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Embracing social media as a resource tool to aid in your AML/BSA compliance efforts

By: Naomi Glass, BSA/AML/OFAC Compliance Manager

To support the government in its fight against the funding of terrorism and money laundering activities, federal law requires that credit unions perform member due diligence (MDD) as an extension of their Member Identification Program (MIP). This has resulted in credit unions taking a much more comprehensive view into who they provide services to, what transactional activity is normal and expected for them, and what level of AML risk they possess.

It is no wonder then why credit unions are increasingly turning to social media as an informational source in the verification, vetting, and monitoring of its members.

Defining social media

What constitutes social media? The Federal Financial Institutions Examination Council (FFIEC) defines social media as a “form of interactive online communication in which users can generate and share content through text, images, audio, and/or video.” Social media can be distinguished from other online media in that the communication tends to be more interactive.

Examples of social media include the following:

  • Micro-blogging sites (e.g. Facebook, Google Plus, MySpace, and Twitter)
  • Sites that enable professional networking (e.g. LinkedIn)
  • Photo and video sites (e.g. Flickr and YouTube)
  • Customer review websites and bulletin boards (e.g. Yelp)
  • Virtual worlds (e.g. Second Life)
  • Social games (e.g. FarmVille and CityVille)
  • Blogs and forums

Benefitting from social media checks

There are advantages and limitations associated with incorporating social media checks into a credit union’s MDD process. One of the primary benefits is that social media may reveal illegal or nefarious activities engaged in by the member. For illustrative purposes, imagine you onboard a new member who informs you that he is a gardener. You decide to perform a social media check and discover on his Twitter profile that he is actually in the business of growing marijuana, which is illegal in your state.

More alarmingly, consider this scenario: You onboard a college student who just transferred to the local university in your town. You decide to perform a social media check and discover several of his postings on an online forum about traveling to Syria, suggestive of him being an ISIS sympathizer. Suffice it to say, this is information your credit union would want to know about its members.

Secondly, searching social media may aid in the identification of persons your member is affiliated with and/or connected to. For example, you notice that your member is continually sending wire transfers to an unknown beneficiary, and the purpose of the wires cannot be determined. Because you believe the wire activity to be suspicious, you file a SAR, reporting your member as a suspect. Had you only taken a moment to review your member’s list of Facebook friends, you would have been able to identify the beneficiary on the list, determine the relationship between the member and beneficiary, and ascertain the purpose of the wires and their legitimacy.

In other words, had you incorporated social media checks into your MDD process, this would have prevented you from unnecessarily filing a SAR on your member.

Recognizing the limitations of social media

Searching social media has its drawbacks though. The main drawback is the information retrieved from social media may not be accurate or reliable. Is there any real way of determining whether the business owner whose account you opened last week created a fictitious LinkedIn profile, professing to show a lengthy entrepreneurial career that never was? I doubt it, which is entirely the point.

Taking member-created content at face value is akin to the flawed notion that Wikipedia is as accurate an information source as Encyclopedia Britannica. Credit unions would be better served validating certain member-provided information against public source records (i.e. confirming the existence of the member’s businesses via a search of the state’s Secretary of State website).

Being mindful of the times: Social media as a resource tool

Navigating the world of social media has its pitfalls and challenges, but it would behoove your credit union to embrace social media as a resource tool to aid in your AML/BSA compliance efforts. Although there is no AML/BSA regulation requiring credit unions to utilize social media when performing due diligence on their members (including those that are high risk), credit unions should be mindful of the times. It is 2017, and social media has become an increasingly significant aspect of our daily lives. (We even have a President-elect who loves to tweet!)

There is no denying that criminals and terrorists are using social media, too, as a means of running their enterprises and furthering their unlawful agendas. William Mitchell of MIT described cyberspace 20 years ago as “the new land beyond the horizon, the place that beckons the colonists, cowboys, con artists, and would-be conquerors of the twenty-first century.” I think the same could be said of social media today.