The International Perspective Panel - Opening Remarks

Conference: UK Finance Economic Crime Congress, 30 March 2023

Session Title: The International Perspective

Session Abstract: An old adage within our industry is that criminals do not respect borders, and this has never been truer than in today’s increasingly globalised and connected industry. This discussion will focus on international perspectives, and how we as an industry in the UK can best collaborate with colleagues in other jurisdictions to combat the common enemy.

Panel Host: Nick van Benschoten (Director, UK Finance)

Panellists:

• Jennie Haslett (UK Head of FATF, HMT)
• David Howes (Global Head, Financial Crime Compliance, Conduct, and Compliance Frameworks, Standard Chartered Bank)
• David Liebscher (Senior Manager and Deputy Head of the International Corruption Unit, National Crime Agency)
• David Lewis (Managing Director, Global Head of AML Advisory, Forensic Investigations & Intelligence, Kroll, Senior Associate Fellow, Royal United Services Institute & Board Member, Lawyers without Borders)

Opening remarks:

I’m particularly honoured to be introducing a panel on international cooperation at a time when we so desperately need it.

On the subject of improving collaboration and cooperation, there’s a precedent I often think about - which is the aftermath of the 9/11 terrorist attacks, when there was an overhaul of various departments across the US government. They adopted a stance which they referred to as an ‘All Tools’ approach.?

All Tools was a tacit acknowledgement of the failures to prevent 9/11, and it was a way of saying ‘we need to work differently: we need to be less siloed, more multi-layered. We need a cross-agency strategy’. It’s generally felt to have been successful in that aim, so much so that they continue to use the phrase All Tools - most recently in relation to how they intend to fight cybercrime.?

So, what if we could apply the same principle on an international scale??

The three central pillars of the post 9/11 All Tools approach were:?

(i) better collaboration - through an active two-way exchange of resources, information, and assets,?

(ii) a powerful political will, backed by extremely robust tone from the top, and?

(iii) more effective use of technology and data.

Where could those three things be used on the international stage? I’ll give you a few ways it could happen, to get the conversation started - I'm sure the panel will have many more ideas.?

First: collaboration through active sharing, the first pillar:

If we look at the assets which are recovered under POCA: less than 2% of the value is returned to countries -the victim countries- from which it was illicitly obtained, despite the fact that we know a lot of the dirty money in this country didn’t start its life here. So there’s scope here for the UK to really lead the way internationally on this point:

• An revised legal framework for repatriation, with appropriate controls - the money would have to be put to demonstrable good use- and information and resources shared between the UK and the victim countries, is not only the right thing to do, it could help the UK to counter charges of self-interest and overreach.

Look at standards-setting bodies like FATF: and what they themselves call the ‘unintended consequences’ of their mutual evaluations:

• I think those unintended consequences could be at least partially staved off through a more inclusive process. We can't assume good intentions and only look at face-value technical compliance, and I think an All Tools mindset would bring more people into the evaluation tent.?
• FATF could include a dialogue with domestic non-profits, humanitarian bodies, journalists even, as part of that process. They could even look at that issue of asset repatriation, and make an assessment of the effectiveness of the off-ramps a country has in place for repatriated criminal funds. I think that could be eye-opening.

If we look at tone from the top, the second pillar - I’m going to look at my time in banking. We all know that banks can be just as siloed as governments and regulators.

• Think about the model, certainly in the bigger banks, for how Alerts are managed - whether those alerts are for transaction monitoring, name screening, adverse media etc - you’ll often see that a single screening alert has been escalated through three different countries before a definitive decision can be made. I’m not necessarily proposing we change that - there are sometimes good commercial reasons for that model, but this is another landscape where international ‘All Tools’ thinking can help.
• In my own career, I’ve seen that it is possible to de-silo even enormous banking operations, but it needed an emphatic and continuous tone from the top before things finally became more joined-up.

It also needed to make optimal use of technology, so I’ll finish by talking about technology and data: that final pillar of the All Tools mindset.?

For the industry, it simply may not be possible to truly solve this problem of siloes while there are still banks out there sitting on tech stacks and lines of code which are 50 years old.?

Every year, we’re making advances in the types of analytics that it’s possible to do once you’re working with clean data on a modern stack: the roadblock, really, is how quickly we can get that into the hands of compliance teams in our biggest banks.

We also -both public sector and private- need to examine the phrase ‘data-driven approach’, and to think about how to make it more than just a phrase.?

I was going to cite the REPO Task Force as an example of an effective international ‘All Tools’ initiative when I was preparing for today. REPO certainly seem to be doing something right - $58bn worth of sanctioned Russian assets blocked, at the last count. It's a good headline. But when you try to dig into those numbers - as Transparency International has recently tried to do, it seems difficult to get any granular data.?

We all need to think more about data if we want to see better collaboration across borders, particularly in a world which is becoming increasingly complex from an international payments perspective.

For those of you who don’t know me, I’ve worked in the industry for 20 years, both in enforcement and in compliance - lots of things have changed in that time - but one of the few constants has been the fact that criminals can always move more quickly than the people who are trying to stop them: they have very light-touch governance, very slick procurement processes, and they can afford to take a punt on something new without too much risk -or cost- to themselves.?

We’ll never close that gap completely, but we can reduce it, and so there will never be a better time than now to adopt this All Tool mentality, both as a country and within our businesses, and to apply it to the fight against financial crime.?

For the US government, it took a seismically terrible event to prompt this change in how they operated. But it showed that when the political will is there, it really is possible to make large entrenched functions work together more effectively.

We’re extremely fortunate to have the focus and time of some key decision-makers today: this is exactly the urgency we need in this conversation.?

I’m looking forward to what I think will be a very engaging discussion. Please join me in welcoming the panellists.