs] and the law could serve as the foundation for my career aspirations.”

After Calvery earned an undergraduate degree in international affairs from The George Washington University, she received her law degree from the University of Arizona College of Law.

During a 15-year career at the U.S. Department of Justice (DOJ), Calvery focused on combating money laundering and organized crime. As a prosecutor with the Organized Crime and Racketeering Section, she focused on cases targeting transnational criminal organizations and the professional money launderers who supported them.

Calvery also spent two years in the Office of the Deputy Attorney General, serving as senior counsel to three different deputy attorneys general. She was the founder of the International Organized Crime Intelligence and Operations Center and then later was chief of the DOJ’s Asset Forfeiture and Money Laundering Section.

In 2012, Calvery was appointed director of the Financial Crimes Enforcement Network (FinCEN) at the U.S. Treasury Department. In July 2016, she moved to London to become the Deputy Global Head of Financial Crime Compliance at HSBC. In October 2016, Calvery was appointed the Global Head of Financial Crime Threat Mitigation — a new HSBC function responsible for identifying, analyzing and investigating financial crime.

The ACFE, during the 28th Annual ACFE Global Fraud Conference, June 18-23 in Nashville, will present Calvery with its Cressey Award for a lifetime of achievement in the detection and deterrence of fraud. The award is named after one of the foremost fraud experts and a founding father of the ACFE, Dr. Donald R. Cressey (1919-1987). She’ll then give a keynote address at the conference.

“I am enjoying life in London, one of the world’s great cities,” Calvery says. “My favorite tourist attraction remains the Churchill War Museum. Perhaps I am biased because Winston Churchill had an American mother, but I have always admired his many accomplishments in life and am particularly drawn to his quote: ‘To improve is to change; to be perfect is to change often.’ ”

FM: You were a trial attorney for the U.S. Department of Justice Criminal Division for more than nine years early in your career. How do you use your prosecutorial skills now that you’re working in the private sector?
       JC: During that part of my career, I served as a fraud prosecutor and then an organized crime prosecutor. I would travel from “Main Justice” (headquarters) to cities across the U.S. to join with federal investigators and prosecutors on the ground locally to conduct investigations of particularly complex crimes and present evidence to investigative grand juries and ultimately trial juries. This experience taught me the importance of asking witnesses the right questions, of paying very close attention to non-verbal cues from witnesses and juries, and how to go into a place as an outsider — not necessarily a welcome one — and to show respect for colleagues and the wider community, including its culture and values.

I learned firsthand the great diversity of the U.S. by trying to assimilate myself in places such as Houston, Los Angeles, Manhattan, Salt Lake City, Boston, San Francisco, Philadelphia, Portland and Fort Lauderdale, and then to work with foreign counterparts in places such as Russia, Liechtenstein, Brazil, Germany, Latvia, Bahamas, Switzerland, Ukraine, and so on.

These skills translate directly into my job today where as a risk professional, I need to know how to ask the right questions and understand both the verbal and non-verbal cues that I receive in response. I’ve relocated to London and manage a global workforce at the world’s leading international bank so my ability to assimilate and respect the cultures and values of such an amazing and diverse workforce is at a premium.

FM: Can you describe some of your most memorable white-collar crime cases during your tenure as a DOJ attorney?
       JC: I have a career full of stories and memories, but if I were to pick just one that is most relevant to this audience it would be a fraud and money laundering case involving defendants in Los Angeles, Atlanta, Liechtenstein and Austria. The fraudsters were peddling a fictitious high-yield investment scheme to their victims by preying on the victims’ distrust of the U.S. government and economic system and convincing them that they could get into the same inside investments purportedly only available to the very wealthy.

It was run a bit like a pyramid scheme, and what became interesting was how each layer in the pyramid lied, stole and cheated the layer below it until finally the money ended up with some American money launderers and fraudsters who stashed it in some banks in Liechtenstein only to have it stolen from them by some local money launderers from Austria and Liechtenstein. It truly displayed the principle that there is no honor among thieves.

...‘To improve is to change; to be perfect is to change often.’

When we seized the money, and began the process of returning what we could recover to the victims, a whole new group of fraudsters posing as recovery agents came out of the woodwork intent on cheating the victims all over again. But probably the most frustrating part of the case was the fact that the victims were so distrustful of the government and our economic system that they still believed the secret investment program existed and were intent on finding the right person to help them reinsert their recovered funds back into it.

FM: The Wall Street Journal reported that during the three years you were with FinCEN, anti-money laundering concerns gained new importance and reshaped the way banks do business, in part because FinCEN and other regulators imposed record fines for lapses in controls. What accomplishments were you most proud of during your time with the agency? 
       JC: Before joining HSBC, I spent nearly 20 years with the federal government. In my roles at the DOJ and the Treasury Department, I believed it was necessary to hold accountable institutions and individuals who allowed the U.S. financial system to be vulnerable to illicit financial activity.

However, once I moved to Treasury, I had the opportunity not only to leverage FinCEN’s enforcement powers but also explore ways to work more closely with the private sector through public-private partnerships. As a result, FinCEN placed significant emphasis on such initiatives under Section 314 of the USA PATRIOT Act. From my time in government, I know that the value of information provided by the private sector cannot be overstated. Financial institutions are on the front line of combating financial crime, and it’s this reporting that is used by governments to investigate and prosecute criminals, shape AML/CFT [anti-money laundering/combating the financing of terrorism] policies and legislation, and safeguard the international financial system from abuse.

I also believe that we have an important opportunity — right now — to strengthen information sharing between the public and private sectors. Money launderers who engage in schemes to move illicit proceeds take advantage of the fact that financial institutions and governments rely to a large degree on separate bodies of information: Only governments maintain unique intelligence on specific actors or trend information across financial institutions, while only banks have insight into end-to-end global payments within their respective books.

The current environment is a challenging one for information sharing: Banks are constrained by what they can share with industry peers; banks also are limited in what they can provide to governments (and vice versa). And banks and governments alike are restricted in what they can exchange cross-border. On top of all of this, criminal activity is often obscured by the sheer volume of transactions fueling global commerce.

HSBC has created the new Financial Crime Threat Mitigation [FCTM] function to leverage intelligence, analytics, technology and public-private partnerships to create an industry-leading capability that proactively identifies financial crime and seeks opportunities to more robustly share financial intelligence with industry peers and government stakeholders. By improving techniques to detect financial crime and bridging gaps that deepen information sharing, FCTM empowers HSBC to make valuable contributions that not only protect the integrity of the financial system but also the communities that it serves more broadly.

FM: Companies such as your HSBC Holdings PLC and J.P. Morgan Chase, which both incurred large penalties for lapses in money laundering controls, have hired former regulatory executives such as yourself. As Global Head of Financial Crime Threat Mitigation, how are you helping HSBC with its internal controls? 
       JC: Within HSBC, the Financial Crime Compliance function is responsible for ensuring that adequate systems and controls are in place so that HSBC is compliant with all relevant legal and regulatory requirements. As the Global Head of Financial Crime Threat Mitigation, which is responsible for identifying, analyzing and investigating financial crime, it is my job to protect HSBC from this risk so that the bank can focus on its purpose of connecting people to opportunities so that they can grow their businesses, support their families and contribute to their communities. Removing financial crime from the equation allows banks to operate as banks, as they were intended (i.e., taking deposits, extending credit and offering other products that are vital to a functioning economy), without exploitation by criminal actors. 

FM: Without revealing trade secrets, what are some ways you and your company are detecting and deterring money launderers? How has what you learned from your public-sector work aided you in the private sector?
       JC: While I was at the Treasury Department, FinCEN analysts made major strides to enhance deployment of advanced analytics tools to make sense of the ocean-sized data they had at their disposal from SAR filings and other sources of information. These tools were essential to FinCEN’s ability to mine data and spot trends, and I knew that I would also need to leverage these tools at an international bank like HSBC.

Think about the sheer amount of data that this bank has at its disposal: HSBC is the very definition of a global institution — we are in more than 70 countries, our networks cover more than 90 percent of global GDP, trade and capital flows, and our four lines of business meet the needs of every customer that you can imagine, from individuals to multinationals. To uncover financial crime on a global scale we are bringing in and continuing to attract top talent in the areas of data science, intelligence analysis, research and development, investigations and technology to apply industry-leading data-driven analytics. I’m building a team of the best of the best so that we can stay ahead of financial criminals who seek to take advantage of this global institution. Above all, the most effective tool we have is our people, and I’m tremendously proud to be working with such a talented team here at HSBC.

I believe that we are at a critical point in advancing our ability to detect, deter and combat financial crime.

FM: During your February 2012 testimony before the Congressional Subcommittee on Crime, Terrorism and Homeland Security, you mentioned several popular tools for concealment, such as shell and front companies, offshore financial sectors and free-trade zones. What are the additional tools you’ve found in your current work? 
       JC: The tools you mention are popular with criminals because they undermine transparency. Criminal actors need to move funds while hiding their nature, source, location and ownership — often using mechanisms that don’t make economic sense. As I stated earlier, I believe that information sharing is an invaluable mechanism by which we can exchange financial intelligence to shed light on criminal activities that are otherwise obscured from our view.

To this end, HSBC is a sponsor of the Future of Financial Intelligence Sharing [FFIS], a private-sector led initiative that seeks to inform and support policy changes around the establishment of financial intelligence public-private partnerships in Hong Kong, the UAE, Argentina, Singapore and Mexico.

The forums will convene the latest research on legal and operational issues, financial crime impact and lessons learned from such public-private partnerships. FFIS will report its findings before the FATF [Financial Action Task Force] Plenary in June, and our ultimate hope is that FATF considers instituting a new standard on information sharing to help national authorities on the issue. As the international standard-setting body, FATF is best positioned to influence countries to affect change at a national level, which will allow financial institutions such as HSBC to move the ball even further down the court with respect to robust information sharing initiatives.

FM: Dr. Joseph T. Wells, CFE, CPA, founded the ACFE with the idea that fraud deterrence and prevention can save dollars, reputations and heartache. Now that you are working for a company that’s trying to avoid money-laundering lapses, what prevention measures have you implemented?
       JC: I agree with Dr. Wells — financial crime has tremendous downside for institutions that are unable to deter, detect and combat it. While I was in government, I once heard a banker say that there is a reason that financial institutions must obtain licenses. It’s a great bestowal of trust that enables banks to be part of the financial system, and with that trust comes obligations. One of those obligations is a responsibility to put into place effective AML/CFT controls so that criminals cannot exploit financial institutions as a means to their illicit ends.

I’m proud of what we are accomplishing within the Financial Crime Threat Mitigation function at HSBC. Our posture is an active one — we are on our toes, we are learning forward, and we are charging towards the risk instead of waiting for someone to escalate it and bring it to our attention. HSBC is the world’s leading international bank, and I’m proud to be leading our global effort to protect the bank against financial crime so that it can focus on its purpose: to be where the growth is, enable businesses to thrive and economies to prosper, and help people fulfill their hopes and realize their ambitions. 

FM: With your years of anti-fraud experience, what advice would you provide to ACFE members?
       JC: First, and foremost, I’d like to state how much I respect the work that all your readers do. We are all here, working in this industry, because we care about preserving the integrity of the financial system. We all share a common goal and have a collective impact when we are all pulling in the same direction, and I’m glad we can work together. In doing so, we can and do make a difference. I saw it when I was in government, and I can see it today in my new position at HSBC.

I believe that we are at a critical point in advancing our ability to detect, deter and combat financial crime. I’ve never been known as a defender of the status quo, and I have built my work history around start-ups, rebuilds and implementing mandates for change. So, I encourage all your readers to be bold, try new methods and techniques and be willing to fail now so they can succeed later. And don’t hesitate to work with counterparts at other institutions — peer-to-peer engagement — or with government via public-private partnerships to identify innovative ways to stay ahead of criminal actors. In doing so, we can define the new frontier of combating financial crime together.

FM: You were a two-time All-American basketball player at George Washington University. How have you applied the lessons you learned playing basketball to your career?
       JC: In addition to the cliché answer about learning to build high performing teams, I think one of the important lessons I learned through my participation in sport was how to dedicate myself with absolute focus and intensity to those things about which I am passionate.

Dick Carozza, CFE, is editor-in-chief of Fraud Magazine. His email address is: dcarozza@ACFE.com.