Developing a mindset of an Investigator? The traits to be developed to become a good Fin-Crime Investigator.

So you are planning to become a fin-crime Investigator or take your fin-crime investigations ability to the next level here are a few suggestions which I believe will take you a step closer in being an Ideal Investigator.

Lets first understand a few roles and responsibilities of a fin-crime investigator

An Investigator can work either within the organization in-house or as a third-party consultant. Their roles and responsibilities in an investigation vary based on the organization’s size and risk tolerance levels. Typically, investigators draft investigation plans, trace the flow of funds, review banking documentation, and respond to court orders and other legal demands. They gather necessary information through interviews and by collaborating with internal and external parties. Investigators analyse data, review financial reports, and conduct forensic investigations to uncover how financial crimes occurred. Finally, they prepare reports, present findings, and may testify in court as an expert witness.

Steps in an Investigation:

1. Plan Creation: Investigators begin by creating a comprehensive and logical plan outlining the investigation’s scope and objectives.
2. Flow of Funds Analysis: Often referred to as “following the money,” this step involves accessing and reviewing banking documentation and reports.
3. Data Collection and Collaboration: Investigators may need to gather information from customers, other departments, or external organizations. They work both independently and collaboratively.
4. Data Analysis: Utilizing large databases and analytical software, investigators analyse the collected data. They also respond to requests from law enforcement in a timely manner.
5. Forensic Investigations: Using their expertise in financial crime typologies, investigators conduct detailed forensic investigations to understand and communicate their findings logically.

Now that we have defined what is expected of an Investigator, lets understand what makes a good Investigator.

Bringing in an Investigative Mindset

A good investigator possesses an investigative mindset, characterized by suspicion, intuition, an open mind along with continuous learning. They question everything and support their suspicions with facts, thinking strategically and remaining vigilant. They should consider various theories and report only the facts, avoiding bias. Their role is to gather and present facts, not to determine guilt or innocence. Staying ahead of criminals requires the Investigator to think from a fraudsters perspective and question what would the fraudster do to achieve what he is trying to do at this moment? What is happening in the market presently, are there any new types of fraud which has surfaced, how is this typology of fraud spreading and what are some of the common approaches taken in the industry to prevent this.

Traits of an Investigative Mindset:

• Suspicion: Question transactions and behaviours that seem out of place.
• Instinct: Trust gut feelings developed through experience and knowledge.
• Open-mindedness: Consider multiple theories and avoid preconceived notions.
• Continuous Learning: Stay updated with training and research on financial crime trends.

Example: A transaction monitoring alert is triggered by unusual fund transfers to a high-risk country by a corporate customer. Despite an updated KYC file and no prior alerts, the investigator suspects potential money laundering due to the high-risk destination and uncommon currency used. Upon further inquiry, it is discovered that the customer is expanding operations to a new country, confirmed by property deeds. The investigation concludes with no further action needed, but key takeaways include the importance of suspicion, instinct, and thorough verification.

Understanding the Organizational Risks and Vulnerabilities

As an Investigator you must understand the organization’s risks and vulnerabilities, which can be exploited by fraudsters. An enterprise-wide risk assessment provides insights into institutional risks and is a good starting point. Organizational culture also plays a critical role; a toxic culture with unethical behaviour and weak controls can be a breeding ground for financial crimes. Investigators must ensure the risk assessment is current and understand the organization’s compliance culture. Next is to understand the offering of the of the organization. Are you missing out on an important loophole due to a new product offering or for example do you have multiple and detailed transaction monitoring rules around foreign transactions when the business only deals with local jurisdictions and no scope of foreign transactions.

Organizational Risks include:

• Inadequate Risk Assessment: Failing to identify and mitigate key risks leaves loopholes for exploitation.
• Insufficient KYC Requirements: Exposes the institution to onboarding criminals and sanctioned entities.
• Limited Compliance Resources: Allows suspicious transactions to go undetected.
• Product and services offering: Allows understanding the products, channels jurisdiction and risks specific to your business.

Leading an Investigation

Effective leadership in an investigation requires securing senior management commitment towards the Investigation and adequate resources required to help out with the Investigation. The lead investigator should have experience, high ethical standards, and a thorough understanding of the law. They must create and implement a detailed investigation plan, allocate resources strategically, and maintain confidentiality. Effective communication, time management, and building strategic relationships are crucial.

Key Responsibilities of a Lead Investigator:

• Resource Management: Identify and allocate the necessary resources and expertise.
• Communication: Provide clear instructions and maintain confidentiality.
• Pattern Recognition: Identify patterns and develop theories based on them.
• Time Management: Keep the investigation on schedule and take corrective actions when necessary.
• Strategic Relationships: Build relationships with stakeholders and educating them on why it is important to ensure cooperation.

I believe these principles will help to effectively uncover the accuracy in financial crime investigations and help improve an investigation.

These are some of the approaches I can think of, did I miss out on anything important, or do you have a completely different approach, lets discuss.