Blacklists, Greylists and the Evolution of Criminal Investigations

But first, the field of financial crime detection has changed a lot in three decades, and our next guest has observed this evolution from a unique vantage point.

Jim Lee started his career in the 1990s, working as a special agent for the IRS, where he ultimately became chief of criminal investigations before leaving the organization in 2024.

Today, he is global head of capacity building at Chainalysis, so it's safe to say he's a true veteran in this field.

In our conversation, he reflects on the remarkable pace of change and his work leading the teams who have unraveled some of the most complex financial crimes the world has ever seen.

It has changed significantly.

One thought process for your audience, uh, working for IRS Criminal Investigation, uh, as a special agent for, uh, you know, nearly 30 years, it's an agency that dedicates 100% of its time to financial crime.

Doesn't matter what the predicate offense is, it's the money, it's the profit that's made from the crime.

So while the agency does work tax investigations and tax evasion, uh, the agency responsible for Al Capone's, like, a claim to fame, the agency, uh, in the States, illegally earned money is taxable, okay? And it's also, uh, when the predicate offense is illegal, then that can be a money laundering charge.

So the division works all of that, as some context.

So it's changed drastically because early on it was police work.

You were doing surveillance, you were doing trash pulls, you were interviewing witnesses.

A lot of this is how agents would develop financial crime cases.

Uh, so it was a lot of good old-fashioned police work, and it's still good today.

Sorry, is trash pulls just going through someone's trash?

[laughs] That's exactly what it is.

Whoa, okay.

Just wanted to make sure.

'Cause you, you, you would not believe what people actually throw away.

Now, I think when they caught onto it at some point in time, or if you're a real sophisticated fraud- fraudster, then you'd shred it 50 different ways.

But not everybody did that at the time.

Again, so there was...

That's good old-fashioned police work.

It still holds true today.

Um, but it's evolved rapidly.

Well, when I started, literally, again, this is more context, I started in Detroit field office, and we had 20 people in a group.