Voice-over: This is Leaders in Finance, a podcast where we find out more about the people behind a successful career. We speak with the leaders of today and tomorrow to discuss their motivations, their organizations, and their personal lives. Why? Because the financial sector could use a little more honest conversation. Your host is Tom van Disseldorp.
Tom: Welcome to this extra episode of the Leaders in Finance podcast. We have just concluded the Leaders in Finance AML Event, the anti-money laundering event, here in Amsterdam, where we brought together senior professionals from across the financial sector to discuss some of the biggest challenges in AML and the fight against financial crime. We’ve heard a lot of different perspectives today from financial institutions, regulators, and technology providers, but also from outside the industry.
So, before everyone heads home, we thought this would be a good moment to sit down together, reflect on what we have heard today, and perhaps more importantly, look at where we need to go from here. Thank you all for joining me. Before we dive into the discussion, perhaps we can start with a quick round of introductions. Could each of you briefly introduce yourself, your role, and your connection to the AML and financial crime space?
Marinos: Yes, absolutely. Thanks for having me. I’m Marinos. I’m a solutions lead at SAS Institute, working in the Benelux market alongside banks. I sit in a slightly unusual seat because I’m not a regulator, nor am I a bank, but I’ve been helping financial institutions and banks deploy solutions to help them in this fight against financial crime. One of the things that I’m here for is to ask: why are we still talking about the same issues that I heard about 10 years ago?
Tom: Thank you. I will switch to the person next to you.
Oliver: I’m Oliver Bullough. I’m a journalist and author. I see myself as the annoying kid brother of the anti-money laundering space, the kind of person who turns up and says all the things everyone would rather just shut up about.
Why are we still talking about the things we’ve been talking about for the last 10 years, or 20, or indeed 30 years? They say the definition of madness is to keep doing the same thing and expect different results. It does all feel a bit like that sometimes.
Tom: Thank you.
Dan: Hi, everyone. I’m Dan Orchard. I’m the EMEA and APAC KYC strategy lead at NICE Actimize. I help clients with the technology solutions related to all of the problems we’ve just talked about.
Tom: Good that you’re here. Please.
Vincent: Hi, everyone. I’m Vincent Gaudel. I work as a financial crime compliance expert at LexisNexis Risk Solutions. In a few words, my role is essentially about keeping track of new regulatory ideas and new requirements for financial institutions to implement, working at the intersection of those regulations and our customers, and helping to translate the requirements into new data and new capabilities to help our customers.
Tom: Thank you for being here. And last but not least.
Guido: Hopefully not least. Good afternoon, everyone. My name is Guido Penzhorn. I work at Deloitte in the forensic and financial crime team. To be honest, as a consultant, I ask the same question that was asked by my fellow guests around the table: why, 10 years on, are we still talking about the same things?
Tom: Since we’ve just come out of an entire day discussing AML and financial crime, let’s immediately add one short question to that. What is one thing you heard today that particularly stayed with you?
Marinos: For me, quite a lot stood out, actually, to begin with. But one thing that I really remember now is when Jaap van der Molen from ABN AMRO stood up and asked AMLA: should we maybe also consider changing certain aspects or certain work that we’ve already been doing for a long time? I think that struck a nerve, at least with me, because I feel the same way.
We’ve always been talking about technology and how we can improve the processes, which may be a good thing to consider. But if we actually take a step back, I feel like we should maybe be asking something else. What can we spot today that we missed yesterday, as opposed to improving what may be an obsolete process that should not even be there anymore to begin with?
Oliver: For me, I was struck by what Rikke-Louise Ørum Petersen from AMLA was talking about. It was all good, what she was saying, but there just seemed to be such a lack of urgency about the European response to money laundering. If they’re finally going to maybe get up and running in 2028, so in two years’ time, think about what’s going to happen in two years. The world is accelerating at the moment. Everything feels very slow, and I find that frustrating.
Dan: From my perspective, and not just because he’s sitting on my right now, I think it was refreshing to hear a bit of a reality check in terms of how we’re getting on as an industry. I think there can be a temptation to operate in a bit of a bubble and think: we’re compliant with regulations, and this is how it’s been done for many years.
But actually, are we delivering what we ought to be in terms of the prevention of financial crime? It’s nice to have that reality check and maybe rethink some of the approaches that have been in place for many years.
Tom: Vincent, what do you think about today?
Vincent: I like the energy. I like the speakers. I think it was great to see such a large community joining the event, honestly. I also agree with some of the remarks already made. Some of this content has been heard quite a few times over a long period. We heard a lot about the risk-based approach, the need to share more information, et cetera. What needs to be done is known to the industry.
I think we need to move one step further and talk a little bit about the how. Going back to that question: we talk about effectiveness, but what outcomes should we really prioritize? What concrete outcomes should we, as the financial sector, look at? Let’s look at those objectives.
Guido: Thanks. Dan, you stole mine, so I’m going to cheat and do two. For me, the first one is the ongoing importance of collaboration. You also see it in the examples that were presented today, showing how different banks and regulators collaborating really makes a difference.
But also the topic of data. I think data is incredibly important, but what was interesting to me is minimizing data. Only collecting the data you need, and also only collecting risk-relevant data, is going to make execution, including the technical execution, that much simpler.
Tom: Oliver, I would like to start with you. One of the central questions today has essentially been: despite all the regulation, investment, people, and technology that have gone into AML over the years, why are we still struggling to stop money laundering?
Oliver: How long have you got? There are so many ways of answering that question.
Tom: Okay, let’s clarify the question a little bit more. Why do you think we are still failing to stop enough financial crime?
Oliver: When you say “we”, I mean we as humanity. Because we’re not trying. The reason we’re not stopping financial crime is because we’re not trying. There are tremendous obligations being placed on certain bits of the economy. Banks and various other financial institutions have to spend a colossal amount of money to do the various acronyms that we talk about.
That’s part of the solution, obviously. The problem is that’s where we’ve stopped. There are no corresponding demands on other parts of the economy.
We’re in the Netherlands. The Netherlands is home to Rotterdam, Europe’s busiest port. Where is the same kind of focus on trade-based money laundering? It is just as important, if not more important, than financial money laundering. But where is this kind of complexity? It doesn’t exist. No one checks it because it’s hard. It’s really hard, and it would be laborious and annoying.
Where is the demand on financial institutions? Where is the demand on law enforcement agencies to do as much work and work as hard as financial institutions? I’m not saying that banks are all great. I’m sure they’re not. But they do a lot of work, and they spend a colossal amount of money. Hundreds of billions of dollars are spent by financial institutions. Governments don’t match that.
At the moment, it feels a little bit like we’ve built a castle to keep our economy safe from criminal cash, and part of the wall is 100 meters high and equipped with incredible AI-powered weapons that can detect people a mile away, and the rest of it doesn’t have any wall at all. Obviously, no one’s going to try and scale the 100-meter-high wall. Just go around the back. That’s what it feels like to me.
It is very frustrating all the time to come to a conference like this and hear all the hard work people are doing and all the thinking people are doing in this particular sector of the economy, when at the same time you know very well that it isn’t happening at all in other parts.
Tom: Vincent, would you like to respond? Because I see you nodding.
Vincent: I completely agree, and I think it resonates with the distinction between the objectives of protecting the integrity of the financial system, which is what we have been fairly successful in doing, and fighting financial crime. I really liked your point about the castle. Interestingly, and maybe a question back to you: in terms of professions, who should we be looking at next? Who should be the priority targets for regulators?
Just a note: I think it was interesting to see that the FATF has recently published an advisory on underground banking, on the hawala network, et cetera. I think that’s an interesting avenue that is probably less looked at. Obviously, it’s more difficult to look at the underground banking system, but I think it’s an interesting one to consider as well.
Marinos: If I think about it, this is something that stuck with me because someone said: we’re pretty good at proving that we work hard, but not that good at proving that it works. I think this really comes down to a lot of things. Especially if I look at my fellow analysts, they are all measured on these KPIs: cases closed, alerts handled, customers reviewed on time.
Naturally, these are also things that create that framework, not allowing us to actually become more proactive or more engaged in fighting the cause, or at least to see that what I did today materialized into something that actually had an impact.
For me, that means moving from proving the effort to proving that it had an effect. That means it has to change within the organization first, before we even talk about policies and regulations themselves.
What I would like to see, ideally, and again, I’m of course from the vendor side, but still, I can relate to that because I am a customer analyst, is that we need to look at: how much money, how much in criminal, illicit funds, have I actually stopped? What networks did I actually break open today? And what really gives a lot of motivation, I think, is: how many victims did I actually protect in the end? I think this is a bit of the mindset that we need to start embracing.
Tom: Guido, do you want to react?
Guido: Something I really liked about your keynote was: at what cost to individuals? Because at the end of the day, a lot has been said in the Dutch banking sector about discrimination because of anti-money laundering rules. It has a real human cost, not just a financial one. That’s something I really liked about your keynote. It’s something that I don’t think we around this table generally consider, which is unfortunate.
Oliver: It’s something I find very annoying, in that this is always talked about by the FATF as “unintended consequences”. No, they’re intended. The entire point is about excluding people from the financial system. That’s the point of what they’re doing. These are intended consequences. It’s just that these are not the people they want to be excluding.
But the idea that this is not supposed to be excluding people, that’s foundational to the entire way the FATF is set up. They need to answer for that.
Tom: Guido, do we need to move the discussion from “Are we compliant?” towards “Are we actually effective?”
Guido: Yes, but then the question becomes: how do you measure effectivity, if that is even a word? Maybe effectiveness is a better word. Exactly as you were saying, from a gatekeeper’s perspective, it’s all about the KPIs. These are the rules I put in place. These are the alerts that I closed. It doesn’t speak to the quality of the alerts. It doesn’t speak to what’s happening on the other side.
I also think, and I find myself a little bit between you and the speaker from AMLA, we don’t exactly know what the FIU and law enforcement are doing with that data. We can see the numbers, and we can see the FTEs, and we can extrapolate what that means. But I think the lack of transparency is what I struggle with. If the transparency is, “We’re not doing a lot because we have resource constraints”, okay. Whereas now it feels like you don’t know whether we’re doing a lot, because we just don’t get told.
Dan: I think that move towards outcomes or effectiveness is in the rhetoric from AMLA and other regulators in the UK and beyond. I’m not sure if it is necessarily present in the underlying text. With AMLA, for example, I don’t see a huge change from where we are today in terms of moving towards a more outcomes-based model.
It’s certainly an opportunity to do it, though, right? To continue the castle analogy, Europe at the moment is whatever shape has loads of sides, and there are lots of opportunities for criminals to exploit gaps. Whereas AMLA is an opportunity to create that more protected situation.
But I share the concern around urgency and some of the changes that are needed in the underlying texts.
Marinos: I think their intentions are clear, right? I think we’re all trying to bring this fragmented world together. I think the initiative, with Article 75 coming into force next year and starting to push data sharing on high-risk customers, is great.
One question that I have for AMLA is, of course: what are you going to be measuring? Is it going to be the outcomes, or is it going to be just another tick in the box of “I’m doing as I’m being told”?
Again, I think what they’re trying to achieve is right. Maybe if I take a step back, and it might be even more of a step back than the questions you’ve asked, if we look at the US and China, they both have regulations, but they’re going about it very differently.
The US is very much embracing technology first. We’re going to push the boundaries. You see all these AI experts, so to speak, saying we need to develop faster because the perpetrators are already using it. If we’re not going to expand and take the next step with technology, we’re going to fall behind automatically. So they only come in as soon as something goes wrong.
Of course, we’re hoping it’s not going to become a Skynet. But the other part is China. They have a state-led mechanism, so they push a lot of things out, but they have a flow of putting it out in a controlled way compared to Europe. I just feel like Europe is still a bit fragmented, and I’m hoping this is going to change. I really do.
Tom: But let me ask all of you something. Are we reaching a point where AI can fundamentally change AML investigations rather than simply making existing processes a little faster?
Oliver: Can I tell a story?
Tom: Yeah.
Oliver: I was chatting to a compliance contact of mine a few months ago, and they had this new AI software, which they’d unleashed on a massive dataset of transactions. They’d found this incredibly complicated money laundering scheme in Southeast Asia, and they were really pleased with it.
There was no way you could have found this without AI. It was so complicated, with all these accounts moving together like a school of fish. It took them about two days to realize that it could only have been designed with AI. It was so complicated that no human could possibly have designed, controlled, and coordinated this system.
I think that, as with all tools, the internet, the telephone, the piece of paper, it’s as useful for criminals as it is for the people trying to stop criminals. But the problem is that criminals, up to now, have had much more urgency. They’re much more entrepreneurial. They can operate internationally in a way that no one else can. That’s a real challenge.
So no, I think with AI, in the grand scheme of things, the arms race will just carry on as before.
Tom: Anyone want to react?
Marinos: I don’t want to be the only one, guys, but we don’t even need to talk about AI right now. Fraudsters and criminals were the first ones who actually invented deepfakes, right? They started this years ago.
I think there is a learning curve. They don’t have processes. They don’t need to wait for any kind of permission. We’re in this predicament, unfortunately, where we need to embrace it.
I see that a lot of the banks are struggling because, unfortunately, up until today, and again, hopefully this will change, the cost of doing nothing is greater than actually risking something, because then I get fined.
Tom: Guido, please.
Guido: You’re heading in the same direction as I was going, in terms of: if it’s not being supervised, is it going to get priority? I think with the big banks, the priority is going to be on getting rid of the massive workforces via AI.
Is their priority actually catching criminals? Is their priority actually going after those networks? That’s with the big banks and big financial institutions that can afford it. What about the smaller ones, which have lower barriers to entry in many cases? They don’t have the budgets to fund massive investments in AI. How do we then stop them from not acting as gatekeepers, as it were?
Dan: I think you do then have a reliance on the regulators. It’s spot on, isn’t it, that it’s always been the case that we as an industry are a step behind the criminals, for the reasons explained, in terms of the use of technology or other tools to commit financial crime.
There’s a reliance on the regulators to quickly give the industry the level of assurance they need in terms of how AI can be responsibly used. Otherwise, that gap between the criminal use of AI and the legitimate use of AI to detect criminality will just get bigger and bigger.
Oliver: It’s an issue. There was one thing that Rikke-Louise was saying today about potentially having low-risk sectors, places where you can get away with doing less due diligence because it’s a low-risk sector. My reply would be: so if money laundering happens in that sector, do they not get fined?
Because if they don’t, then there’s still a risk there. Everyone’s still going to do the same amount of due diligence. Because the risk, if you are a profit-making institution, is not the risk of enabling financial crime. The risk is the risk of being fined. If that’s what you care about, then you will adjust yourself accordingly.
The people who are supposed to care about stopping financial crime are the regulators and the law enforcement agencies. They’re the ones who need to be doing the work to detect how much financial crime there is and what’s working to stop it.
At the moment, talking about the risk-based approach but applying it only to financial institutions just means we end up with more of the same. I told this example of a friend of mine called Richard Smith, who shares his name with about 40,000 other people, including someone who’s tangentially involved in a lawsuit in America because his sister is an actress and various other things.
He received an email just to confirm whether he was the same Richard Smith. Imagine, 40,000 people receiving that same email just because of a media report in a Hollywood magazine. It’s absolutely mad. That is where we’re at at the moment.
This is just because no one wants to be fined. If that continues to be what everyone’s concerned about, you’re never going to get anywhere.
Marinos: On top of that, what I like about your point is that, absolutely, there’s this fear of getting fined. But the other part that I see, at least in my job, is data quality. Maybe that analyst who gave this guy a ring had only the name and that article he saw in the news.
I think this is what I see when we talk about technology and what it can actually solve: it begins with clean data, right? Again, we’re talking about AML and Article 75 coming into force. That blockage, that excuse of fragmentation, goes away.
But what comes next is actually the trust and the data itself. I haven’t heard anything about that today. It was maybe implied, but I think that’s going to be another interesting part, because data is what drives models. Data is what drives decisions. If we don’t have clean data, then we can talk all day about it.
Tom: Are financial institutions looking too much at individuals, customers, and transactions, or are they getting better at understanding the wider networks behind financial crime?
Dan: Some certainly are. There’s an increasing amount of technology that can help you look at those networks within organizations and across organizations. We heard some of the examples today.
I suppose the one point to note is that not everyone is doing that. That’s where we do have that reliance on more and more organizations taking that approach and being able to share that data. It’s almost a cliché. You hear it a lot at these events, but it’s right. That’s what we need to do if we are going to make a meaningful dent in financial crime.
Tom: Guido, I see you nodding. Do you want to add something, or do you just agree?
Guido: No, I agree. I think there are things like outlier detection. I think feedback loops are also not used nearly as much as they should be.
Looking at proven financial crime typologies or networks and replaying that against existing data to find the ones we’re not finding, to find the false negatives where we already have the data to show their transactional patterns and their behavior. That can help us find the people who are doing exactly the same thing but just aren’t triggering the same rule-based red flags that are generally the bread and butter of what goes into these systems today.
Tom: So, if I hear all of you, there is still a lot of work to do. Given the time, I would like to go to the last question. If we’re sitting around this table again in 2030, what would convince you that we have actually made progress in fighting financial crime?
Maybe I would go around from the other side.
Guido: So that means me first?
Tom: Yeah.
Guido: I think, for me, first, everything is a lot more data-driven. It’s also not just all the extraneous data we can possibly get. It’s the data that actually leads somewhere. I think we have much better feedback loops in place, not only internally, but also between the various supervisors, the regulators, the FIUs, and across the EU, to actually see the impact that we’re making.
And I think we need to find a way of making it measurable. I don’t know what that looks like now, but is this making an impact? Is the drug trade in the port of Rotterdam significantly less than before? Because everyone knows it’s there. So how do we show that we’re actually making a difference?
Vincent: I’ll continue on that front. I’d say a simple objective for me would be to see an ambitious and truly cross-border information-sharing partnership having taken shape throughout the EU, and really seeing that cooperation among financial institutions taking place and delivering insights.
Tom: Okay, thank you, Vincent.
Dan: It’s tough to go third, in a sense. I think having a way to measure financial crime, a consensus on how to do that, is certainly one thing that I would look for. But also, going back to the earlier point, the fundamental question is how willing we are as a society to make a change here. Maybe financial crime is more in the public debate.
Tom: Yeah, so more public debate. Oliver?
Oliver: I would love it if AMLA hired some analysts who just went out and found out how much it costs to launder money. What’s the transaction cost for criminals? Literally 2%, 1%, 3%, 5%? We don’t know. No one knows.
What is it in different countries? It’s not hard. You can find this out. You just need to go out there on the street and talk to criminals. Once you figure that out, you can see: is it going up? Is it going down?
You can’t figure out if you’re succeeding by how many unusual transaction reports have been filed with the Dutch Financial Intelligence Unit. It doesn’t help. But do some actual, genuine work on the street, figuring that out, and then you can see what works and what doesn’t work. Just do the stuff that works.
But I do think there is always a risk in journalism and in many other things of thinking everything is on the internet. Everything is in the data. It isn’t. Criminals don’t keep financial records and file them with the corporate registry. If you need to find that stuff out, you need to go out there and ask people things. That’s stuff that requires a different kind of effort, a different kind of intelligence gathering.
Marinos: Great. Everyone has taken all the wind out of my sails, but so be it. To answer your question, if we were in 2030, how would I like to see the results?
There are a couple that come to mind. First of all, I would like the FIU to finally give feedback to all institutions that are filing these millions and millions of files about what really helped to have an effect in terms of arrests or criminal investigations. Then we can derive that intelligence to understand: this is what really matters. And then share this across the people and the institutions.
Other than that, I want people who work in this field to really stop getting this so-called investigation fatigue. Doing the same things over and over again. People who qualify, study criminology, and all of a sudden they’re stuck in this rat race of just coming in and leaving at five, and they don’t even know what happened, what they have actually produced.
So I want the KPIs to change. I want banks and institutions to start really looking at: hey, this is the amount of criminal money that you actually stopped. This is the network that you just exposed that has helped protect numerous other institutions.
And lastly, and most importantly, this is the number of victims that you were able to protect. Because that is, in my eyes, what we are all actually fighting for.
Tom: I think that’s a very good point to end on. Thank you all for joining this conversation. And, of course, thank you for being part of the Leaders in Finance AML Event today.
And to everyone listening, thank you for listening to this extra episode of the Leaders in Finance podcast. We hope to see you again soon at one of our upcoming events. Thank you all very much.
Vincent: Thank you.
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