On December 15th, the ACAMS Carolinas Chapter held the last virtual event of 2021 to discuss the current threat environment tied to terrorist financing. The event was moderated by Board Member Peter Wild who is a Senior Advisor at McKinsey. The speakers included:
Frederick Reynolds, Chief Compliance Officer at Brex
Dennis Lormel, President and CEO of DML Associates, LLC and
Michael N Emmerman, BCFE DACFEI, Founder and Chief Investigator of the Special Operations Support Group and Contract Intelligence Analyst for the DEA New York Division and OCDETF Strike Force
Dennis Lormel began the discussion by giving his views of the current threat environment. The panel talked about the historical transition in terrorist activities since 9/11 leading up to the Capital Riots of 2021. It was noted that through Western intervention, certain Islamist terrorist groups like Al-Qaeda and the Islamic State (ISIL/ISIS) have devolved to the point where they lack the capacity to carry out the type of attack that occurred on 9/11. The panel agreed the terrorist acts that were once financed and led by Islamist terrorist groups are now, in the current threat landscape, centered on individual threats like home-grown violent extremists (HVEs) that may align with Islamist terrorist groups and domestic violent extremists (DVEs) that align with various hate groups, primarily right-wing, like the Proud Boys and Oath Keepers. The panel discussed the shrinking costs associated with carrying out terror attacks in the current environment and how these small-dollar transactions can be hard to track within the monitoring software used by financial institutions. The panel speculated whether or not the ongoing prosecution and criminal lawsuits filed against several individuals and groups tied to the Capital Riots would act as a deterrent for future domestic events.
The conversation segued into a discussion of the current threat environment in Afghanistan and centered on the devolution and evolution of terrorist groups in the region. The panel noted that since the US withdrawal from Afghanistan, the Taliban, by waiting out the United States, has again exerted control over the country through an alliance with the Haqqani network, an Afghan Islamist guerrilla insurgent group that is also considered a transnational criminal organization. Through its control of the country, the Taliban now offers Al-Qaeda a safe haven to operate out of so there was speculation that Al-Qaeda will likely rise again in prominence in the area. The panel expressed concern that the Islamic State may make a play, through its recruitment of disgruntled Taliban fighter’s intent on Jihad, at taking over Afghanistan.
The panel spent some time discussing how the Taliban’s playbook of waiting out the United States is being replicated in Mali and West Africa by Al Shabab, Al Qaeda, the Islamic State, and other terrorist groups given France’s public desire to leave West Africa. These terrorist groups understand they can grow and evolve by capitalizing on the chaos this strategy causes if the French leave in a manner similar to the United States withdrawal from Afghanistan. Given these changing dynamics, concern exists around how these terrorist groups will interact with each other as it relates to western powers.
Next, Frederick Reynolds led a discussion tied to a paper he co-authored with Dennis Lormel regarding how these threats develop. Frederick built on the conversation by noting command for terrorist attacks is now decentralized. The panel noted that financial institutions, in addition to looking for suspicious wire activity that may be indicative of terrorist planning, should begin to focus on those financial behaviors that are indicative of a client transitioning into a DVE or an HVE. The conversation focused on the taxonomies shaping terrorist radicalization, financial warning signs for individuals on the path to becoming a DVE or a HVE, and the steps to DVE or HVE radicalization. The panel noted that DVEs and HVEs can come from all walks of life. A link to the published paper is provided below.
Next, Michael Emmerman led a discussion on China’s Belt and Road Initiative, money laundering, and the use of cryptocurrency to fund terrorism. He reinforced terrorist financing concerns discussed in the ACAMS Carolinas Chapter October meeting which focused on Trade-Based Money Laundering. A link to this Blog post and further details on that discussion is below:
Several panel members discussed recent case studies. Dennis discussed the terrorist radicalization of Steven Carrillo which included a discussion of financial warning signs and demonstrated how Carrillo followed the four steps of the terrorist radicalization process discussed earlier in the presentation (Sympathizer to Activist to Extremist to Terrorist). In May of 2021, Carrillo was convicted of killing a Federal Protective Services Officer and a week later murdering a Santa Cruz Sheriff Sergeant. Carrillo, a former Sergeant in the Air Force and leader of an Air Force anti-terrorism squadron called the Phoenix Ravens, has been linked, through his membership in the Grizzly Scouts, to the Boogaloo Boy movement. The Boogaloo Boy movement is a decentralized, domestic extremist, anti-government movement that believes in, and intends to initiate, a second American Civil War. Interestingly, for years leading up to the killings, Carrillo was in active communication with other like-minded individuals who also carried out other attacks across the country. This highlights the problematic nature of decentralized movements related to identifying individuals as they escalate through the radicalization steps.
Next, Frederick built on the community concept noted in the Carrillo case by discussing acronyms and codes used by various hate groups and movements to identify themselves to other like-minded individuals. Frederick discussed the potential to use transaction monitoring to scan for these codes in payment messages in an effort to reveal an individual’s affiliation with an extremist group. The website for the Anti-Defamation League’s Center on Extremism lists many of these codes and can be found here:
The panel noted that it is much easier to go after foreign actors as opposed to US citizens because the use of hate speech or symbols, etc. is covered by the 2nd Amendment and only becomes illegal when someone acts on it.
Michael Emmerman discussed a Trade-Based Money Laundering case involving four individuals that were able to move over a billion dollars in less than nine months in support of two disconnected terrorist groups.
The panel concluded the call by answering several questions from the audience.
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Blog Written by: Associate Board Member, Sean Marsden, CRC, CAMS