Three key takeaways on fighting financial crime from FFECON21
250+ financial crime experts, 100+ fintechs, and one goal: winning the fight against financial crime.
It’s a wrap on #FFECON21, Fintrail’s annual flagship event dedicated to helping fintechs stem the rising tide of financial crime. From fintech leaders to compliance experts, the two-day conference brought together some of the industry’s best minds to tackle the growing threat, and particularly the increasing technological sophistication of bad actors.
At Griffin, compliance and financial crime prevention is at the heart of our mission to become the bank that fintech innovators can build on. We want to be an active force for good in the financial ecosystem, and so FFECON21 was a great opportunity to learn from the people and organisations leading the fight against financial crime. The speaker line-up included panel sessions and keynotes covering financial crime in its many forms; from money laundering and terrorist funding, to modern day slavery.
So, what did we learn? We’ve compiled our top three takeaways from this year’s event.
1. As technology advances, so too does financial crime
In his keynote address, Beyond the Lazarus Heist, investigative journalist and author Geoff White shared the story of how bad actors in North Korea joined forces with hacktivists and an Instagram star in an attempt to steal over one billion pounds. (The story is now a fascinating BBC World Service podcast).
According to White, cybercrime shows no signs of slowing down, and advances in crypto technology and peer-to-peer exchanges are making it increasingly difficult to track down fraudsters. With financial crime networks popping up across the world and apps like Photoshop being used to undermine Know-Your-Customer (KYC) technology and processes, White believes that we need to prioritise security and always be on guard against new threats.
However, he emphasised that even with all these advances in technology, phishing emails are still the number one way bad actors target victims. “It all starts with dodgy emails,” said White, who has spent years investigating cybercrime.
In the same vein, during the panel discussion Know Your Enemy Part 1 - The Domestic Crime Environment, David Carlisle, Director of Policy and Regulatory Affairs at Elliptic shared that “the UK is particularly exposed to financial crime” precisely because “it has a very tech-enabled financial system.”
The panel also explored how criminal activity often mirrors consumer trends; just as fintech becomes more mainstream, so too do the methods underpinning fincrime. Likewise, the more popular crypto becomes, the more criminals will take advantage. The more we embrace digital banking, the more technologically savvy the scammers and fraudsters become.
As a tech-driven challenger in the banking space, at Griffin we know we have to build our platform with a security-first mindset.
“We need to be smart with our use of technology to stay ahead of hackers and fraudsters. This is why we purposefully built the bank using immutable, event-driven architecture, so we have a complete record of every action taken on our platform. This complete picture will help us identify trends and create a more secure platform for our customers, our end users, and our staff.” - Allen Rohner, co-founder and CTO of Griffin
2. COVID-19 is exacerbating the human cost of financial crime
Know Your Enemy Parts 1 and 2 explored how bad actors and criminals are exploiting victims and why the industry needs to act fast to combat evolving financial crime threats.
Unseen, a UK charity that raises awareness about slavery and exploitation, shared that modern slavery generates an estimated US$150 billion in illegal profits every year. “Modern slavery is all about the money” said Justine Currell, Executive Director of Unseen. She added that “this is a very real problem in the UK, not just abroad.”
With the pandemic making it easier to target and exploit vulnerable people, the session explored the harsh reality that terrorist groups are thriving by tapping into crowdfunding and social media platforms to raise and move illicit funds.
The session also highlighted an alarming 27% increase in sexual exploitation during the pandemic, with criminals exploiting modern marketplaces, such as Airbnb for temporary brothels and crypto for child sexual abuse and prostitution.
“Criminals who commit financial crime—whether that’s money laundering, bribery and corruption or fraud—hide in the shadows. And so it can be easy to forget that somewhere, at some point, someone innocent has been exploited. That may be through forced prostitution or child slavery, or from being scammed out of their money. As members of the financial system, we have a responsibility to do better at disrupting these crime networks and protecting innocent people from harm.” - Anna O'Shaughnessy, Chief Risk Officer at Griffin
So, how can fintech help to prevent fincrime? Many prevention methods were shared throughout the agenda, but these three actionable points came to the fore.
- Leverage payment profiling. Fintechs are able to monitor, identify, and analyse new trends and patterns in payment transactions associated with exploitation and modern slavery. This technology is getting better all the time and giving us crucial new insights into criminal activity. Sharing these insights with others in the community raises awareness and helps us stay a step ahead of bad actors.
- Analyse behavioral characteristics. Traditional KYC methods play a huge role in fraud detection, but new technologies mean that now we can augment these with the massive amounts of data available about behavioral trends. Integrating this analysis can really supercharge prevention efforts.
- Understand the full cycle of moving money. To effectively prevent financial crime, we need to look at the big picture, not just our own patch. Fintechs need an in-depth understanding of how perpetrators raise, use, and move funds across the whole financial ecosystem. As an industry, this information helps us see where and how we can most effectively stop the flow of criminal funds.
3. Sharing is caring in the fight against financial crime
In Know your Enemy Parts 1 and 2, the need for community information sharing and widespread education was discussed at length. This message was also reiterated in the panel Banking Crypto—How to Drive a More Effective Approach to Risk Management and the Protection of Consumers.
- Knowledge is power. With the world of crypto changing so quickly, we all need to be educated and have a shared understanding of the financial crime trends and challenges ahead. As Nick Lewis OBE, Managing Director, Financial Crime and Compliance warned, “...unless you understand it, you can’t fight it.”
- Collaboration is key. Startups often only have one person responsible for compliance and financial crime prevention, which makes it very hard to stay on top of everything. Sharing key signals, patterns, and insights with other partners across the industry helps all of us collectively strengthen our defenses. The movement of dirty money is a system-wide problem, so our prevention efforts have to be systemic as well.
- Horizon scanning is a necessity, not a “nice-to-have.” And this doesn’t just mean keeping an eye on upcoming regulations and new compliance requirements; we need to be diligent and proactive about identifying and assessing cybercrime trends across the globe. Single mission NGOs like Unseen produce great global insights, and attend community meetups and events like FFECON21 to share knowledge. Engaging with them is a great way to expand your perspective on the problems and develop your resources for tackling them.
"Fintech is a community, and as a community we have a responsibility to help each other learn, grow, and act in the best interest of our customers, our partners, and the general public. At Griffin, our culture emphasises that we always have more to learn, and we're stronger when we proactively share our knowledge with others—and we aim to embrace this even more as the company scales." - Adam Moulson, Chief Commercial Officer at Griffin
Bonus takeaway: KYC is for life, not just for onboarding
The panel discussion, From Sidekick to Superhero—How RegTech is Revolutionising CX, explored how the first wave of regtech (short for regulatory technology) focused on automating point checks during the onboarding process, while the second wave of SaaS regtech is driven by the concept of “perpetual KYC”, i.e. a continuous process of customer screening and monitoring.
The panel shared that this data-driven, agile approach to fighting crime has the potential to revolutionise the customer experience—reducing friction between customers and back-office teams, and enabling financial services companies to become long-term partners who predict what customers want before they ask for it.
Looking ahead and playing our part
“At Griffin, we’re passionate about creating a world where launching financial products is easy and embedding finance is simple, and we know that means we have a strong responsibility to play an active role in preventing financial crime. As a member of this community, we need to both listen and feed back insight to create a safe, secure platform that supports our partners and protects our customers.” - David Jarvis, co-founder and CEO of Griffin
FFECON21 was an eye-opening event by Fintrail, delving into the murky world of financial crime in a useful and engaging way. As we begin thinking about the challenges we’ll face in 2022, it’s exciting to see industry leaders come together and share actionable insights. If we had to boil down to two our two days at FFECON21 into one key takeaway, it’s this: we can’t fight fincrime unless we do it as an integrated and informed community.