VP of Fidelity & Anti-Money Laundering sheds some light on what is being done to counter terrorist financing

“The revolutionary paradigm shift is that financial institutions are now responsible for where the money goes - an obligation to follow the money to know who is behind it and what their regulations are.” According to Stephen Ganis, Vice-President of Anti-Money Laundering and Fidelity Investments, 9/11 has brought about a paradigm shift in the new fight on “dirty money” as financial institutions must be more responsive to illicit funds that pass through their system. Although this shift has brought illicit financing issues to the forefront of the media, the money laundering challenges that financial services institutions faces now are not new.

In Ganis’ speech, titled Terrorist Financing: Why International Anti-Money Laundering Experts are needed to Fight the Global War on Terrorism, he described the current regulatory and professional environment of anti-money laundering, from legislation to implementation. Ganis spoke as part of the Fletcher Global Speaker Series, sponsored by the International Business Relations Program at The Fletcher School, Tufts University on September 25, 2003.

In his current role as Vice-President of Anti-Money Laundering at Fidelity Investments, Ganis leads a team which overseas regulatory compliance throughout Fidelity. This includes ensuring compliance with the USA Patriot Act of 2001, the Bank Secrecy Act, local and federal criminal money laundering statutes, and the U.S. foreign policy sanctions administered by the United States Treasury’s Office of Foreign Asset Control (OFAC). Ganis moved into his role [both] from both public and private careers on anti-money laundering, including working as Counsel to the Banking and Financial Services Committee in Congress on legislation which eventually became part of the USA Patriot Act, and working as an attorney in the Office of the General Counsel of the SEC. His background in financial legislation and anti-money laundering gives him specific insight into the methods that criminals use to launder money.

Ganis engaged the audience by proposing that to stop terrorist financing in the United States is similar in many ways to stopping other criminal misuses of the financial system. And regulation such as the USA Patriot Act, Bank Secrecy Act and others have allowed private institutions, such as Fidelity, to reduce the risk of their financial services being leveraged by terrorists. The new attention to this regulation has expanded the net of anti-money laundering to include non-banking institutions that had previously seen less scrutiny.

News reports indicate that the new regulation has already had an impact. For example, this past July in an enforcement action against a diamond trader in New York City, who attempted to launder money for an arms dealer attempting to sell missile launchers to terrorists in New Jersey.

Despite the new requirements for regulated financial institutions, there are unregulated channels that terrorists are still able to use easily. ATM cards, for example, issued by banks in certain semi-failed states outside of the United States could be easily acquired and then used at cash machines in the United States to withdraw funds. The easy movement of cash falls in line with recent evidence of significant piles of cash found in a raided al-Qaeda safe house in Riyadh.

Ganis closed with insights into some of the actions Fidelity takes to carry out its responsibility under the USA PATRIOT Act to detect, report and prevent money laundering and terrorist financing. He also noted that a specialist on his team, Katherine Sikora Nelson (Fletcher ’93), helps Fidelity comply with the sanctions administered by OFAC. It was clear to many in the audience that the existence of Ganis’ his team at Fidelity is critical, as the private sector and public sector collaborate in the war on money laundering and terrorist financing.