Event Round-up: Leeds FraudTech & FinCrime Seminar – 8th November 2019
On the 8th November, FinTech North hosted a FraudTech and Financial Crime seminar at RSM in Leeds, which was supported by RSM and TruNarrative. Our 47th event since 2016 was the second in a two part series, following a successful September seminar at RSM’s Manchester offices.
Julian Wells, Director of Whitecap Consulting & FinTech North, opened the event with an overview of FinTech North and how we use an events programme to bring together the FinTech community across the north, hosting events in multiple cities.
Jon Pepper, Partner FS Risk Assurance at RSM, gave a warm welcome to everyone on behalf of our hosts, and introduced his colleague Paul Jennings, Partner FS Risk Assurance. Paul provided an industry update, focusing in particular on the importance of transaction monitoring. Paul mentioned the penalties being issued under Section 166, the key areas of focus being accountability, understanding key risks, governance and communication between firms. Paul explained how Transaction Monitoring Systems (TMS) include customer transfers, deposits and withdrawals and automated clearing within their scope.
Benefits of effective TMS include;
- Identifying suspicious behaviour
- Increased automation in customer monitoring
- Increased effectiveness
- More confidence in senior management
Recent penalties imposed include a fine of £163,076,224 issued against Deutsche Bank and a fine of £409,000 against Linear Investments Ltd.
Victoria O’Brien, Senior Financial Crime Manager at Ebury, gave an overview of what Ebury are doing in this sector from the perspective of a FinTech. Ebury works with over 40k businesses and organisations in 21 countries. They trade £20bn across over 140 currencies in over 50k transactions.
Victoria highlighted four key risks for FinTechs, three of which apply to Ebury:
- Market risk (n/a to Ebury)
- Counterparty risk
- Liquidity risk
- Compliance risk
“Segmenting clients and setting strategy makes transaction monitoring easier.” – Victoria O’Brien
Ben Martin, Director at Safe4 Information Management, brought an information and data orientated perspective to proceedings. Ben has been involved in the process of moving data for a number of years, and S4E creates front-end solutions that use the Safe4 secure vault.
Ben used the residential conveyancing journey to illustrate how the vault can be used. The client has full control of their vault, including granting access to whoever they need to, for example their estate agent and lawyer. The data is then duplicated, one set belonging to the customer, the other set belonging to the asset (in this example the residential property) like a service history, adding to the value of the asset.
Richard Freedman, Chief Operating Officer at Cifas, was then next up; getting things underway with an anecdote about a 15 year old money mule. Cifas are the UK’s largest fraud prevention community, they comprise many different sectors; a network of likeminded organisations sharing expertise data and intelligence. Cifas saved members £1.4 billion in 2018.
“Fraud and Cyber crime accounts for more than half of crime in the UK” – Richard Freedman
Fraud is growing and is on the rise. Last year there were 325,000 cases of fraud that Cifas dealt with, mainly Identity Fraud and Facility Takeover (Money Mule activity). That works out at 835 new frauds every day, or one every two minutes.
“Fraud as a service – it exists” – Richard Freedman
Richard finished by showing us an incredibly hard-hitting video regarding money mules and the criminal beneficiaries of FinCrime, entitled ‘Sponsor a child-trafficker’.
Panel Q&A
All the speakers then gathered for the panel discussion, where they were joined by Ryan Morrison, Financial crime expert and Director at TruNarrative. TruNarrative are a Leeds-based FinTech specialising in FraudTech who now employ 40 people in the city.
Q: What are the responsibilities when taking on an AML role?
“If you are taking on one of these roles, you need to do the homework on the firm because you are personally liable. We’ve seen AML roles personally get fined £40k, these are people who are often overworked. You need to ensure you have appropriate resources and that you are remunerated accordingly.” – Paul Jennings
“It’s a bigger challenge for the emerging FinTechs, they just don’t have the same resources as larger firms” – Ryan Morrison
“It’s how you utilise the different technologies available to you, two people with the right technology can do the work of many more people.” – Victoria O’Brien
Q: On the topic of Machine Learning, do you think we will get to a point where we will do unsupervised machine learning in Fraud?
“There’s a balance to be struck. I don’t think we should ever do away with the human element. There’s a danger we in the industry will overpromise on machine learning.” – Ryan Morrison
Q: Are we at a point where we are sharing the data?
“Definitely there’s more than just data being shared, voices, faces.” – Richard Freedman
“One of the first models we built was on Cifas data” – Ryan Morrison
Q: Collaboration seems to have been a theme today, where does Open Banking fit into this? What will open banking mean for Fraud and FinCrime? Is Open banking a concern or an opportunity?
“I have a number of clients using Open Banking, the big debate I’m having is what is the extent of their liability?” – Paul Jennings
“It is something and clearly people are buying it. I think it is a solution looking for a problem. What is it solving? You still need to drive consumer engagement. I don’t think we have found it’s real use and real strengths yet.” – Ryan Morrison
“Criminals will work out how to exploit Open Banking before we realise the weak points and threats.” – Richard Freedman
Q: do you think we can use the technologies we are talking about today to protect companies and colleagues?
“Yes you can, you can ringfence controls and limit access to data in order to protect different members of staff.” – Victoria O”Brien
To close the event, panel chair Julian Wells asked each speaker for a one to two word summary of what they felt the hot topics in Fraud and Financial Crime would be in 2020:
Collaboration and technology – Richard Freedman
Borrowing and governance – Ben Martin
Automation – Victoria O”Brien
Governance – Paul Jenings
Automation – Ryan Morrison
Check out RSM UK’s Risk Advisory page.
Forthcoming FinTech North events include:
Liverpool Conference – 14th November
International FinTech Showcase, North West – 26th November (Manchester)
International FinTech Showcase, Yorkshire & North East – 27th November (Leeds)
FinTech North Forum – 28th November (Newcastle)
FinTech North Forum – 13th December (Leeds)
