We got to know Andréas Hobbelin, Head of AML (Anti Money Laundering) and financial crime prevention at ZTL, a few months ago. His energy, commitment and enthusiasm for processes around Anti Money Laundering were impressive and contagious. Here is Andréas's explanation of how he navigates the abundance of data.
A challenge
Let us start with an example of his commitment.
Three months ago, Andréas posted this on LinkedIn:
He challenged the industry, but got little response.
We at Enin were not mentioned, but it prompted us to want to understand more. As a new provider of global PEP and sanctions lists, we want to understand how the B2B data we already have can be combined with this data.
So we had to talk more with Andréas, to hear more about what he was looking for.
Glossary:
Sanctions checks are specialized searches covering a range of public sanctions databases. They identify individuals who are not permitted to represent certain activities or industries.
In finance, a politically exposed person (PEP) is someone who has been given a prominent public position. A PEP generally represents a higher risk of becoming involved in corruption, because of the position and influence they hold.
Know your customer or know your client (KYC) guidelines in finance mean that professional players must make a substantial effort to verify the identity of, and the risk involved in, various business relationships.
Anti-money laundering (AML) is a term used mainly in finance or legal functions and controls. Its purpose is for companies with a reporting duty to the Financial Supervisory Authority of Norway to prevent, detect and report activities that indicate money laundering
Source: Wikipedia
Read more about the topic at our partner Quesnay: Glossary of regtech and compliance terms
If you had to highlight three points that characterize today's challenges in a KYC/AML process, what would the most important ones be?
At ZTL we work hard to understand both what the vendors out there are offering, the quality of what is offered, and how we can best use all relevant information and systems to identify risk indicators.
ZTL first chose a Nordic KYC/AML vendor that many others use. It is not complete, so we had to look around for another vendor, and we have worked out what we believe meets our needs.
When it comes to the biggest and most important challenges in this market, I would highlight three main areas:
1. Employees' understanding of the quality of information is in short supply.
I also find that vendors do not entirely understand the customer's needs; they are keen to sell "their" product without regard to what the customer really needs. When it comes to the KYC process, most people's needs are equivalent in order to be "paper compliant". It is when it comes to risk, and using the information to uncover and identify risk indicators, that it has to be tailored to each individual need.
2. The systems meant to use the information are not good enough.
Here I think several of the vendors of KYC/AML systems should have come further. Both in terms of onboarding solutions, transaction monitoring and sanctions screening of payments. So far I have found only a few vendors that really deliver a complete KYC/AML system that genuinely works. Several times I have thought that I will have to help build this myself if I am going to get everything I really believe such a system should have.
3. Making the process itself work once the information and systems are working
Once you have good information and systems in place, qualitative risk indicators are what remains to be followed up. That often involves manual work. Many people think they will automate enhanced customer due diligence with "machine learning" and "AI". My view is that if you do not have the right people with the right experience and expertise on which relevant risk indicators actually need to go in, then do not try machine learning and AI. It can result in something you are unable to handle, such as too many "false" risk indicators, or the "false positives" that many people talk about. Often in connection with PEP and sanctions screening.
Finally, I would just say that those of us subject to the Anti-Money Laundering Act have to make more demands of the vendors; we cannot do this without good information and systems.
The company you work for has a roadmap for rolling out into new countries. What is the most important thing to be aware of in the KYC work on a journey like that? Which data matters most?
The information available in the countries we are entering, especially when it comes to beneficial owners. How digitalized those countries are in terms of BankID or similar is decisive. After that, it is important to understand the inherent money laundering, terrorist financing and sanctions risk in those countries. Entering a high-risk country will require substantial investment.
Public authorities impose strict requirements on industries with a reporting duty in the KYC area, but how can they be part of the solution themselves? Is there anything you wish they had done?
First of all, I have to say that we need to work more proactively. For example, we have contacted both Brønnøysundregistrene and Bolagsverket in Sweden to obtain information on bankruptcy history. I have also been in touch with SSB to understand incoming and outgoing transactions between Norway and other high-risk countries such as Russia. We use this to analyze patterns and risk indicators.
We have to understand the history in order to anticipate what will happen going forward. So my wish would be that those of us with different needs related to anti-money laundering and counter-terrorist financing actually have the opportunity to order whatever information we need from the public authorities, without it costing us a fortune.
What qualities do you look for in a company that is to be a long-term partner for you and your company?
An understanding of the customer's unique needs, and the ability to actually adapt to even the smallest customers. On that point I have to say that even though we are not a customer of ENIN, you have been more accommodating and service-minded than any of the vendors we actually are a customer of.
That a vendor understands that it is not the needs of the majority that will take us further in the work of preventing financial crime; it is the few unique and possibly quirky requirements and needs of a small number of players that will develop both you as a vendor and your ability to help us.
Finally, you have a burning commitment to a field that many find heavy going and complicated to get into. What drives you day to day, what makes you "get up in the morning"?
Haha, my first thought was to say that I have no choice, since my almost three-year-old wakes up early, and otherwise I am woken by my partner firing up the espresso machine.
But what does drive me is curiosity and a wish to "make a difference". A cliché perhaps, but finding and seeing something no one else sees, and connecting the dots where many do not quite see the link, that is part of what drives me. I also see every day as a training day for getting better at what I do.
We thank Andréas very much for his valuable input. Feel free to contact us if you would like to talk more with us about this topic, which we care a great deal about too.
