The Compliance Word

S1E7: Women In Compliance: Denisse Rudich

May 12, 2021 Season 1 Episode 7
The Compliance Word
S1E7: Women In Compliance: Denisse Rudich
Chapters
0:00
How Does Denisse Stay On Top Of Everything?
8:12
Crypto
10:09
Improving Old Systems
14:54
Human Trafficking and Modern-Day Slavery and AML
27:18
Knowledge Sharing
30:48
Rudich Advisory and RAW Compliance
36:26
Modern Technology
The Compliance Word
S1E7: Women In Compliance: Denisse Rudich
May 12, 2021 Season 1 Episode 7

Join us on 'The Compliance Word' podcast as Denisse Rudich and host Oonagh Van Den Berg discuss their passion for innovation, change, AML, and modern-day slavery. As well as explain how and why they both founded their respective companies Rudich Advisory and RAW Compliance.

Show Notes Transcript Chapter Markers

Join us on 'The Compliance Word' podcast as Denisse Rudich and host Oonagh Van Den Berg discuss their passion for innovation, change, AML, and modern-day slavery. As well as explain how and why they both founded their respective companies Rudich Advisory and RAW Compliance.

Oonagh van den Berg 0:00

 

I have been so excited to talk to you today because compliance is my passion. One of the things I really wanted to ask you about was the development of not just FinTech’s and virtual banks and crypto. We are constantly having to think on our feet and regulations are changing overnight. We are understanding new typologies within products. How do you manage to keep abreast of everything across the board? To keep the likes of the g7 and the G 20 informed and up to date and moving in the right direction?

 

Denisse Rudich 0:49  

I would like to say that maybe my real secret is that I don't sleep that much. I do sleep enough, but weird hours. I am not going to lie to you. But I also I have help. It is not just in terms of the community we have on LinkedIn as financial crime professionals. My secret to stay on top of things is LinkedIn and following some interesting people. The kind of the updates that we get from the data providers that are also knowledge providers, if you will, who are issuing newsletters that are bite-sized. We are very, very busy. I will have to say I have had to upskill in some areas in the past couple of years. 

I have been fascinated with crypto for a long time. I think 2011 was when I first heard of Bitcoin and I was like, ‘what is this Mickey Mouse currency?’ It is like Monopoly money. What is the underlying value? A friend of mine was an MRO and he used to be worked for the Financial Intelligence Unit, in the UK. He told me that it is like stocks and shares, that are traded publicly and its perceived value. And that is when it clicked. Understanding the technology and understanding the difference between a cold wallet and a hot wallet. I'm still upskilling with DEFY decentralized financing. When I work with clients, I'm constantly learning, right? They are learning, I'm learning, we're all learning. And that is what makes it feel so exciting. I wear many hats. I do the g7, the G 20 stuff. With that, I do have this incredible woman who has a master's in conflict in development and has worked with the University of Toronto for years, and I have a network of people. The g7 and the G 20, research groups, our global network of academics and practitioners and students of g7 and G 20 which, a little bit niche but through them, I managed to kind of stay on top of what happened within the space. With the g7 being held here in the UK, I have had the opportunity of getting a little bit more into the weeds of engagement with different partners here in the UK. Providing insights into various ways you're able to do so in a transparent and open and open manner, without getting into any conflict or anything like that. And then the other area that I spend a couple of days a week working on is looking at conflict in Africa. It is that particular piece of work that has actually changed the way I look at what we do, and the impact of what it is that we do as financial crime professionals and compliance professionals. Because it is actually seeing on the ground impact of illicit financial flows and the harm the actual harm to human life, that bribery and corruption can costs. So, I yeah, so it's constant upskilling. If I see something on LinkedIn that I think I'm going to have to read or reuse or think about in the future, I just tagged it, save it on my list of saved items. And then when needed I go back to it at least. It's amazing how one professional social network can actually help with helping you stay on top of things.

 

Oonagh van den Berg  5:06  

It's amazing you say that. Somebody that I became quite good friends with is Benedict Nolan's from the Bank of International Settlements. She is one of my neighbors. She lives across the road from me. I'm a massive fan of hers, the energy she has is just endless. And what she has achieved as a woman in our space, the passion, and the drive she has for innovation and change, and constantly pushing ourselves to review and revisit the status quo. I’m always in awe. So, we sat on the committee, the woman in banking finance together. And now she is the co-chair in Hong Kong. I asked her the same question; where do you find the time in the day? Because she has got two young sons as well and she's everywhere. She is working so hard. The amazing work that is happening, the innovation, the work that is happening with BIS, she's promoting women in banking. She is just honestly a force to be reckoned with. She's just phenomenal and I asked her the same question like, how do you keep on top of all the developments, and she said exactly the same thing, I don't read newspapers anymore. I do not need to, with the social media that we have, with WhatsApp groups and with LinkedIn. It’s more real-time than any news outlet out there. There are certain people that will post very insightful comments, overviews, and descriptions. So we don't need to read anymore. You talk about the move into crypto, I first came across a kind of crypto in the compliance space back in 2014, or 2013. It was a gentleman in Singapore. Eric Vilken Hoff Plant. He's based in Luxembourg at the moment. I think he was one of the first compliance officers that I ever knew in the crypto space. Just listening to him talk, he was there at the very initial stages. And what is exciting about crypto, is anybody coming into the compliance space today. There are legacy issues in all other areas of compliance, except for this space! This space is anybody that's sitting around the table is as informed as the next person around the table. I think this is such an amazing moment. We do have people like Eric and like Malcolm, that have been in this for years and yourself, but then there are other people that are coming in that are new to it but can get up to date on it quite quickly.

 

Denisse Rudich  8:12  

Crypto is such a misunderstood area in terms of understanding how this technology works, understanding what is available, and you could see that with the adoption of the implementation of the travel rule with FATF. There was not a technology layer available for the industry to be able to comply with the requirement that was introduced. But then again, banking did not have the technology layer available to comply with the requirements when they were introduced in 2001-2002, after the September 11th attacks of the originator and beneficiary information. You still hear people calling crypto completely anonymous, but again, the transactions, it's the individuals who are sending and receiving funds who aren't subject to identification and verification that are anonymous. The way transaction monitoring is carrying out in crypto is phenomenal, right? Because they are fully transparent for the most part until they get lost, but you can then see whether there are tumblers and mixers that are involved. If you look at a blockchain transaction monitoring solution versus a fee add transaction monitoring solution that's rule-based and a little bit dinosaur-ish.

 

Oonagh van den Berg  10:09  

I could not agree with you more. I think that is one of the things I can remember back in 2013, it was kind of at the time where the automation of transaction monitoring was being prescribed in certain locations. I thought these tools just are not fit for purpose. We should not be monitoring rules and scenarios, we need to be role monitoring behaviours and typologies. And these systems do not work. The truth was these systems have a 2% accuracy rate. And if you would be fair to the 8 percent is the figure we give it because the other 6% is something we find in the client book, when we're looking but it's not directly related to the alert itself. It is shocking how we have not been able to fix this problem. But the problem itself is exasperated by multiple sources of the truth, siloed systems, and technology infrastructure. Some of the larger banks have on their hands, one of the biggest tech challenges that has ever existed. If they want to be competitive in a future environment, especially the development of a lot of virtual and digital banks, they're going to need to get their backend systems fixed. And the truth is if you do this well it's not just risks in the client that are identified. But you also can identify cross-selling opportunities, because you can identify changes in a client's behaviors and what they want to invest in. But we do it so badly. And it's just shocking the number of times I see it over and over again. This is not a problem that started yesterday, we've known about it for years, but we just don't seem to really want to fix it.

 

Denisse Rudich  12:14  

I think it is also the ability to share information on kind of like cross-institutional pieces. So, I think it's also the laws and regulations and what they allow you to do. And one of the areas that I am excited to see what they can do is transaction monitoring Netherlands. Where they are actually a national level consortium to be able to, to identify a transaction from banks A to bank B to C to D. I'm just hoping beyond hope that the model is actually built, that allows for a data sharing on a kind of national basis. So, you could then start picking up the payment, the illicit flows in the illicit financing payment corridors, because now banks only have such a limited view of what it is that they can see. Another bank has a limited view, not every organization and not just banks, but we are kind of we're looking at the whole ecosystem. Looking at crypto and looking at MSBs. Looking at all the different payment, formal and informal payment networks, everybody has a different piece of the puzzle. And about everybody operating in silos. It is also about the lack of data standards, and something that every time I get the opportunity to kind of say something to anybody that may listen and may have the authority to do something about this is the creation of common data standards. Because we do not have that. You have organizations like Open Government Partnership that are looking at creating data standards for beneficial ownership and transparency. If you look at simple onboarding for KYC, the way that names were captured, the way that dates of birth are captured, depending on the country, right? If you have Spain or Mexico, you're going to have very long names. What is the first middle name? What is the first name? What is the middle name? What is the last name, if you're looking at the use of different alphabets, a date of birth might be captured numerically, it might be captured using combination of alphanumeric. And things like that, they can be fixed. But it makes it difficult for data sharing and data to be analysed across even across different, like different subgroups of the same entity. So, we need common data standards.

 

Oonagh van den Berg  14:54  

This is the thing we have CRS and common reporting stuff. But you're absolutely right, we will not be able to identify complex networks unless we're working as a group. We've seen it in Hong Kong and the Netherlands. These intra bank working groups are going to be the key to success. One of the things that we have seen over the past year, has been the limitation of reviews and investigations because of data privacy. We've kind of created a utopia for personal protection of that data.  It was honourable of FATF when they came out to say that they're going to do a review of how some of the guidelines have been translated into regulation. Because we've ended up with de risking, we've ended up with other challenges and they want to understand that this was never something that we thought would happen as a result of best intended guidelines, but it has been, unfortunately, a negative consequence. The data privacy requirements somebody really needs to take a step back and practically look at that because that is a big challenge. The other thing that you mentioned too is the human trafficking and modern-day slavery and corruption. At RAW Compliance we have been working closely with Archana Kotecha. She used to work with Liberty shares. She set up her own entity, she is an amazing woman, she used to be a barrister in the UK, and she joined the UN. She talks clearly, but again, misunderstandings, the difference between human trafficking and modern-day slavery. She also talks about the immaturity of some views on these issues and why they exist. But these are areas that we are so passionate about educating people in because they are challenges that exist, modern day slavery exists all around us. And yet, we are a times I would not say ignorant to it, but we just maybe do not recognize it. It is important that we understand the typologies, to see ways in which we can educate people to understand and learn what we can do to make a difference.

 

Denisse Rudich 17:34  

I was at the Financial Conduct Authority and women's empowerment tech summit. They were looking at creating solutions to be able to support women who had been disenfranchised or cut out of the financial system. And I ended up meeting this incredible group of women. One of them a victim of, well, not modern slavery, not human trafficking, but domestic abuse. And we basically work together to see if we could create some sort of a solution that would be able to provide support to victims, again, not just domestic abuse, or economic abuse, or even emotional abuse, but also individuals who might be trafficked to see if we could create a verifiable identity, or verifiable aspects of their identity, that are using non-traditional data points. So, one of the big problems from a financial inclusion perspective, from the risk perspective as well and the kind of the negative impact of de risking or the unintended consequence of AML CFT legislation. Has been the number of individuals who just cannot get access to a bank account. Any kind of individual who is vulnerable, who has been trafficked, or who is a migrant, etc. Having access to something that helps them start building their identity or access to help. The challenge is that a lot of situations, individuals have their mobile phones that are being controlled. Their bank accounts are being controlled or set up under their names, and money put into the accounts under their names. Creating something where there was the possibility of either creating a self-sovereign identity that's hopefully GDPR compliant but that is creating new data points. It is harder for modern slavery and human trafficking but for victims of abuse, if they can get their GP to verify their identity or their National Insurance number or getting a school to confirm that this person is who they say they are. I think for victims of modern slavery, human trafficking especially if they are starting to get out of that situation. A charity who can confirm their identity so that they can get access to making services. So, they do not end up going back into the cycle of modern slavery, or being victims of trafficking, just due to lack of orbits or due to the need to rely on somebody who might not be the right person to rely on but who's offering help in some way. Really, important. 

 

Oonagh van den Berg 20:53  

The most important thing that we can do, as a society to help to make a change is first and foremost, to give individuals that are trapped in this space recognition that they are human. And I think that is something that has taken away from them, they are viewed as a product, they are viewed as a service. Something as basic as getting a bank account, to them, makes them feel like they have an identity, and that they exist. But we are taking away more and more from these individuals, their ability to be human. I love that you are talking about the work that is being done, because this is exactly where it starts. If we want to give someone a voice, we first and foremost need them to know that they are recognized, and that they will be heard. And that is the first step towards a mindset shift that needs to happen.

 

Denisse Rudich 22:20  

That is so beautifully put, the idea of identity, having a voice and being heard and being seen. I was thinking about this last week, just how identity can be an enabler, but it can also be a barrier, right? The things that people will do for money, especially when they are in a situation of desperation, it is just incredible. I think if there is anything we can do to try to think about what else is available, right? This is where kind of innovating not just technology but innovating the way that we look at the application of regulations and standards and look at maybe bringing the regulators and the standard setters moving forward with us to see what else is available. What are other options, right? As part of customer due diligence, you must identify and verify the identity of an individual. But where did it say that there were only these five documents that you can use? And what is there to stop us from saying there might be another way to do this?

 

Oonagh van den Berg 23:44  

One of the guys that was working on the architecture for our client onboarding. I told him from a regulatory perspective, we need to capture proof of address. And he said, ‘what do you mean by proof of address?’ So, I explained, what we need. And he said ‘but our target groups are going to be like 18- to 30-year-olds, most of these people have paperless accounts. So, what do you expect me to get from them?’ And he said, wouldn't it be a better idea, if we just ping them, we did a GPS ping to check where they are? Let us be honest, if somebody is a drug dealer, they do not want us to know where they are. So, wouldn't that be a better way to identify their location? It is so easy to do! They basically confirm their address you then ping them and again, you can there is many national registers that you can do a sanity check on if you need to. These guys do not want us to know where they are and at any point in time, we can ping them. And I was just like, this is genius. But we need the regulations to move with us as quickly as you know, the practical aspects move as well. So that was that was one thing where we can do so much positive work. Innovation getting this in front of regulators and just common sense needs to prevail. I'm a big believer that the work we do is at its purest form, it's simplistic. It's not rocket science, if you asked anybody on this, or any person walking down the street, they can basically tell you we've over engineer this within an inch of its life, with the best intentions.

 

Denisse Rudich  25:42  

I mean, originally AML CFT was developed to tackle for trafficking and get the drugs off the streets. And that was, you know, in the late 80s. And I think this is maybe where you and I maybe should give a shout out to, to the FATF and David Lewis. Could you please explore potential other data points that could be acceptable.

 

Oonagh van den Berg  26:05  

Actually, I do have a call David and a couple of weeks. So, I will say Denise and I were chatting on our podcast that’s in public domain now and we thought that we should personally make you accountable as the Secretariat to get this fixed haha!  

 

Oonagh van den Berg  26:28  

I think as well, we should be looking to the FinTech’s and the crypto firms as well, as they're evolving to provide us with much more guidance on this. Because we do have quite a traditional view of things coming from the traditional banking background. And it's amazing the innovation with the FinTech’s and the crypto firms that we're seeing coming through. But honestly, I'm incredibly conscious one that we have covered an entire spectrum of AML. We haven't even talked about trade-based money laundering or the likes. I honestly believe that you're somebody that I could sit with for hours and talk about this nonstop.

 

Denisse Rudich  27:10  

This is where you can see I am an AML geek, I have found my spirit animal!

 

Oonagh van den Berg  27:18  

We are like kindred spirits! We set up this global social enterprise RAW compliance. And the reason I did it last year was I feel that there is such a lack of knowledge and information sharing across our industry to drive innovation. If we would just start speaking to each other a little bit more and talking about technologies and challenges. It may just be the spark, that kind of starts an idea in somebody else's head. That is where innovation is going to happen. So, we set up RAW to kind of try to push this message. We also as well set up a mentor mentee program because there is a real lack of mentor mentee programs across our industry, not just in AML. But across the board. And the reception to it has been phenomenal. Some people have like reached out a little bit extreme and said, ‘I've been looking for this my entire life’. It’s just being able to help people. Do not get me wrong having global standards and AML education such as ACAMS and ICA is so important, it is so important that we can show a minimum standard of qualification. I had a conversation with a ACAMS the other day about this. In our work over the past six months in RAW Compliance, we have seen a number of people that haven't been able to either progress in their careers or get jobs in compliance, because of financial exclusion, ie they cannot afford the qualification. And in my opinion, this is wrong. We aren't a middle-class job. That's not at all what we're about. We're talking about trying to help underprivileged and disadvantaged people, that also starts at our front doorstep, we need diversity, we need people from all walks of life coming in to challenge the work that we're doing to bring different perspectives and viewpoints. But if we are not even letting those people over the threshold, because they don't have the right qualification, we need to have a long, hard look at ourselves. And as we said in Northern Ireland, have a word with ourselves. Whether it's helping to sponsor people with the programs helping to change the way that these trainings are priced. I understand these are organizations, but we need regulators to do more. We need industries to do more to support training and development. And don't get me wrong during COVID. We've seen for example, even with IBF in Singapore offer up to 90% discounts or refund capabilities. Mauritius even have just introduced 75% rebate program for compliance trainings. These are amazing initiatives. And this is where we're able to remove that financial exclusion. And I want to see more of it, I want to see more of it happening in underprivileged locations as well.

 

Denisse Rudich 30:48  

I think the Royal united services Institute are doing some phenomenal work, working with civil society groups and some of the emerging markets to help be a little bit more skilled in terms of anti-money laundering and counter terrorist financing and what that all means. To help them make the government more accountable for what is happening in their jurisdiction. So, I think that's one of the great initiatives and I believe that's actually being supported by some governments and it was seen as a gap that was needed to be filled in emerging markets. But I the ethos behind you founding your firm. I am also a founder, I found it Rudich Advisory in 2013. The situation that you shared on LinkedIn was like something that happened to me. The bank that I was working with restructured, and I could have applied for a role to stay in. Or I could have left the organization, which is what happens during a restructure of every large financial organization. So, I tend to think that if you have worked in banking, you have been through this, right. There are reworks. And it like an open secret that people do not like to talk about. From a psychological perspective, it's a very difficult thing to go through.

 

Oonagh van den Berg 31:57  

I was embarrassed and ashamed. I was absolutely mortified. I could not believe that something like this could happen to me. You know what, when it happened, in all honesty, this sounds like a terrible thing to say. But when it happens to other people, you're kind of like, phew, it wasn't me. I rationalized that I understood the reason for the restructuring. And there were multiple positions taken out and the money was going to be reinvested in automation, etc. And then that whole imposter syndrome started to set in…actually, am I any good at my job? And I started to go down this very slippery slope of questioning my own capabilities. Have I oversold myself? Did I reach my peak? I was like you know; I need to figure this out. And there was a course at Yale and executive woman leadership. And I signed up for it. And I wish I had done this course 10 years before it focused on values, innovation, and networking. And it talked about the types of networking, it talked about values. And I never realized just how strong my value driver was. Even the professor said to me, they have not really seen anybody with it is so strong, because it's probably a blend with other values. But I discovered, I am bloody good at what I do, if I may say so myself. But I was in the wrong environment to flourish, absolutely the wrong environment. And if I just took that passion, and harnessed it in the right environment, which is what I am trying to achieve now and use the amazing, amazing network of people that I have around me. We can make a credible, credible difference, we can make a dent, we can make a difference. That course absolutely shows, and I've recommended it to a number of people who've gone on to take it and they've also felt the same empowerment from it. It is transformational. It was just amazing.

 

Denisse Rudich 34:00  

Amazing. And I think going back to your point about like how you felt, I think it's like an open secret in the city or any big financial centre. Everything is getting gets restructured every few years. And that means that not just you, but like everybody gets put at risk. But the way that it is done sometimes makes it feel so personal. A number of heads of financial crime tends to be some of the women that have been through this who are a little bit more open about what's actually happening, because again, some people just keep it silent. The restructure is happening, they have all been put at risk, etc. The ones that decide to stay because again, quite often you may or may not be given a choice as to whether you apply for something internally or whether you want exit. But it can lead as a catalyst for the creation of something that you need without realizing that you need it. So, I set up Rudich Advisory in 2013. And again, the whole idea was to work on collaboration and focused on co creation. And also knowledge sharing, right? Even speaking with you today, I've learned a lot! I think the age of keeping everything to ourselves and trying to kind of protect our ‘backyard’ or whatnot. I think, given the way the world is evolving and the fact that we kind of live-in a in a borderless world, the fact that I'm having a conversation with you and having a such a great time here in London, and you're sitting in Hong Kong, like how amazing is that?

 

Oonagh van den Berg 36:11  

What modern technology has done for us to remove borders and remove boundaries has been phenomenal. I am so happy that your redundancy has had such a positive impact across our industry in terms of what we have been able to get from you. Because, as I said, at the very beginning of this podcast, your reputation proceeds you and your knowledge, your ability, and your passion and your drive for what you do, proceeds you. People talk about it openly and being able to speak with you today. I have learned so much from you today. To be able to have these conversations, talk openly about issues, and not be afraid to share our stories, and kind of the challenges. This is one of the biggest things that I have learned over the past year is to embrace our weaknesses. And we are not encouraged. I think even as children. And even as women to an extent we are not encouraged to share our weaknesses. It is you know, focus on your strengths, not in your weaknesses. But our weaknesses are where our biggest strengths lie, because if we know where our weaknesses are, and we can bring other people into the journey with us who have as their strengths or weaknesses, there is a phenomenal amount of positive change we can make. I am just so honoured and nice to be able to speak with you today. Not just as a woman, but as a person in our profession. The work that you are doing is phenomenal. And it is such a privilege to be able to talk with you.

 

Denisse Rudich 38:29  

I am going to have to compliment you as well, in terms of I think, I guess it was your redundancy that led to us being able to have this conversation! But like the right opportunity and the fact that that event led to us having this conversation. So, I want to say that I have had a fantastic time speaking with you. 

 

Oonagh van den Berg 40:01  

Thank you, Denisse!

 

How Does Denisse Stay On Top Of Everything?
Crypto
Improving Old Systems
Human Trafficking and Modern-Day Slavery and AML
Knowledge Sharing
Rudich Advisory and RAW Compliance
Modern Technology