Speeches about money laundering have rarely been described as passionate, but this is the type of language observers are reaching for to capture the recent shift in tone from the global anti-money laundering body FATF.

The direct messaging from FATF leadership at industry events is spurring public recognition of a fundamental systemic challenge: despite strengthened regulation and sustained efforts by financial institutions, anti-money laundering outcomes are not being achieved.

Coupled with clear signals of intent from major jurisdictions, it is clear that pressure to tackle the poor levels of implementation of international anti-money laundering standards is only going to increase…


One of the major challenges faced by financial institutions with extensive correspondent banking relationships is managing the financial crime risks they are exposed to through their networks.

Among the approaches used by banks to manage these
risks is ‘de-risking’: terminating or restricting their business relationships with categories of clients and in some cases whole markets. De-risking can severely affect access to financial markets and has a wide range of societal costs such as the impact on remittances.

Paradoxically, de-risking often simply reallocates risks
to less transparent channels, be they overburdened local banks or the informal market.

This case study shows how the quantification of financial crime risk allows for a more nuanced and productive approach to the management of correspondent banking relationships.

Baseline situation

Bank A operates in…


3 Suptech milestones to look out for until 2023 — and why they will matter


In viewing the current state of the banking industry, it has become readily apparent that whilst innovation is challenging, it is also very much needed. Financial crime capture and control rates have effectively flattened since the early 2000s, and proportional estimates of financial crime in the market have remained equally unflagging (UNODC/Sidanius, 2019). Change is clearly needed, but innovation is incremental and sparse where it does exist. The question that must, of course, be asked is “What is preventing financial institutions from embracing innovation fully?”

1. Extreme Caution and Cultural Conservatism

For many banking executives, “innovation” and “technology deployment” mean complete disruption of their daily routines…


Within the banking and risk management industry, new tech should be viewed as an augmentation to improve team function and efficiency, not an interface where capability is limited by technological conservatism. Yet, when grappling with the ever-changing field of available technologies, financial institutions often worry about the costs surrounding these technologies. New technologies are viewed not simply in terms of their raw purchase costs, but also their time costs, specifically as it pertains to the training and upgrading of their IT, risk and compliance teams. Financial institutions tend to view these monoliths as forces in opposition, with the efficacy of…


Overcoming Experimenter’s Bias to Better Manage Financial Crime Risk

In many ways, current best practices within the Financial Crime and Risk Management space seem to be preordained; the common wisdom of the industry seems sound, yet stubborn and immoveable. For many risk managers, it’s common sense that extractive industries or real estate brokers would present as high-risk clients, while medical equipment manufacturers or food service providers likely don’t throw up any flags. There’s a strong possibility that such an assessment is somewhat grounded in reality. Yet, underpinning this all is the experimenter’s bias; the observer-expectancy effect. Risk managers believe that they will find financial crime in industries traditionally considered…


Times of crisis often lead to an odd mix of tragedy and innovation, and the global COVID-19 pandemic is no exception. Governments around the world rightfully prioritise human lives at the immediate cost of their economy in an attempt to contain the pandemic and flatten the curve. Financial institutions have been quick to adapt to new circumstances and adopt remote working as a new normal. …


Learning from the past to change the future of Correspondent Banking

Today, the global FinCrime risk management industry finds itself at a pivotal moment. As it stands, the global economy is more integrated than ever before. With this interconnectedness has come a marked increase in the financial crime risk borne by financial institutions operating in the global market where risk managers are now left to oversee complex international networks. In looking towards the future of the financial industry, it may be useful to look to the past, and the evolution of the credit risk industry; in its history lies a model for the future of the financial crime risk industry. …


Reflections on Fixing a Flawed System

The revelations surrounding the conduct and likely criminal activity of Isabel dos Santos has brought to the fore familiar issues in the financial crime space. The reporting conducted by the International Consortium of Investigative Journalists (ICIJ) paints a picture we have seen before: the child of an autocrat loots their country for billions and enjoys the proceeds in the European and American markets, similar to Guinea, Kazakhstan, the Congo, or any number of other countries (New York Times, CNN, Quartz).

The case of the Luanda Leaks is simply further evidence of a systemic flaw present within the global financial network…


Genesis, Evolution and Vision

Elucidate is a Berlin-based RegTech providing financial crime risk quantification to help financial institutions to score and predict financial crime risk through the Elucidate FinCrime Index platform (“EFI”).

What issues have you addressed in the market, and how does the EFI address them?

Shane (S): As with many startups, the genesis of Elucidate was frustration with the status quo. We have first-hand experience of the challenges faced by financial institutions struggling to manage financial crime risk, and were determined to create a mechanism to enable clear quantification and, eventually, prediction of financial crime using data analytics and machine learning.

Filipe…

Elucidate

Elucidate is a financial crime risk management company enabling banks to benchmark and price FinCrime risk through risk assessment, data analysis and scoring.

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