Despite the banking industry’s significant effort and investment in fraud prevention tools, bad actors continue to target U.S. consumers, Darrin McLaughlin, EVP for Flagstar Bank, told House lawmakers today.
McLaughlin — who is also the Flagstar’s chief Bank Secrecy Act/anti-money laundering and sanctions officer — testified on behalf of the American Bankers Association before the House Financial Services Subcommittee on National Security, Illicit Finance and International Financial Institutions, which held a hearing on combating fraud. In prepared remarks, he emphasized the need for others in the public and private sectors to join banks in addressing fraud.
“Banks strive to follow all applicable BSA and compliance rules, educate our customers, train our employees and invest in sensitive detection and compliance systems,” McLaughlin said. “But banks are in a difficult position with only limited tools to address this growing problem. The federal government and other private sector industries, including telecommunications and social media, must do their part. Combating fraud requires a whole-of-government approach, partnered with the private sector.”
McLaughlin outlined key changes needed to optimize bank efforts to combat fraud, including more actionable feedback from the government on priority threats.
“Banks need information only the government can provide to stay abreast of changes,” he said. “Banks also need feedback about whether banks’ BSA reporting is highly useful to the government to detect fraud, financial crime and counter-terrorism funding. ABA has called for this feedback, and for bank regulators, [the Financial Crimes Enforcement Network] and government agencies to work together to ensure regional federal law enforcement priorities and trends are shared with banks, while encouraging state and local law enforcement to do the same.”
