Top 5 Differences Between Fraud Investigators and Anti-Money Laundering Analysts

In the world of anti-financial crime professions, there are a few major disciplines that stand out and tend to define a career. One of these is anti-fraud. In recent years, fraud has become more well-known to the public. Any type of misrepresentation, lying, scheming, scamming or stealing credentials and identities in order to gain money is known as fraud. 

Financial institutions and many other types of companies as well as law enforcement and government agencies all have departments, people, and task forces set up to fight this growing and pervasive problem. On the front lines are the investigators. These are diligent people who look at alerts, read complaints, gather information, and try to make sense of what happened and who might be responsible. 

Another major category of anti-financial crime work is Anti-Money Laundering. AML departments exist mostly inside financial institutions (FI), although the definition of an FI is broader than most people realize. Insurance companies, brokerage firms, and a veritable menagerie of ever-changing, ever innovative fintech companies all fall under the FI umbrella. Any company that moves or exchanges money from one form to another is a financial institution. Since money is an exchange of tokens of value, other companies that deal in valuable individual items, such as used vehicles, coins, and precious metals, all require some kind of AML compliance activity. The niche AML and broader financial crime risk and compliance industry has many more career options than it appears on the surface. 

Analysts Vs. Operators

The crime of money laundering only occurs after someone has committed a different, specific crime that generated a profit. In order to effectively use the funds, criminals must place them in the banking system and make them appear to have come from a legitimate source. In fact, fraud is one of the many Specified Unlawful Activities (SUA) named in AML statutes. Inside a bank, the fraud and AML camps are analogous to the characters in an FBI TV show: AML investigators are like intel analysts behind computers, assessing perpetrator information in a maze of data. Fraud investigators are the operators, kicking down virtual doors and catching actual perpetrators with the goal of holding them accountable or at least recouping stolen funds. Both are important to the anti-crime mission, but ultimately distinct in the way they do business. In this piece we discuss five major distinctions between these two crucial disciplines, and along the way we may discover some similarities as well.

1. Fraud is a defined crime, a designated SUA. Reports and alerts initially tell us that someone believes a fraud crime has occurred, the question is how much was stolen and by whom. Therefore, Investigations focus on the ‘Whodunnit’ aspects and usually involve preservation of evidence. Money Laundering is a secondary crime. There must have first been another SUA that generated illicit proceeds. Laundering money that did not come from an illegal source is called tax evasion and is a different, if similar, crime. Investigations into potential money laundering operate in nuances, trying to determine, where did the money come from, where did it go and is it suspicious? While fraud investigators lament that they are usually  unable to recompense each victim for all of their fraud losses, the anti-money laundering investigator AML investigator rarely has the satisfaction of knowing whether the report helped fight crime and may not know if a crime was committed at all. Experienced AML intelligence professionals understand that a few pieces always contribute to the larger puzzle. Fraud investigators prefer the visible cause and effect of being able to go after a certain criminal for a certain crime. The difference is notable in personality, style, and outcome.

2. Speaking of outcomes, the outcome of a fraud investigation is potentially admissible in court, and documentation must be preserved as evidence. Fraud investigators are trained to keep careful notes, maintain an upstanding professional record, and be prepared to testify in court. This is a public facing and potentially dangerous role. Suspicious Transaction/ Suspicious Activity Reports (STR/SAR) written at the end of a successful money laundering investigation are secret documents. Related information and backup documentation must be subpoenaed and re-analyzed to become admissible. Again, an individual’s personality might lend itself to one track or the other. A person who prefers to be anonymous may balk at appearing in a courtroom. 

3. Fraud investigators interview witnesses, persons of interest, and suspects. This public facing role requires interpersonal savvy as one never knows who exactly is on the other end of a phone call. A certain personal detachment and skepticism, a nose for when people might be lying, and similar skills all come into play. In contrast, AML is like Fight Club: you are not really supposed to talk about it, much less call a customer who may be involved in moving money for a multinational narcotics ring. These team members behave more like spooks, sitting in corporate back offices, only occasionally contacting a teller or frontline employee for more information. There is a veil of secrecy that must be maintained, similar to working in a secure facility in the intelligence and national security world.

4. Career trajectories in both disciplines are rewarding, but differ in path and opportunity.  Fraud is extremely broad, encompassing much more than happens at financial institutions. Most industries deal with fraud, including retail, construction, medical billing, government benefits, appraisals, and insider threats. AML investigators sometimes stay inside this niche field, but many branch out into other areas of risk and compliance. These include sanctions, lending compliance, consumer protection, data privacy, and financial reporting, to name a few. Both directions lead to rewarding and well-paying careers, but the more specialized a person becomes, the harder it is to cross from one to the other. 

5. Fraud is similar to law enforcement, while intelligence professionals and former bankers do well in AML roles. Anyone who has operated a teller drawer or had to fill out know your customer forms has a certain understanding of what regular business looks like in practice. This skill is very useful, then, when reviewing alerts that indicate potentially unusual activity: the person who knows what correct business looks like is naturally adept at intuiting when something is amiss. By contrast, the skepticism and interview skills of police and federal law enforcement officers work well for fraud jobs. In particular, if needing to handle evidence or testifying in court becomes an issue, anyone who has already dealt with the legal system is naturally more comfortable with the process.

Are You an Operator or an Analyst?

Meaningful careers are, of course, to be had in both of these areas. One should consider these factors and more: what businesses thrive in your area? What industry is already represented in your network? Which job do you want to be doing in ten years? If you want to be impactful in the fight against criminals profiting from their dirty deeds, understand your personality and how you like to spend your time. Then get out there and fight crime!