Where did your compliance journey begin?
I fell into Anti-Money Laundering (AML) by accident. I worked in Australia, for a well known Bank. After a closer look at some unusual transactions, I uncovered a money-laundering ring that was heavily linked to the illegal drug trade. The criminals had infiltrated our Banking system and managed to dodge the AML safeguards we had in place in order to wash their illicit funds. Despite not being a Money Laundering Reporting Officer, (MLRO), I decided to put my naturally suspicious mind and talent for recognising fraudsters to good use.
Subsequently, I moved back to the UK and pursued anti-fraud investigation roles and now to my role as Head of Compliance at Amaiz. This wealth of experience allows me to recognise behaviours associated with both normal, and more importantly, abnormal payment transactions. It has also given me an appreciation of why compliance is so vital across the entire customer lifecycle, from AML through KYC, KYB and remediation.
What’s the biggest compliance challenge you face as we approach 2021?
The challenge will be to maximise time and resource to ensure we deliver a great customer experience and effective compliance.
2021 will see an increased focus on fraud and wider compliance issues. It is not easy to identify those cases that are potentially suspicious. If we can address this and identify those that need further investigation we can allocate resources far more effectively.
The use of a digital solution will certainly support this key area of focus to ensure we only investigate those cases that are considered ‘amber’. We know the ‘reds’ are dangerous for the business and the ‘greens’ are good to go but being able to efficiently pull out the ‘ambers’ for further investigation is where our focus should be.
How do you process unusual or suspicious behaviours?
As soon as you identify a pattern of money laundering, or fraud, the criminals have moved on, with a new pernicious scheme.
We not only need to keep up-to-date, but ahead of the curve by using the latest technology to our advantage. I don’t think we should ever relax and think we know it all, or have everything in place to prevent fraud. The criminals will always have access to funds that will allow them to develop technologies to try and ‘beat the system’.
We recognise there are patterns of behaviours and set alerts to flag accounts that require further investigation. It is important to profile the business correctly and know who you are dealing with and what the expected activity should look like.
By performing comprehensive Know Your Business verification and performing Customer Due Diligence you can be alerted of anything outside the normal and expected behaviour.
There is a difference between unusual and suspicious activity. If you better understand your customers, something that looks suspicious may actually be unusual but genuine, if you have an understanding of the business behaviour the need to return to the customer to ask further questions can be significantly reduced.
Are the efforts across government, the regulators and regulated entities enough to combat the progression of economic crime?
Increased cross-sector collaboration would indeed be beneficial and more efficient, particularly when sharing relevant intelligence on suspicious activity and customers. For example; many property transactions are processed through the legal sector, and can be subject to money laundering. By opening up lines of communication between both sectors information will no longer be siloed.
Fraudsters work across different sectors and take advantage of the gaps that appear. GDPR, despite its importance, often impedes communication between banks, regulators, legal and law enforcement agencies. Surely, if you anonymise correctly, there is a way to collaborate on the use of data. Having a single global database would be perfect, but I recognise that we are a long way from achieving this.
Do you have any real-life examples with bad actors manipulating the system?
One of the basic examples of Money Laundering is fraudsters guessing transaction monitoring thresholds. Criminals will deposit unusual amounts which appear to try and circumvent transaction monitoring.
Money laundering is not simply small-time drug dealers, it can be much darker than that and can include human trafficking and modern-day slavery. There is one particular case that will always remain in my mind. The company was flagged as suspicious and required further investigation. There were adverse media hits linked to the company directors, their credit cards and calls records and I’ll never forget the first media article I opened. The pictures showed young girls, from overseas, in squalid conditions with mattresses across the floor. Images like that stick with you and motivate you to continue the fight against all types of fraud.
What do you think compliance will look like post pandemic with the predicted recession?
There’s been an 80% increase in fraud since the Coronavirus pandemic and as more people face financial uncertainty, unfortunately this number will rise (source).
With an increase in remote working and a substantial rise in online communications, fraudsters have taken advantage of this as they have an increased number of channels to exploit.
Fraud thrives on two human qualities, fear and hope. Currently, there are more people fearful of losing their income and vulnerable to deception. Then there is hope. When people are desperate they easily believe the implausible. When an email is claiming they have won a prize they may be more willing to share their account details.
As fraud and financial crime increases, so should regulatory scrutiny and harsher fines should be levied on those found non-compliant.
Do you see KYC Remediation as a headache?
I was involved in a remediation project when the gambling sector was subjected to tighter regulations for age verification. The previous checks were no longer stringent enough and the prospect of heavy fines drove the business to deliver KYC Remediation. We amended all our KYC parameters and refreshed KYC for every single customer which had the following key challenges:-
- Intensive resource allocation
- Remediation of huge volumes of data held on multiple legacy systems
- High levels of customer communication to update personal information, which was time consuming and caused friction with our customers
However, the penalties for non-compliance would have been catastrophic. In retrospect, it would have been advantageous to have deployed a digital compliance solution for operational efficiencies as well as a frictionless experience as possible.
What has been the most surprising aspect of your journey?
People are often surprised I have four children and manage to be an MLRO, on call seven days a week, 24 hours a day. If I didn’t love the role so much I wouldn’t have ever dreamed of having such a fulfilling career combined with a family.
Many companies see compliance as a simple tick box exercise and do the minimum to ensure compliance, but I’m a person and more importantly a mother, and want to do my bit to stop the continuation of these horrible crimes.