Working overtime, fighting crime, fighting crime

Fintech expert Leda Glyptis, a true Sibos Insider, is a resident blogger for Sibos 2021, offering her unique take on this year’s event. This blog is part of a series released daily throughout Sibos week.

I could write 20 pieces a day at Sibos and still not work through all the ideas shared. So bear with me while I bend the rules a bit and stay with Day 1. Because you may have missed the panel called ‘catching the criminals’ and, if you did, this one is for you. Also if you like M.A.S.K. this one is for you also.

Your bank is the only thing standing between you and scammers.

As an ex banker, I find that comes with a weight of responsibility few of us stop to contemplate. Because financial crimes are not victimless, as we often hear. The drug and arms trade and human trafficking are direct beneficiaries of financial crime and they have victims galore. And the ‘sword in the night’ between the scared young woman, indentured far away from home, is the banker. Not just the banker. But very much also the banker.

Was the panel about heroism and self-congratulation?Nope.Far from it.

The panel was really about three things, and none of them came wearing a superhero cape. Though it properly should.

1. This is not about a race for compliance. This is about our duty to society. So the banks need to look at it differently. The good news is, the AML squad is ‘out of the basement’ (I could totally relate to this line. It happened to IT not long ago as disruption hit, and we appeared to be more useful than originally assumed). The people doing this work are in the rooms where decisions are made. No longer an afterthought or a necessary evil. And this matters. Not just to the folks doing the work but fundamentally to how they get to do the work.

2. Our learnings are not universal or consistent across countries. Which creates opportunity for the enterprising scammer. As regulations are disparate in maturity and scope across the world, a globally savvy financial criminal network will find ways into the global financial system where the defences are weaker. And the defences are not weaker because people don’t care but because regulators in some economies still have what the panellists described as a ‘resource hungry practice’: a lot of activity that doesn’t increase effectiveness in a changing world.

3. The way we used to think about risk and compliance (checklists and matrices and proof that adequate steps were taken to avoid exposure) is obsolete. Again, the language resonated with me as it sounds a lot like what happened to the rest of the business about 15 years ago, when we started hearing that disruption was the new normal for banking. Well. Disruption: meet the compliance team. Much as we faced on the business side, the digitisation of the wider economy means that the way we do things, all things, has to change. And in a world of digitally savvy criminals, the way we face into the threat must change. The way we perceive risk writ large must change. Where and when we look for the risk must change. The good news is, we (as an industry, as institutions and as individuals) have been here before. We have dealt with profound disruption before. We got this. The bad news is, it wasn’t easy the first time round. The change needs to be profound, continuous and itself changeable. Because what ‘disruption’ has taught us this far is that it’s not a ‘one and done’. It keeps unfolding. On the business side, the competitors keep learning. And proliferating. And that’s stressful. On the AML side it’s not the competitors who keep learning and proliferating. It’s the bad guys. And that’s terrifying.

So what’s the answer?Hard work. Focus. Public-private partnerships so that criminal proceedings can apply where appropriate. And international collaboration and information-sharing. Not a photo-op at a conference on best practices once a year. But constant and continuous information-sharing, standards definition and the pursuit of consistency across jurisdictions to avoid giving the bad guys an easy way into the system.Frankly.This didn’t make for easy listening.But I can sense a pattern emerging. And if every one of my Sibos pieces this year is a pointer to the absolute and fundamental need for international cooperation, I am totally fine with that.