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The Red Queen Hypothesis: Adaptive Evolution in the Fight Against Money Laundering and Financial Crime

Key Takeaways from AML 2024

An effective anti-money laundering program is a critical tool to fight financial crime and protect the integrity of the capital markets and global financial system.

For nearly a quarter of a century, securities industry professionals have gathered with regulators and law enforcement at SIFMA’s Anti-Money Laundering & Financial Crimes Conference. This conference is a core, fundamental offering at SIFMA and vital to our work in support of effective and resilient capital markets, providing a forum for conversation focused on protecting our markets from illicit financial activity. Working with the Conference Planning Task Force, our goal each year is to create a program focused on the quality of the content and speakers, and to provide valuable networking opportunities.

As we stand on the brink of the 25th anniversary of the Conference, it is remarkable to reflect on how our landscape has evolved. In the early days, participants at this Conference brainstormed and debated how to implement the Patriot Act and new Bank Secrecy Act requirements for broker-dealers. They discussed how a rapidly emerging technology called “the internet” might present new opportunities and new challenges. Today, we are talking about the great promise and the great risk of generative AI, the novel risks posed by digital assets, ever evolving and sophisticated cyber threats, and geopolitical crises that test the resilience of financial crime programs. Despite the specific focus of each topic, all of our discussion this year revolved around one key theme:

The threat landscape is evolving.

To effectively combat money laundering and financial crime, so must we.

The Red Queen Hypothesis

Illustration by Sir John Tenniel (28 February 1820 aa 25 February 1914)19th Century Illustration

“Now, here, you see, it takes all the running you can do, to keep in the same place,” said the Red Queen to Alice in Lewis Carroll’s Through the Looking Glass. “If you want to get somewhere else, you must run at least twice as fast as that!”

Strikes a chord, doesn’t it? Evolutionary biologists borrowed Carroll’s words to coin “The Red Queen Hypothesis,” which explains that a species must adapt and evolve to compete for survival against organisms that are simultaneously evolving. Today’s AML and financial crimes professionals must similarly adapt and evolve to remain one step ahead of bad actors seeking to exploit our markets and financial system.

This requires tremendous time, diligence, and resources. Only by working together – with the public sector, regulators, and the industry as a whole – can we uncover how these bad actors seek to mask themselves and effectively mitigate risk.

FinCEN Director Andrea Gacki told attendees that the information they provide to law enforcement is critical to strengthening the government’s anti-money laundering and countering the financing of terrorism (AML/CFT) system. “FinCEN truly views information sharing as one of the most powerful tools to help enhancing compliance with AML/CF requirements,” she said.

“No piece of information is too small,” said Paul Roberts, Assistant Special Agent in Charge for the New York Field Office of the FBI. “If it’s suspicious, we want to see it now. We can put it together down the line to see when there is either a case or a trend that is developing.”

“The industry is the first line of sight,” said Jonathan Larsen, Director, Field Operations, Northern Area, IRS: Criminal Investigation (CI). Representing $7.4 billion in asset seizures, 13.9% of all investigations opened by CI in 2023 originated from information shared under the Bank Secrecy Act.

“You and your firms have the insights and capabilities,” said Bryan Smith, Senior Vice President, Complex Investigations and Intelligence (CII) for FINRA. “How do you bring that to bear? That is the importance of partnerships. Getting people with the requisite skill sets and bring them to the fight with you.” Smith noted that partnerships between the government and private firms are increasing because information sharing is key.

Internal partnerships are equally important. Smith encouraged attendees to identify the crown jewels of the organization and make sure you are working across departments to protect them. “We’ve got the specific expertise – AML, sanctions, finance, crypto – but the adversary is going in between those seams.”

Public-private information sharing goes both ways and regulators put out a lot of information themselves. Industry professionals should subscribe to email alerts from agencies including the U.S. Department of the Treasury, FinCEN, and FINRA.

“We recognize that the vast majority of folks are trying to be good citizens and market participants,” said Andrea Griswold, former Deputy United States Attorney, Southern District of New York, United States Attorneys’ Offices. “If you see something, say something. The benefit of the doubt will be given to those with a consistent record.”

Conference Planning Task Force

At SIFMA, we advocate for clear and sensible regulations and provide forums to consider thought-provoking and critical questions that help the industry learn from and benchmark with its peers.

Nearly 25 years ago, a group of industry leaders pioneered SIFMA’s involvement in the anti-money laundering and financial crimes space. They sought to share insights and practical takeaways that help the industry at large prepare financial crimes programs for changes in policy, the regulatory environment, the geopolitical landscape, and new and advanced technologies.

Our 2024 Conference Planning Task Force, on which I have the pleasure of serving, has once again made this conference the industry’s premier gathering through their dedication and collective expertise. With gratitude for their service to SIFMA, the industry, and the markets, I would like to recognize:

2024 Conference Planning Task Force

  • Logan Anderson, Financial Crimes Risk Management and AML Investigations, TD Ameritrade
  • Nicole De Bello, Americas Head of Global Financial Crimes Legal, Morgan Stanley
  • Margaret Edmunds, Director of AML and Corporate Compliance, Baird
  • Jim Fiebelkorn, Principal, Financial Crimes and Chief AML Officer, Edward Jones
  • Sarah Green, Global Head of Financial Crimes, Vanguard Group Inc.
  • Adrienne Kosta, Head of Financial Crimes Program Office, Fidelity Investments
  • Samantha J. Leventhal, Managing Director, Global Financial Crimes Global Wealth & Investment Management and Global Markets Risk Executive, Bank of America
  • Tara Loftus, Global Head of Financial Crimes Compliance, Brown Brothers Harriman
  • Robert Molloy, Chief AML Officer, Raymond James Financial
  • Jeffrey Weiss, Head of Financial Crimes, Robinhood Financial LLC
  • Meg Zucker, VP US Head of AML & Financial Crime Advisory, RBC
  • Bernard Canepa, Managing Director and Associate General Counsel – Office of General Counsel, SIFMA

We hope to see you next year for what promises to be a memorable occasion: the 25th anniversary of SIFMA AML. We’ll be at the Conrad Washington DC from May 13-14. Registration opens this fall; you can sign up for updates here and follow SIFMA’s work on matters related to AML and financial crime here. 

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Bernard Canepa is a Managing Director and Associate General Counsel in SIFMA’s Office of General Counsel, where he works on a variety of legal and policy issues, including anti-money laundering and financial crime compliance. He monitors and keeps SIFMA members apprised of relevant developments, engages in ongoing dialogue with regulators, and advocates industry positions. Bernard joined SIFMA in March 2016. Prior to that, he worked at FINRA for over seven years. Bernard has an undergraduate degree in foreign affairs from the University of Virginia and a law degree from the University of Miami. 

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