I have a question: Why are Informal Value Transfer Systems (IVTS), particularly the hawala system, legal on U.S. soil? Ok, maybe I have a couple of other questions? Why does there seem to be no conversation in our industry about the risks of the hawala and other IVTSs despite the risks FinCEN itself has identified.

Don’t get me wrong. This isn’t an argument that every hawaladar is a criminal. Millions of people around the world rely on IVTS to send money to family members in places where traditional banking is expensive, unreliable or simply unavailable. In many parts of the world, these systems existed long before modern banks.

However, in an age of a Western Union or MoneyGram in almost every country and/or local jurisdiction, as well as the advancement of cryptocurrency and peer-to-peer payments via apps on our phones – Why are we comfortable with allowing the trust-based system called the IVTS?

The Financial Action Task Force (FATF), the international ‘watchdog’ for financial institutions, advises banks to operate on a ‘risk-based approach.’ Meaning, if a customer or transaction is too risky, they shouldn’t be allowed to bank within your firm.

Ok, then why are our lawmakers allowing IVTS, which the U.S. Treasury has declared as high-risk, to continue to operate on our soil?

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has repeatedly warned financial institutions that IVTS can be exploited by terrorists, money launderers and transnational criminal organizations.

FinCEN’s advisory on Informal Value Transfer Systems, released in 2022, states that information continues to indicate the possible use of IVTS to fund attempted terrorist attacks, including against the United States. The advisory also reminds financial institutions that these systems can be used to facilitate money laundering and other illicit financial activity. Why doesn’t it seem like the issue receives more sustained attention?

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The Justice Department recently announced another successful operation targeting international scam centers, including the seizure of millions of dollars in cryptocurrency connected to fraud schemes. The numbers are impressive, but they weren’t what caught my attention.

For years, those of us in financial crime compliance have tended to organize crimes into neat categories. We have fraud teams, AML teams, cyber teams, sanctions teams and investigators who specialize in areas like human trafficking. There’s nothing inherently wrong with that. Large organizations must divide responsibilities somehow.

One of the biggest lessons I took away from working human trafficking AML cases was how quickly one crime could lead to another. I might begin looking at activity that appeared to involve trafficking, only to uncover fraud, money laundering or another piece of criminal activity that wasn’t obvious at the outset. The deeper you dug, the harder it becomes to separate one crime from another.

That lesson came back to me as I read about the latest scam center investigations.

When most people think about these scams, they naturally focus on the American who loses their retirement savings or life savings after being manipulated into sending money or buying cryptocurrency. Those victims deserve every bit of our attention.

But there is another side of these operations that often gets less attention. Many of the individuals carrying out the scams have reportedly been trafficked themselves, lured by promises of legitimate employment before finding themselves trapped inside compounds and forced to participate in fraud.

From an investigator’s perspective, that’s a remarkably complicated picture. The customer sending the money may be a victim. The person persuading that customer to send the money may also be a victim. The only people who aren’t victims are the criminal organizations controlling the operation and ultimately collecting and laundering the proceeds.

That’s why I think scam centers are exposing a blind spot in the way we sometimes approach financial crime.

Too often, we’re still asking whether we’re looking at fraud, money laundering or human trafficking. Increasingly, I think the better question is whether we’re looking at an organized criminal enterprise that happens to involve all three.

If a fraud investigator sees an elderly customer suddenly wiring large sums of money, that’s useful information. If an AML investigator notices multiple customers sending funds to related beneficiaries, that’s useful too. A cyber team may have intelligence on fraudulent websites, while a crypto exchange may recognize wallet activity connected to previous cases.

Viewed separately, each piece may seem unremarkable. Viewed together, they begin to tell a very different story.

That’s one reason I’ve become such a believer in the investigative mindset. An alert should never be the end of the conversation. It’s simply the point where the questions begin.

Instead of asking whether a transaction is suspicious, investigators should also be asking what else it connects to. Have other customers sent funds to the same destination? Does the same wallet appear in multiple investigations? Are there common beneficiaries, businesses or geographic patterns that haven’t been connected before?

Those are the questions that reveal networks instead of isolated cases.

I also think this is an opportunity for financial institutions. Banks, fintechs, cryptocurrency exchanges and payment companies all see different pieces of how money moves. Individually, none of them have the entire picture. Together, particularly when information is shared appropriately with law enforcement and trusted partners, they can help expose criminal infrastructure that would otherwise remain hidden.

Scam centers aren’t simply another fraud typology. They’re a reminder that organized crime has become increasingly interconnected, even if our investigations haven’t always kept pace. Criminals don’t separate fraud from trafficking or money laundering before deciding who should handle it. They use whatever methods help them make money.

If I could change one thing tomorrow, it wouldn’t be transaction monitoring software or another typology. It would be teaching investigators to ask one additional question every time they close a case:

“What else could this be?”

In 2025, Americans reported losing more than $20.8 billion to internet-enabled fraud, according to the FBI’s Internet Crime Compliant Center (IC3). That’s not a typo. Twenty billion dollars. And because so many victims never report what happened, the real number is almost certainly much higher

We see this fraud happening in investment scams, romance scams, business email compromise schemes, elder fraud cases, and increasingly in cryptocurrency-related fraud. The scams may look different, but many of the organizations behind them operate with a level of sophistication that would have been hard to imagine twenty years ago.

For years, those of us working in financial crime have been arguing the same thing: fraud isn’t some lesser offense that sits a few rungs below organized crime. In many cases, it is organized crime.

Which is why the FBI’s new Most Wanted Fraudster list is more important than some people may think.

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Undercover Compliance has always been about financial crime.

Fraud. Human trafficking. Terrorist financing. Cryptocurrency. Dark web investigations. The people who spend their careers trying to make the world just a little bit safer.

Today, I’m taking a detour. Not because financial crime suddenly matters less, but because the people fighting it matter more.

One of the phrases we hear throughout our lives is, “As long as you have your health...”

It’s one of those sayings that rolls off people’s tongues until the day it stops being a cliché and becomes your reality. For me, that journey began in 2021.

I started experiencing persistent abdominal pain and immense bleeding. At first, it was easy to dismiss. Life was busy. Work was demanding. Surely it was stress. Maybe something I ate. Maybe it would just...go away. But it didn’t.

After months of appointments, scans, and uncertainty, I underwent a partial hysterectomy in 2022. I believed that chapter was over - and for the most part, it is.

Apparently, this was just the beginning.

Not long afterward came pain deep in my hip. Not on the outside where you expect a sore muscle, but buried inside what I jokingly called the “cup holder” of my hip. An MRI eventually suggested bursitis. It wasn’t a perfect explanation, but it was something.

Then came my shoulder.

The pain became so severe that surgery was required and it revealed large bone spurs that no one had expected to find. Surely that was the answer. Except it wasn’t.

Today, the pain has spread.

My shoulders, hips and knees ache as though someone poured concrete into them overnight.

My hands hurt. My hips hurt. My joints protest every morning before they reluctantly agree to cooperate. Some days I feel like I’ve completed the hardest workout of my life...even though all I did was wake up.

I’ve seen specialists. I’ve had imaging. Blood work. Tests. More appointments than I care to count. Every physician has been thoughtful. Every one has wanted to help.

And yet... No one can tell me exactly why this is happening.

Could it be menopause? Maybe.

Could it be something autoimmune? Possibly. Something neurological? We’re looking.

For now, the most honest answer from the people I trust with my care is simply:

“We don’t know.”

That may be the hardest diagnosis of all.

If you’re reading this and you’re a woman in your forties or fifties, perhaps this sounds familiar. Maybe you’ve been told it’s stress. Maybe you’ve been told you’re getting older. Maybe you’ve started wondering if you’re imagining it because every test comes back “normal.”

Please hear me. You are not imagining your pain. You know your own body better than anyone. That doesn’t mean every strange symptom points to something catastrophic. But it also doesn’t mean you should ignore what your body keeps trying to tell you.

I’ve spent much of my professional life teaching investigators to trust patterns.

One isolated data point rarely solves a case, but when enough small clues begin to line up - they tell a story. Our bodies work the same way. That lingering ache. The unexplained fatigue. The pain that migrates.

The symptom you keep apologizing for mentioning because you don’t want to sound dramatic.

Those are clues. Advocate for yourself. Get a second opinion. Then a third if you need one. Keep asking questions. I’ve been told I’m good at asking annoying, pestering questions.

One of the unintended consequences of living in a high-performing profession is that we become experts at functioning while hurting.

Compliance officers don’t stop because they’re tired. Fraud investigators don’t pause because they’re in pain. Analysts don’t suddenly miss deadlines because they couldn’t sleep the night before. We push through.

Until one day we can’t.

If my recent absence from writing has taught me anything, it’s this:

Nothing matters more than our health. If you’re on a similar journey, I want you to know you’re not walking it alone.

I don’t have answers. I wish I did. What I have is a story that’s still being written. And perhaps that’s enough for today.

Because sometimes the most important thing we can offer each other isn’t a solution.

It’s simply the reassurance that someone else understands.

If this story resonates with you, I'd love to hear from you. Many of us in compliance spend our careers solving other people's problems while quietly carrying our own. If you're navigating unexplained pain, menopause, autoimmune disease, or simply trying to find answers, know that this community extends beyond financial crime. Sometimes the most valuable intelligence we can share is our own experience.

Most people assume banks are just places that move money from Point A to Point B.

They’re one of the largest - and quietest - intelligence networks in the country.

Every day, banks sift through millions of transactions. Buried inside that ocean of normal activity are the signals of fraud, money laundering, human trafficking, terrorist financing, and more. The job of a financial institution isn’t just to process money. It’s to spot when money is being used as a weapon.

So how does that actually work?

First, banks don’t randomly stumble into crime. They look for it.

They use a combination of:

• Automated systems that scan transactions for unusual patterns

• Internal alerts triggered by behavior (not just amounts)

• Tips from employees or even customers

Many crimes involve relatively small transactions that, when viewed together, tell a bigger story.

Examples of what might raise a flag:

• A customer suddenly wiring money overseas to people they’ve never interacted with before

• Dozens of small deposits followed by rapid withdrawals (a classic laundering technique)

• An elderly customer sending repeated payments tied to a romance scam

• A business account behaving nothing like its stated purpose

Think of it like this: banks aren’t just looking for big numbers—they’re looking for patterns that don’t make sense. Then, once something is flagged, a real person reviews it.

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I’ve been dealing with a series of significant health issues that have brought with them a level of pain I wasn’t fully prepared for. Despite numerous appointments, tests, consultations, and one surgery, answers have been frustratingly elusive. At the same time, a family emergency required me to travel out of state and shift my focus to matters far more important than deadlines and publishing schedules.

As many of you know, writing about financial crime, fraud, human trafficking, terrorism, sanctions, and compliance requires more than time. It requires focus, curiosity, and a certain amount of creative energy. Lately, much of that energy has been devoted simply to getting through the day and helping the people I care about.

I felt it was important to explain my absence because behind every compliance professional, investigator, analyst, auditor, examiner, and law enforcement officer is a human being carrying burdens that may not be visible to the rest of us.

We spend our days fighting things that most people never see. Fraudsters targeting the vulnerable. Traffickers exploiting the innocent. Criminal networks moving money through our communities. Yet while we spend our professional lives confronting those challenges, many of us are simultaneously fighting personal battles of our own.

This publication has never been just about regulations, investigations, or financial crime trends. It’s about the people doing the work. The professionals who show up every day and try to make their corner of the world a little safer and a little more honest.

I appreciate your patience during my absence. The good news is that I’m working my way back. My pain-addled thoughts are slowly returning to something resembling coherent analysis, and I have no shortage of opinions on the compliance issues shaping our industry.

Thank you for sticking around while I found my footing again.

I’ll do my best to bring more of the conversations that matter to this Substack, and to you, in the weeks ahead.

We’re all fighting something. It’s good to know we’re not fighting alone.

There is a difference between infiltrating a threat and financing it.

That difference is now at the center of a federal indictment against the Southern Poverty Law Center - an organization that, for decades, has positioned itself as the nation’s moral cartographer of extremism.

According to the Department of Justice, that map may not have just identified the terrain.

It may have helped build it.

Acting Attorney General Todd Blanche didn’t mince words, accusing the SPLC of “manufacturing the extremism it purports to oppose.” Prosecutors allege that more than $3 million was funneled - through opaque channels - into individuals embedded in groups like the Ku Klux Klan and neo-Nazi organizations.

The SPLC says this was an informant program.

Anyone with an intelligence background recognizes that argument immediately. Confidential sources, penetration of hostile networks, controlled access to bad actors - this is standard tradecraft.

But here’s the fracture line: intelligence operations are designed to observe and penetrate threats, not to financially sustain or amplify them.

Because once money enters the system at scale, the mission changes.

You’re no longer just inside the network.

You’re influencing it.

And that’s where this stops looking like intelligence collection and starts looking like something else entirely.

Call it what you want - covert action, influence operations, controlled opposition - the principle is the same: when you inject resources into a hostile ecosystem, you risk shaping the very behavior you claim to be monitoring.

That’s not hypothetical. That’s operational reality.

Now layer in the second allegation: donors were never told.

That’s where this moves from controversial to potentially criminal.

Fraud isn’t about whether informants were used. It’s about whether the organization misrepresented what donor money would actually do. If funds raised to “combat hate” were quietly routed into the infrastructure of those same groups, then the issue isn’t tactics.

It’s deception.

And the consequences ripple outward.

Organizations and individuals - from Moms for Liberty to Brigitte Gabriel to Donald Trump - have been publicly labeled, categorized, and in some cases, stigmatized within a framework the SPLC helped define.

If that framework was influenced - even partially - by an ecosystem it financially touched, then the credibility of the entire structure comes into question.

This case will ultimately be decided in court.

But the underlying issue is bigger than one organization.

It’s about a dangerous temptation: the belief that you can fight division by quietly feeding it.

Because once you cross that line, you’re no longer documenting the fire.

You’re holding the fuel can.

I’ve spent the better part of my career inside financial crime investigations. From large financial institutions to cryptocurrency exchanges, from dark web marketplaces to training compliance teams, I’ve worked thousands of cases. Some started with law enforcement requests. Others began as transaction monitoring alerts quietly blinking in the background of a bank’s system.

I spent my career on the AML side, investigating the movement of illicit funds after they entered the financial system. But over time, something became increasingly clear.

Many of the cases I worked were not purely money laundering cases at all. They were the downstream result of fraud. In some instances, separate fraud-related Suspicious Activity Reports had already been filed on the same activity.

I just didn’t know it.

Not because the institution lacked visibility, but because fraud and AML operated in parallel, rarely intersecting in a meaningful way.

Many of the most impactful cases I worked didn’t begin where we tend to focus.

What initially appeared as suspicious movement of funds often traced back to a moment of deception. A victim manipulated. A decision made under pressure, before the financial system ever had a chance to respond.

By the time it reached us, it looked like money laundering.

But the crime had already started.

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There are crimes that move money. There are crimes that move people. And then there are crimes that do both - quietly, efficiently, and with far less attention than they deserve.

Human trafficking and terrorism are often treated as separate threats, filed into different policy buckets and assigned to different task forces. But in practice, they intersect in ways that are both operationally convenient for bad actors and strategically dangerous for everyone else.

I’ve seen this connection from both ends. I’ve stood in war zones, where terrorism leaves behind human carnage and fractured communities. And I’ve traced the financial activity that often comes first. These transactions are easy to miss in real time, but in hindsight, they are warnings we in the financial industry often catch too late.

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When people think about human trafficking investigations, they picture undercover agents, rescued victims, and dramatic criminal trials.

But in many cases, the most important evidence does not come from a sting operation. It comes from a spreadsheet.

A cash deposit.
A wire transfer.
A prepaid card.
A hotel charge.

Human trafficking is a brutal crime of exploitation. But it is also a business. And like any business, it runs on money.

That is why financial institutions sit at one of the most powerful vantage points in the fight against trafficking.

After years working financial crime investigations, one lesson becomes obvious very quickly: traffickers can hide victims, they can hide locations, but they rarely hide the money well.

A Growing Criminal Justice Focus — and a Troubling Gap

The U.S. government has increased its focus on trafficking prosecutions over the past decade. Even so, compared with the number of people estimated to be living in some form of modern slavery, the number of prosecutions remains far too low.

According to The Department of Justice’s Bureau of Justice Statistics 2024 report, the number of individuals prosecuted for federal human trafficking offenses grew from 805 in 2012 to more than 1,656 in 2022, more than doubling in ten years.

Convictions followed a similar trajectory, rising from 578 convictions in 2012 to more than 1,118 in 2022.

More recent data shows the trend continuing. In 2023, federal prosecutors pursued approximately 1,782 human trafficking cases in U.S. district courts, reflecting a 73% increase in prosecutions since 2013.

Those increases are encouraging. But they also expose an uncomfortable reality.

The numbers remain extremely small when compared with estimates of the scale of the crime.

Globally, The International Labour Organization estimates that tens of millions of people are trapped in forced labor or sexual exploitation, while U.S. authorities identify thousands of trafficking victims each year.

So where is the disconnect?

The gap reflects how difficult trafficking cases are to uncover and prosecute. Victims are often controlled, relocated, or too fearful to cooperate with investigators. Trafficking networks move people across jurisdictions and hide behind legitimate businesses.

But there is one element of these crimes that rarely disappears.

Money.

Financial records do not stay silent. Payments, deposits, and transfers create a record that can expose networks even when victims cannot safely come forward.

Human Trafficking Is Also a Money Laundering Crime

Under U.S. law, human trafficking is a predicate offense for money laundering. In other words, the profits generated from trafficking almost always lead to financial crimes designed to conceal those proceeds.

The Department of the Treasury has repeatedly emphasized that trafficking networks rely heavily on the formal financial system to operate. Payments for travel, hotel rooms, escort advertisements, recruitment expenses, and the movement of victims’ earnings frequently occur through traditional banking channels, prepaid cards, and digital payment platforms.

Even emerging payment methods have become part of the ecosystem. FinCEN has identified thousands of cryptocurrency wallet addresses connected to suspected trafficking and online sexual exploitation cases, demonstrating that traffickers evolve alongside legitimate financial technology. (FinCEN.gov)

In practical terms, this means something important.

Human trafficking leaves financial fingerprints.

And financial institutions are often the first to see them.

The Responsibility of Financial Institutions

For compliance professionals inside banks, the responsibility is enormous.

A well-trained investigator reviewing transaction monitoring alerts may notice patterns that reveal exploitation long before a victim is identified.

Examples include:

• Multiple hotel and travel payments tied to a single controlling account
• Frequent small deposits followed by rapid cash withdrawals
• Payments tied to escort advertising platforms
• Unusual prepaid card activity or remittance patterns
• Business accounts masking illicit massage operations or other front businesses

Individually, these transactions may appear benign.

Together, they can tell a story.

This is why Suspicious Activity Reports (SARs) filed by financial institutions are often a critical intelligence source for investigators. Financial reporting can connect victims to traffickers, identify networks, and uncover locations where exploitation is occurring.

In some cases, those reports are the first clue law enforcement receives.

Compliance Work Saves Lives

Inside financial institutions, anti-money laundering programs are sometimes viewed through a narrow regulatory lens.

But trafficking cases remind us that the work is far bigger than compliance.

Behind the alerts and transaction logs are real people - victims who are often invisible to the outside world.

Compliance analysts, investigators, and financial intelligence units are uniquely positioned to spot patterns others cannot see. Their work can trigger investigations, disrupt criminal networks, and ultimately help victims escape exploitation.

Human trafficking is a violent crime carried out through financial systems that were never designed to detect it.

Yet every day, investigators inside financial institutions prove those systems can be used to fight back.

Trafficking networks move people in the shadows.

Their money moves in plain sight.

The question is whether we are paying attention

I remember saying, quite confidently, that the risk was far too high for financial institutions to bank this new “internet money.” There were no controls. Know Your Customer (KYC) procedures felt loose at best, nonexistent at worst. Wallets could be spun up in minutes, so how could financial institutions be confident their customers were conducting legal activity. Funds could cross borders at the speed of light. To a career investigator who had spent years tracing fiat transfers, servicing law enforcement subpoena requests, it all felt like a playground for money launderers.

Then, in 2015, at a conference where I was speaking, a fellow presenter leaned over and quietly said, “Let me show you something.”

He opened his laptop and began tracing funds along the blockchain in real time. Transaction after transaction. Wallet to wallet. Timestamped. Immutable. Public. He explained that when transactions are placed on a blockchain like Bitcoin, they are permanently recorded. You cannot erase them. You cannot backdate them. You cannot quietly “adjust” them in the middle of the night.

Boom. Instant conversion.

From a fraud and money laundering perspective, this was not a black box. It was a glass box.

That moment marked the beginning of my appreciation for blockchain analytics companies and the role they now play in the financial crime compliance ecosystem. Firms such as Chainalysis, Elliptic, and TRM Labs have built sophisticated tools that cluster wallet addresses, identify illicit typologies, flag sanctioned entities, and provide risk scoring that rivals traditional transaction monitoring systems. What once felt like digital anarchy has matured into one of the most transparent financial ledgers ever created.

Cryptocurrency itself has evolved at astonishing speed. What began as a niche experiment in 2009 has become a global asset class. Exchanges like Coinbase and Gemini operate with compliance programs that look increasingly similar to those of traditional banks. Institutional investors have also entered this space. Governments have taken notice. Criminals, yes, have used it. But criminals also use cash, wires, trade finance, prepaid cards, and every other instrument available. The question has never been whether bad actors will attempt to exploit a system. The question is whether we can see them.

With blockchain analytics, we often can.

From a regulatory standpoint, the direction of travel is clear. In the United States, the Financial Crimes Enforcement Network (FinCEN) has made clear that many crypto businesses qualify as money services businesses (MSBs) and must comply with the Bank Secrecy Act, file Suspicious Activity Reports, and implement AML programs. The Office of Foreign Assets Control (OFAC) has sanctioned crypto wallets linked to ransomware actors and nation state threats, signaling that sanctions compliance extends into digital assets. The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) continue to shape the contours of how digital assets are classified and regulated.

Internationally, the Financial Action Task Force (FATF) issued guidance extending its “Travel Rule” to virtual asset service providers, requiring the sharing of originator and beneficiary information for certain transactions. The European Union has adopted its Markets in Crypto Assets framework, often referred to as MiCA, establishing licensing and consumer protection standards across member states. Jurisdictions from Singapore to the United Kingdom are refining supervisory regimes for crypto exchanges and custodians.

This is not the behavior of a passing fad. This is the architecture of an industry that regulators are integrating into the global financial system.

For financial institutions, blockchain analytics companies are no longer a novelty. They are a risk management necessity. Banks that bank crypto businesses rely on these tools to assess exposure to darknet markets, sanctioned entities, fraud rings, and terrorist financing typologies. Law enforcement agencies use them to trace ransomware payments and dismantle illicit networks. Compliance teams use them to supplement traditional due diligence, identify linked wallets, and build defensible SAR narratives.

In cryptocurrency, every transaction leaves a breadcrumb. When paired with analytics, those breadcrumbs form trails that can stretch across continents and years.

None of this means crypto is risk free. Volatility, scams, and emerging typologies remain real. But the narrative that digital assets exist outside the reach of oversight is outdated. The ecosystem is professionalizing. Controls are tightening. Technology is maturing.

As someone who once dismissed crypto as an uncontrollable threat, I now see it as a powerful investigative tool. Blockchain analytics companies have not eliminated financial crime. Nothing ever will. But they have given compliance professionals something rare in this field: a permanent, searchable, tamper resistant ledger.

For those of us tasked with protecting the integrity of the financial system, that is not chaos. That is opportunity.

I have worked thousands of money laundering cases. Most did not begin with a victim’s phone call. They began with patterns. A transaction monitoring alert. A law enforcement request tracing funds across accounts. Activity that simply did not make sense. Alongside my fraud investigator colleagues, the contrast was clear. Their cases often started with urgency, a panicked customer reporting

missing money, a whistleblower, a tip from local police. Mine usually started in silence, with data.

Working those cases side by side made something unmistakable: fraud and money laundering often travel together, but they are not the same crime. Fraud is the deception. Money laundering is what allows that deception to endure.

Fraud is the theft.

Money laundering is what happens after the theft.

If you want a snapshot of how confused we are about this distinction, think of Office Space. In one scene, the characters try to “launder” money and genuinely wonder whether that involves a washing machine. When “Steve the magazine salesman” knocks on the door, they briefly assume he must know how to do it. The joke works because the term feels abstract and cinematic.

It is not.

Fraud is the moment someone lies, manipulates, or fabricates to take what does not belong to them. A fake invoice. A staged nonprofit. Identity theft. A forged document. Fraud has a victim. Someone wakes up poorer.

In my experience, fraud is usually detected because a victim speaks up. A bank customer calls. A beneficiary reports irregularities. An employee notices something that does not add up. Fraud announces itself because someone feels the loss.

Money laundering is quieter.

Laundering is the process of making illicit proceeds appear legitimate. It is layering transactions, moving funds across entities, routing money through shell companies, converting it into assets. It is concealment. It is strategic. It is patient.

Fraud generates dirty money.

Money laundering hides it.

Of course, not every fraud scheme evolves into a complex laundering operation. Some are impulsive, small-scale, or quickly detected before funds can be moved. But when fraud is sophisticated, organized, or high-dollar, laundering often follows.

This distinction matters in today’s headlines. When major public fund scandals emerge, whether in Minnesota or in federal audits examining fraud, waste, and abuse, public debate often collapses everything into a single word: fraud.

But the mechanics matter.

In a public program scheme, the fraud occurs when funds are obtained through false claims, fake vendors, or fabricated beneficiaries. That is the theft. What follows is movement. The funds are transferred, structured, layered, converted into assets. That is laundering.

In federal audits, “waste” may be inefficiency. “Abuse” may be policy manipulation. Fraud is intentional deception. And where there is fraud, there is often an effort to launder the proceeds. Yet we speak about all of it as though it were interchangeable.

It is not.

Understanding the difference determines how we respond.

Fraud prevention strengthens controls. It verifies identities, audits invoices, validates claims. It asks: How did the deception succeed?

Money laundering detection follows financial movement. It analyzes transaction patterns, beneficial ownership structures, rapid transfers, high risk flows. It asks: Where did the money go?

One looks for the lie.

The other follows the money.

I have seen institutions miss critical red flags because they were searching for the wrong problem. Compliance teams may focus on transaction flows without questioning whether the underlying business activity is real. Auditors may uncover clear deception but fail to trace the downstream movement of funds, allowing proceeds to disperse beyond recovery.

You cannot stop what you do not correctly define.

When policymakers announce new “fraud, waste, and abuse” initiatives, we should ask precise questions. Are we strengthening fraud controls? Are we enhancing money laundering detection? Are we doing both?

These are complementary but distinct battles.

Fraud erodes trust immediately. It steals from taxpayers, donors, investors, and beneficiaries.

Money laundering erodes trust structurally. It embeds criminal proceeds into the legitimate economy, distorts markets, and rewards deception.

One ignites the harm.

The other protects it.

If we want meaningful reform and accountability, we must understand the difference. Fraud creates illicit gain. Money laundering protects it.

Clarity is not a technical detail. It is the first line of defense.

When it comes to the recent headlines about the Minnesota fraud scandal, have any of you in our Fin Crime/compliance industry wondered: "Don't FI's run OSINT searches when people and/or companies open bank accounts? - You know, conduct KYC, to verify the existence of a building, payroll, etc, etc.."

Well, I did. And I wrote about it.

Over 100,000 fraud-related suspicious activity indicators were reported by financial institutions in Minnesota in 2024. Concentrated largely in Hennepin, Ramsey, and surrounding counties, these reports frequently cited transactions with no apparent lawful purpose, coordinated activity involving multiple individuals, misuse of checks and government payments, and patterns consistent with organized fraud rather than isolated misconduct.

Those numbers matter. Not because they are abstract statistics, but because they reveal how deeply fraud has embedded itself into our financial system and why it should be viewed not merely as a regulatory or financial issue, but as a national security concern.

The recent fraud headlines out of Minnesota involving daycare centers, medical providers, and other sham businesses are not just local scandals. They are warnings.

Fraud is often treated as a cost of doing business or a compliance failure. In reality, it is one of the most efficient entry points for illicit money to move through the U.S. financial system. And when illicit money moves freely, it does not remain benign. It fuels organized crime, corruption, and networks that undermine public trust and stability.

That is why America’s financial institutions sit at the tip of the spear.

Fraud is the intentional use of deception to obtain money, goods, or services unlawfully. Money laundering is the process of disguising the proceeds of that fraud so the funds appear legitimate. It typically occurs in three stages: placement of illicit funds into the financial system, layering transactions to obscure their origin, and integration, where the money re-enters the economy appearing clean, such as being paid out as payroll, rent, or vendor expenses from what looks like a legitimate business.

Fraud creates dirty money. Money laundering keeps it alive.

In the Minnesota cases, the opportunity to detect this activity existed long before indictments or headlines. It existed the moment these businesses opened bank accounts.

Every U.S. financial institution is required to conduct Know Your Customer, or KYC, due diligence. This process is designed to understand who a customer is, what they do, where they operate, and whether their activity makes sense. For businesses, that includes verifying ownership, stated purpose, expected transaction activity, and physical address.

A daycare should look like a daycare. A medical provider should look like a medical provider. When the story does not match the facts, that discrepancy matters.

I have worked thousands of suspected money laundering and fraud cases for some of the largest financial institutions in the country. I have seen firsthand how illicit money flows through ordinary accounts, how it hides in routine transactions, and how it is detected through inconsistencies, patterns, and human judgment long before a case becomes public.

KYC is not a one-time event. Financial institutions are required to reassess customers over time, especially when transaction behavior changes. This is where transaction monitoring plays a critical role.

Banks use Transaction Monitoring Systems to flag unusual or suspicious activity. These systems are often misunderstood as purely technological. They are not. Humans design them. Compliance professionals determine which behaviors are risky, what thresholds trigger alerts, and why certain patterns warrant review.

Equally important is OSINT, also known as open-source intelligence. Basic internet searches are performed by compliance officers in financial institutions and help verify whether a business address exists, whether it aligns with the claimed operation, and whether public records raise concerns. If a business claims to be a childcare center but operates out of a residential apartment or empty storefront, that is a red flag.

When financial institutions identify potentially suspicious activity, they are required to file a Suspicious Activity Report with the Financial Crimes Enforcement Network, or FinCEN, under the U.S. Treasury. These reports feed the nation’s Financial Intelligence Unit and support law enforcement and national security efforts.

Once a financial institution files a Suspicious Activity Report, visibility largely ends. Institutions are not told whether a SAR is flagged or shared, and the sheer volume filed every day nationwide makes it extraordinarily difficult for government agencies to identify, prioritize, and act on every report in real time. The result is an inherent gap between what financial institutions report and what the public ever sees in terms of outcomes.

The Minnesota SAR data is not just a snapshot of fraud. It is a reminder that recognizing fraud as a national security issue is not optional; it is the price of protecting public funds, public trust, and the financial system that underpins them both.

Read details here: https://www.foxnews.com/opinion/ive-worked-thousands-money-laundering-cases-fraud-national-security-threat

Human trafficking and terrorist financing are often framed as moral crises or law-enforcement problems. They are both. But from inside the world of financial crime, they are something else too: predictable outcomes of government fraud, waste, and abuse.

After more than a decade working financial-crime investigations and training, including years focused on AML, sanctions, and terror-finance risk, I’ve learned this uncomfortable truth: these crimes do not survive on ideology or cruelty alone. They survive on money. And too often, that money comes from public systems designed to help the vulnerable.

Government benefit fraud is not a side issue. It is infrastructure.

Fraud rings exploit unemployment insurance, disaster relief, housing subsidies, healthcare programs, and emergency aid with remarkable efficiency. The losses are measured in billions. What receives far less attention is what happens after the money is stolen.

In states like Minnesota, for example, investigators and auditors have documented vast sums leaving the United States through remittance channels after being siphoned from public programs. Much of this money flows to Somalia, a country where terror groups such as al-Shabaab have maintained a stranglehold on territory, finance, and civilian life for decades. From a terror-finance perspective, this is not incidental. When fraud proceeds exit the U.S. financial system and enter fragile or conflict-controlled environments, the risk of diversion to extremist groups is no longer theoretical. It is baked into the ecosystem.

From an AML perspective, fraud proceeds are rarely idle. They are laundered, layered, and repurposed. In trafficking cases, stolen funds pay for transportation, forged documents, housing, bribes, and online advertising that recruits and controls victims. In terror-finance cases, the same fraud provides clean-looking money that moves quietly through financial institutions and around sanctions controls.

This is why government fraud is so attractive to organized criminal networks. It is low risk, high yield, and often treated as a paperwork problem rather than a national-security threat.

Waste and abuse deepen the problem. Weak identity controls, siloed agencies, outdated data-sharing rules, and pressure to distribute funds quickly create perfect conditions for exploitation. Criminal networks understand these gaps better than most policymakers. They know which programs lack verification. They know enforcement is uneven. They know accountability is rare.

Every control failure becomes a force multiplier.

The human cost is easy to miss. When fraud drains public programs, legitimate beneficiaries lose access. When traffickers reinvest stolen funds, exploitation expands. When extremist groups finance themselves through public money, violence is indirectly subsidized by the systems meant to prevent harm.

In my work, I’ve seen the same patterns repeat across institutions and borders. Fraud, human trafficking, and terrorist financing are not separate problems. They are interconnected financial ecosystems. Treating them in isolation guarantees failure.

Financial-crime professionals are not back-office compliance checkboxes. Transaction monitoring, sanctions screening, and suspicious activity reporting are among the most effective early-warning tools we have. But they only work when fraud is recognized for what it truly is: an enabler of human suffering and insecurity.

If we are serious about combating trafficking and terror finance, we must stop pretending government fraud is victimless. It is not. It is money, power, and opportunity flowing to the worst actors in the system.

And until we follow that money with the urgency it deserves, we will keep fighting symptoms instead of the disease.

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For more than two decades, I’ve worked at the intersection of intelligence, financial institutions, cryptocurrency platforms, and compliance. I’ve investigated fraud, money laundering, terrorist financing, and emerging threats long before they made headlines. I’ve also trained thousands of professionals on how to spot these risks when they are still quiet, ambiguous, and easy to dismiss.

What I’ve learned is this: by the time the public is paying attention, the damage is already done.

Right now, the United States is grappling with unprecedented levels of fraud, data misuse, and financial exploitation. Task forces are being announced. Lawsuits are being filed. Finger-pointing is underway. What’s missing is clear, experienced analysis that explains how these systems actually work, where they fail, and what realistic solutions look like.

This Substack is my attempt to close that gap. Not as an activist. Not as a partisan. But as someone who has lived inside these systems and understands their incentives, blind spots, and pressure points.

2. What kind of community I’m building here

This is not a newsletter for outrage or hot takes.

It’s a space for people who want to understand how financial crime, fraud, and national security risks actually operate beneath the headlines. That includes compliance professionals, investigators, prosecutors, policymakers, journalists, and anyone who wants to think more clearly about how money, power, and systems intersect.

I’m interested in thoughtful disagreement, evidence-based debate, and questions that don’t have easy answers. This will be a place where nuance is valued, where complexity isn’t smoothed over for clicks, and where professional experience matters.

If you’re looking for certainty, you may be frustrated here.
If you’re looking for clarity, you’re in the right place.

3. What to expect from this Substack

I’ll be specific about what I publish and how often.

Posting cadence

• One substantive piece per week

• Occasional shorter posts responding to major developments in fraud, financial crime, or government accountability

Topics you can expect

• Fraud and financial crime as national security risks

• How Suspicious Activity Reports, FinCEN, and law enforcement actually function

• Cryptocurrency, emerging technology, and where regulation lags reality

• Why some financial crime cases are prosecuted and others quietly die

• Data privacy, government access, and institutional accountability

• Practical insights drawn from real investigations and training experience

For free subscribers

• Full access to weekly essays

• Commentary on current events tied to fraud, finance, and security

• Occasional explainer posts demystifying complex systems

For paid subscribers (when enabled)

• Deeper analytical pieces

• Case-study breakdowns

• Early access to long-form work

• Invitations to off-platform discussions or briefings

This won’t be theory for theory’s sake. It will be grounded in how things actually work when money moves, controls fail, and decisions are made under pressure.

If you’ve ever wondered why obvious fraud wasn’t stopped sooner, how intelligence gets lost between agencies, or what realistic reform would look like, I hope you’ll stick around.

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