ACFCS Fincrime Canada Summit Snapshot Day One: More public-private partnerships, AI trust, adoption needed to counter crypto-fueled fraudsters, terror masterminds

The Skinny:

  • ACFCS’ Second Inaugural Fincrime Canada Virtual Summit saw more than 1,700 professionals gather for the three-day event, full of deep, relevant training, networking, games, giveaways and much more. Some key takeaways include:
  • Speakers highlighted that even as Canada in recent years has become a world leader in forging public-private partnerships between banks and regulators to better stamp out human trafficking, child exploitation, romance scams and illicit activity – more must be done.
  • Those initiatives must also innovate, engaging artificial intelligence across anti-money laundering (AML), sanctions, fraud and sanctions programs. Interweaving and underpinning such efforts, institutions must strengthen commitments to sharpen human decision-making – the most subjective and oft-criticized area of the compliance function.  

By Brian Monroe
bmonroe@acfcs.org
November 16, 2021

Even as Canada in recent years has become a world leader in forging public-private partnerships between banks and regulators to better stamp out human trafficking, child exploitation, romance scams and illicit activity – more must be done.

Those initiatives, taking place in and out of the Great White North, must also be paired with greater trust, truth and transparency to engage artificial intelligence across anti-money laundering (AML), sanctions, fraud and sanctions programs.

Interweaving and underpinning such efforts, institutions must also at the same time engender a deeper commitment to broaden training and sharpen human decision-making – the most subjective, nebulous and oft-criticized area of the compliance function.  

Those are just some of the takeaways from day one of ACFCS’ Second Inaugural Fincrime Canada Virtual Summit, where more than 1,700 professionals registered for the three-day event, full of deep, relevant training, networking, games, giveaways and much more.

The conference cov­ered topics across the spectrum of financial crime and compliance, including regulatory focal points, enforcement trends, crypto, data analytics, child exploitation networks, human trafficking and more.

Here are some conference highlights: 

  • Federated learning: While in many cases, privacy coins or secretive beneficial owners hidden by shifting shells can stymie investigations, Privacy-Enhancing Technologies (PETs) can be a boon to teams working to analyze and share vast amounts of data. Using these technologies, systems can analyze information from multiple banks – without the fear of individuals getting access to details they shouldn’t.
  • Community responsibility: So why did banks in Canada, and the country’s financial intelligence unit, Fintrac, band together to better understand and fight back against individuals who harm children or trade in child sexual exploitation material (CSAM)? The reason: “It protects our clients. It protects our community. It is incumbent upon us to protect our children from these predators,” said one speaker.
  • Crypto, terror nexus: Terror groups are turning to virtual value to capture more funding. Some of the indicators of suspected money laundering or terrorist financing, include the use of privacy coins, mixers/tumblers and transactions tied to unregistered/high-risk exchanges. Lone wolf, home grown terrorists are some of the most difficult to uncover, with banks in some cases needing to combine aberrant transactions with negative news dives to uncover sinister inclinations.

On the crypto and compliance side, blockchain analytics firms have a bevy of trends cropping up this year that could be bank and virtual exchange challenges in 2022, including:

  • More criminal groups, sanctions busters and terror groups using mixers.
  • Tracking these groups could be more challenging with the emerging of the Lightning Network
  • Cross-chain hopping and laundering groups riding economic trends, such as hacking the market and cashing out before it drops – in privacy coins. 

Can privacy ever help fincrime compliance programs?

With criminal groups looking for ever more creative ways to launder funds and obfuscate money trails in the real and virtual worlds, that puts increased pressure on banks the world over to somehow make connections among the disparate pieces – and fight back.

So how can you better fight financial crime through public-private partnerships across multiple jurisdictions? While also not skirting privacy restrictions or courting data breaches?

That answer to that question might, ironically enough, be in the area of privacy-enhancing technologies or PET, according to speakers during the Privacy-Enhancing Technologies – The Key to Unlocking FinCrime Collaboration panel on Tuesday.

While in many cases, privacy coins or secretive beneficial hidden by shifting shells can stymie investigations, PET can be a boon to teams working to analyze and share vast amounts of data. Using these technologies, systems can analyze information from multiple banks – without the fear of individuals getting access to details they shouldn’t.

In the case of Canada, this has the potential to supercharge public-private partnerships to make more connections to potential illicit activity across multiple banking groups across different jurisdictions.

Already, Canada’s financial intelligence unit, Fintrac, has been a world leader in the area of PPPs.

The PPP strategies spearheaded by Fintrac, starting with BMO in 2016 tied to human trafficking and last year, with Scotiabank related to child sexual abuse material (CSAM), have resulted in countries and world leaders asking, “How do you do it,” said Stuart Davis, Executive Vice President and Global Head of Financial Crimes Risk Management at Scotiabank.

“It has become a model for the globe,” with dozens of countries emulating the initiatives, he said, adding that combining PPPs and PETs will “help us make a difference in the future.”

A look at what fuels our shared fight: public, private partnerships to protect the innocent

So why did banks in Canada, and the country’s financial intelligence unit, Fintrac, band together to better understand and fight back against individuals who harm children or trade in child sexual exploitation material (CSAM)?

The reason: “It protects our clients. It protects our community,” said Nunzio Tramontozzi, Director of the Special Investigations Unit at Scotiabank, during the panel: Inside Project Shadow – Public-Private Partnerships to Combat Online Child Exploitation.

“It is incumbent upon us to protect our children from these predators,” he said. “I am a big proponent of education and knowledge. We need to teach our kids what to do when presented with these types of individuals online. [Children] need to be able to talk to [their parents] and tell [them] what is going on.”   

So what is the difference between how banks, law enforcement and regulators work together related to investigations into child sexual exploitation material (CSAM) and other fraud and money laundering cases?

“The aim of the investigation isn’t to get the money,” said Michael Boole, Manager in the Intelligence Sector of Fintrac’s AML Unit.

“While we are going after money laundering, in the case of CSAM, the aim is to get the victim out,” he said. “The money is less important.”