Alijah Poindexter 00:06
Good day, and welcome to The Buzz, the bank automation news podcast. I’m Associate Editor, Alijah Poindexter. Recently, I spoke with Daniel Hazel, head of CLM at Intelligent Automation from work. Daniel, I spoke about the bind administration’s reason initiative to counteract corruption and money laundering and financial services. We spoke about the impact and implementation, along with the discussion of impact on cryptocurrency.Daniel Hazel 00:31
any initiative that tries to bring transparency to the world of financial crime art to the world of anti financial crime, I should say is Well, right. And and what the White House are attempting to do here is, I would say laudable? No, there’s a difference between attempting to do something and implementing it right. So the devil I would say, is in the detail there, but the like the overall focus, you know, bringing transparency to ultimate beneficial owners, because sometimes the layers between an organization and the ultimate person who owns it, you know, the webs of intricacy there can be amazing, right? So having that, at least, I would say having a goal of bringing transparency there or bringing more transparency there is extremely important. And I’ll get back to in a minute. We are did look, actually, we can just talk about now you’re talking about in last couple of years, all of those leaks, the Pandora papers was the most recent one. And then maybe five or six years ago, there was motor leak where all of these really important people had all of these offshore funds, wherever and there was a big outbreak, right. So a lot of a lot like that. That idea of trying to bring transparency there, it’s a lot. I would also say that the ability to subpoena banks who have a correspondent banking relationship in the US to subpoena those and have that threat. hanging over banking institution is important, right? Because no matter what you say, no matter what any bank would say, to have the threat of subpoena by the US court hanging over is, is immense. If nothing else, right, nothing would ever come of it again, because there’s a big difference between between the announcement of something and implementation, I would like to get to actually bring over a European bank and get them in front of us court, the red tape to get there would be immense race, but again, just having that trust, it will go a long way to to actually doing it. So maybe

Alijah Poindexter 02:41
we can go a little bit deeper there. So maybe, from your perspective, what will that implementation look like? I mean, in terms of like, what will this realistically kind of look like, if that makes sense. And maybe you can go over some pain points, maybe you mentioned, you know, the difficulties of say, a European bank, bringing that over the red tape, maybe a little bit of more insight, there would be helpful.

Daniel Hazel 03:00
Banks are notoriously slow moving creatures. They’re not your agile fintechs are not born on Silicon Valley. More often than not, they’re institutions with hundreds of years of history. And with that come the size that comes with an institution like that, but also the the policies and procedures that governors are steeped in history, right. And, you know, it needs to go through a steering committee, it needs to go through risk approval, it needs to go through all of these things, all of these different hoops before change can actually actually be implemented. And even before that, in compliance, there is compliance and KYC and AML. Anti financial crime, exactly what the Biden ministration is trying to enhance by bringing this in banks have two different perspectives when it comes to counterparties. Right? Is it something I need to know? Or? Or is it something I should know, the majority of banks deal with, and they design their risk and compliance programs based on what they need to know. And they’ll only put the the maximum amount of resources needed to get to that minimum level of need to know and build a compliance program based on that, and probably not a dime more, right. And then you have these really proactive banks, who design programs based on what they should know and try to proactively manage their risk all year round, right? And there’s a world of difference between the two because the banks who manage their compliance problems on a need to know basis they’re reacting to changes in their risk profile. So they will you know, they’ll do whether it’s a periodic there’s different types of reviews and they’ll review it maybe one every one two or three years. It’s a big human investment that their teams need to undergo these types of reviews. year in, year out. So these type of need to know programs are really driven by people. And those people undergo the same type of reviews every couple of years big human investment, and is a big, there’s a big employee debt. And there’s a big customer debt because the customer has virtually the same information every couple of years, right, and you’re only finding out information about your counterparties every couple of years, or every year, every two years, every three years. So you’re you’re automatically behind the curve, versus the should know profile, where you’re always looking for information on your customer, you’re always going out to find out if there’s been a change in your customers profile. And that’s a very much, you know, 24/7 365 model that is powered by Intelligent Automation, or it’s powered by digital workers, that that type of should know, compliance model, it probably, it probably wouldn’t be optimal, if horribly people because you’d have to hire a lot more people to do it. But there’s the world of difference between the two of those right. And what the Boyd administration they’re doing is they’re increasing the level of transparency. But by the same token, then they’re increasing the level of need to know for a bank. And they’re not just increasing the level of need to know in the US or not, you know, they’re also increasing the level of need to know and European banks that have a US presence, if I need to know this. And look, the reality is nearly every compliance program in the world that are powered by people and only people is creaking. Every other type of program in the world is undergoing digital change, and compliance is getting there, right? But it’s slower. More often than not, you need people to power the processes. And that’s completely okay. The waterboarding administration trying to do, it’s increasing the level of need to know for a bank, so this transparency and deciding, you know, you need to know about beneficial owners, and you need to know, another level of beneficial owners.

Alijah Poindexter 07:01
Maybe you could walk me through, you know, what are some of the major AML concerns or trends right now in the FinServ? space? And maybe, you know, what, what are maybe two or three trends, you’ve seen that maybe push the vitae ministration? Or the people behind the sort of initiative to say, Yeah, okay, this is one of the main reasons why we’re gonna release this, if that makes sense.

Daniel Hazel 07:19
Look, you can’t ignore all of the types of leaks of financial data of homos over the past couple years, Pandora papers, that’s just one of them. Again, I can’t remember the name, I’m sure in your research, you’ll be able to remember, there was one a couple of years ago, where it shows the level of complexity that actually goes on in financial markets, and how money can be shielded from the run of the mill KYC process and the run of the mill compliance progress process. And that type of thing can be can be. And the unfortunate thing is that, again, it’s a need to know basis, and you’re only going to go to the level that you need to go to, and the bad actors in this space. They’re well aware of that right. And they’re well aware of the level of intricacy that they need to go to to a vase, the regulations that are there. So I think that’s probably a big motivator for by the administration, they can see, again, the Pandora papers. And to be fair to them, the majority of the actors in the Pandora papers are they’re good actors, right? They’re celebrities or politicians, there were leaders, and they can probably see the intricacy that they’re going to shield their money to to avail of any tax benefits. So they can only extrapolate that to seeing what the actual bad actors are doing. Right. Like look at for me, I think that’s probably another area again, and it’s easy points on the board for the administration, you can’t deny that banks are being fined very regularly when it comes to AML. And it is a very hot topic. I only read during the week, and I know they’re not a bank would pay pal got fined X amount million for AML findings or something like that. Excuse me, that’s incorrect. I think they for 4.5 million accounts that were on boarded, that has poor AML. Poor AML associated with it, right. So their team didn’t do the right thing and then opened up the risk. The positive aspect was that they caught that risk before anything bad came from it. Whereas there are banks rewards were being fined because they’re just not up to date with the risks that are coming with it.

Alijah Poindexter 09:24
So in the announcement, it mentions crypto, I mentioned digital assets, do you find that type of stuff and but I’m but there is a extremely solid foundational base behind that in terms of there is a large amount of crime being facilitated by crypto. And so I’m curious to know, again, from your perspective, maybe what have you seen in the space and you know, how do you see do you see this initiative, doing anything? You know, concrete in the short to medium term is sort of addressed that.

Daniel Hazel 09:50
You have the blockchain right. And the blockchain is not malleable, it can’t be changed, which is fantastic. And boy, you are absolutely 100% Correct News. A bad actors and criminals have been playing in crypto for a lot longer than the majority of the pianos folk out there. Right? You’ll even see in the US this week, the 3.6 billion case, I think that was in the US, right, where the husband and wife stole 3.6 billion and they got caught last week. Right? So and that’s the biggest case ever. Right? And how long did it take the SEC to crack that? I’m sure there are crypto people who are looking at our crypto criminals looking at that and thinking God, how did they get caught their stupid way to do it? Right. So I think that this is the first iteration when it comes to kind of real crypto regulations when it comes to financial crime. And I would imagine, or at least, I would have to hope that this isn’t a one and done type of thing. You know, actor like you all of these types of things. We’re all coming to, we’re all coming to grips with crypto. It’s an extremely agile space. There’s new coins coming up every day. There’s the blockchain, there’s all these different type of things where there’s just so many different investment products out there that people can move their money around, you know, I think it’s laudable, and again to get there, but I would very much think this is the first step in a long road to even tea even managing any type of risk inside there.

Alijah Poindexter 11:17
You’ve been listening to the bus, a bank automation news podcast. Thank you for your time and be sure to visit us at Bank automation news.com For more automation, you can also follow us on Twitter and LinkedIn. Please don’t hesitate to rate this podcast on your podcast platform of choice. Thank you

Alijah Poindexter 00:06
Good day, and welcome to The Buzz, the bank automation news podcast. I’m Associate Editor, Alijah Poindexter. Recently, I spoke with Daniel Hazel, head of CLM at Intelligent Automation from work. Daniel, I spoke about the bind administration’s reason initiative to counteract corruption and money laundering and financial services. We spoke about the impact and implementation, along with the discussion of impact on cryptocurrency.Daniel Hazel 00:31
any initiative that tries to bring transparency to the world of financial crime art to the world of anti financial crime, I should say is Well, right. And and what the White House are attempting to do here is, I would say laudable? No, there’s a difference between attempting to do something and implementing it right. So the devil I would say, is in the detail there, but the like the overall focus, you know, bringing transparency to ultimate beneficial owners, because sometimes the layers between an organization and the ultimate person who owns it, you know, the webs of intricacy there can be amazing, right? So having that, at least, I would say having a goal of bringing transparency there or bringing more transparency there is extremely important. And I’ll get back to in a minute. We are did look, actually, we can just talk about now you’re talking about in last couple of years, all of those leaks, the Pandora papers was the most recent one. And then maybe five or six years ago, there was motor leak where all of these really important people had all of these offshore funds, wherever and there was a big outbreak, right. So a lot of a lot like that. That idea of trying to bring transparency there, it’s a lot. I would also say that the ability to subpoena banks who have a correspondent banking relationship in the US to subpoena those and have that threat. hanging over banking institution is important, right? Because no matter what you say, no matter what any bank would say, to have the threat of subpoena by the US court hanging over is, is immense. If nothing else, right, nothing would ever come of it again, because there’s a big difference between between the announcement of something and implementation, I would like to get to actually bring over a European bank and get them in front of us court, the red tape to get there would be immense race, but again, just having that trust, it will go a long way to to actually doing it. So maybe

Alijah Poindexter 02:41
we can go a little bit deeper there. So maybe, from your perspective, what will that implementation look like? I mean, in terms of like, what will this realistically kind of look like, if that makes sense. And maybe you can go over some pain points, maybe you mentioned, you know, the difficulties of say, a European bank, bringing that over the red tape, maybe a little bit of more insight, there would be helpful.

Daniel Hazel 03:00
Banks are notoriously slow moving creatures. They’re not your agile fintechs are not born on Silicon Valley. More often than not, they’re institutions with hundreds of years of history. And with that come the size that comes with an institution like that, but also the the policies and procedures that governors are steeped in history, right. And, you know, it needs to go through a steering committee, it needs to go through risk approval, it needs to go through all of these things, all of these different hoops before change can actually actually be implemented. And even before that, in compliance, there is compliance and KYC and AML. Anti financial crime, exactly what the Biden ministration is trying to enhance by bringing this in banks have two different perspectives when it comes to counterparties. Right? Is it something I need to know? Or? Or is it something I should know, the majority of banks deal with, and they design their risk and compliance programs based on what they need to know. And they’ll only put the the maximum amount of resources needed to get to that minimum level of need to know and build a compliance program based on that, and probably not a dime more, right. And then you have these really proactive banks, who design programs based on what they should know and try to proactively manage their risk all year round, right? And there’s a world of difference between the two because the banks who manage their compliance problems on a need to know basis they’re reacting to changes in their risk profile. So they will you know, they’ll do whether it’s a periodic there’s different types of reviews and they’ll review it maybe one every one two or three years. It’s a big human investment that their teams need to undergo these types of reviews. year in, year out. So these type of need to know programs are really driven by people. And those people undergo the same type of reviews every couple of years big human investment, and is a big, there’s a big employee debt. And there’s a big customer debt because the customer has virtually the same information every couple of years, right, and you’re only finding out information about your counterparties every couple of years, or every year, every two years, every three years. So you’re you’re automatically behind the curve, versus the should know profile, where you’re always looking for information on your customer, you’re always going out to find out if there’s been a change in your customers profile. And that’s a very much, you know, 24/7 365 model that is powered by Intelligent Automation, or it’s powered by digital workers, that that type of should know, compliance model, it probably, it probably wouldn’t be optimal, if horribly people because you’d have to hire a lot more people to do it. But there’s the world of difference between the two of those right. And what the Boyd administration they’re doing is they’re increasing the level of transparency. But by the same token, then they’re increasing the level of need to know for a bank. And they’re not just increasing the level of need to know in the US or not, you know, they’re also increasing the level of need to know and European banks that have a US presence, if I need to know this. And look, the reality is nearly every compliance program in the world that are powered by people and only people is creaking. Every other type of program in the world is undergoing digital change, and compliance is getting there, right? But it’s slower. More often than not, you need people to power the processes. And that’s completely okay. The waterboarding administration trying to do, it’s increasing the level of need to know for a bank, so this transparency and deciding, you know, you need to know about beneficial owners, and you need to know, another level of beneficial owners.

Alijah Poindexter 07:01
Maybe you could walk me through, you know, what are some of the major AML concerns or trends right now in the FinServ? space? And maybe, you know, what, what are maybe two or three trends, you’ve seen that maybe push the vitae ministration? Or the people behind the sort of initiative to say, Yeah, okay, this is one of the main reasons why we’re gonna release this, if that makes sense.

Daniel Hazel 07:19
Look, you can’t ignore all of the types of leaks of financial data of homos over the past couple years, Pandora papers, that’s just one of them. Again, I can’t remember the name, I’m sure in your research, you’ll be able to remember, there was one a couple of years ago, where it shows the level of complexity that actually goes on in financial markets, and how money can be shielded from the run of the mill KYC process and the run of the mill compliance progress process. And that type of thing can be can be. And the unfortunate thing is that, again, it’s a need to know basis, and you’re only going to go to the level that you need to go to, and the bad actors in this space. They’re well aware of that right. And they’re well aware of the level of intricacy that they need to go to to a vase, the regulations that are there. So I think that’s probably a big motivator for by the administration, they can see, again, the Pandora papers. And to be fair to them, the majority of the actors in the Pandora papers are they’re good actors, right? They’re celebrities or politicians, there were leaders, and they can probably see the intricacy that they’re going to shield their money to to avail of any tax benefits. So they can only extrapolate that to seeing what the actual bad actors are doing. Right. Like look at for me, I think that’s probably another area again, and it’s easy points on the board for the administration, you can’t deny that banks are being fined very regularly when it comes to AML. And it is a very hot topic. I only read during the week, and I know they’re not a bank would pay pal got fined X amount million for AML findings or something like that. Excuse me, that’s incorrect. I think they for 4.5 million accounts that were on boarded, that has poor AML. Poor AML associated with it, right. So their team didn’t do the right thing and then opened up the risk. The positive aspect was that they caught that risk before anything bad came from it. Whereas there are banks rewards were being fined because they’re just not up to date with the risks that are coming with it.

Alijah Poindexter 09:24
So in the announcement, it mentions crypto, I mentioned digital assets, do you find that type of stuff and but I’m but there is a extremely solid foundational base behind that in terms of there is a large amount of crime being facilitated by crypto. And so I’m curious to know, again, from your perspective, maybe what have you seen in the space and you know, how do you see do you see this initiative, doing anything? You know, concrete in the short to medium term is sort of addressed that.

Daniel Hazel 09:50
You have the blockchain right. And the blockchain is not malleable, it can’t be changed, which is fantastic. And boy, you are absolutely 100% Correct News. A bad actors and criminals have been playing in crypto for a lot longer than the majority of the pianos folk out there. Right? You’ll even see in the US this week, the 3.6 billion case, I think that was in the US, right, where the husband and wife stole 3.6 billion and they got caught last week. Right? So and that’s the biggest case ever. Right? And how long did it take the SEC to crack that? I’m sure there are crypto people who are looking at our crypto criminals looking at that and thinking God, how did they get caught their stupid way to do it? Right. So I think that this is the first iteration when it comes to kind of real crypto regulations when it comes to financial crime. And I would imagine, or at least, I would have to hope that this isn’t a one and done type of thing. You know, actor like you all of these types of things. We’re all coming to, we’re all coming to grips with crypto. It’s an extremely agile space. There’s new coins coming up every day. There’s the blockchain, there’s all these different type of things where there’s just so many different investment products out there that people can move their money around, you know, I think it’s laudable, and again to get there, but I would very much think this is the first step in a long road to even tea even managing any type of risk inside there.

Alijah Poindexter 11:17
You’ve been listening to the bus, a bank automation news podcast. Thank you for your time and be sure to visit us at Bank automation news.com For more automation, you can also follow us on Twitter and LinkedIn. Please don’t hesitate to rate this podcast on your podcast platform of choice. Thank you