Key Take Away From The 2nd Fraud And Financial Crime Conference In London

Bleckwen were delighted to participate and contribute at what was a fascinating and high energy event in London this week.

During two days filled with presentations and panel discussions, a wide-ranging audience discussed the rapidly moving developments across technology landscapes, regulatory topics, debating the psychology of crime and, of course, looking into evolving criminal strategies. Participants left rich with an updated set of relevant market statistics, estimates and predications.

 Fraud: the 15th largest country on earth!

Businesses everywhere are now affected in the broad wave of financial crime in all its guises: 47% of businesses have been affected by financial crime within the last 12 months. It is estimated that $1.47tn is lost to financial crime globally, which is 5% of global GDP according to one estimate. This criminal community (call it “Gotham City” just without Batman to oversee things!!) would rank as the 15th largest country on earth. Staggering stuff!

5% of global GDP was lost to financial crime during the last 12 months  

At the same time, it was also noted how cultural and reputational issues meant that not all financial crime was disclosed to allow the broader financial community to effectively mitigate or organize against repeat, similar attack profiles or bad actors.

Regulation speeds up

During the conference, there were many engaging discussions around Bank’s levels of readiness in respect to the 5th Money Laundering Directive (5MLD). For a number of banks the pace and speed at which regulatory change was approaching was raising concerns.

Considering that the 4th AMLD is not fully deployed yet, the 5th AMLD will put additional pressure on financial institutions and require new processes to be implemented. As an example, they will have to use the Ultimate Beneficiary Owner (“UBO”) registries put in place by local authorities as well as report any discrepancies they identify between the information gathered from customers and that which is available in the official registry.

Given the pace of regulatory change and the corresponding new requirements to be placed upon financial institutions – the upcoming 5MLD was compared to the recent implementation of SEPA where, as an industry, there were varying degrees of bank preparedness as deadline dates approached and with a corresponding awareness that not everybody would be ready on time to meet the new obligations.

The Arms Race

One recurring theme throughout many discussions was an acknowledgement of the rising level of collaboration amongst criminal fraternities. Against this backdrop there was a recognition that the evolution in real-time payment platforms and corporate/bank strategies were changing the nature of threat. A corresponding response in solution technology approach and architecture is now required. The situation was characterised in one panel session as being akin to an ‘Arms Race’ developing between the criminal and the business/individual when it comes to Fraud, Anti-Money Laundering and broader financial crime.

With views shared from the senior experts within, for e.g. the Metropolitan police, large banks, technology providers and European regulators, it was recognized that there is increasing sophistication, speed and also threat level and as an industry and as a community we need to respond quickly.

The most effective counter-strategy will need to be federated and collaborative 


Leveraging technology and AI

David Christie, Bleckwen’s CEO, joined a key panel discussing the “Uses of technology of AI and Machine Learning to automate and increase fraud and AML detection”. In today’s faster moving and more dynamic space, models based on averages or generic rules are no longer to be considered best-in-class: the rules can be quickly subverted by an intelligent, well mobilized and connected criminal fraternity.  Also broad averages would not adapt and adjust to individual profile development and hence would throw out too great a field of unnecessary investigations leading to both operational, cost and client friction.

AI and ML are now being effectively deployed in the fight against financial crime and particularly fraud detection. Noting the processing power, detection capabilities, intuitive nature of Bleckwen’s technology and enhancements on basic ‘rules based’ platforms, David highlighted how Bleckwen’s solution is geared towards addressing both the authorized and unauthorized fraud processes.

A critical differentiator amongst AI based solution providers is the “interpretability” of the output: humans need to know on what elements the algorithm has based its decision (the contribution of each variable to the results). Interpretability allows them to make an informed decision in an efficient and reliable way. Bleckwen, as a company, believes “Interpretability” to be a key for effectiveness.


To effectively fight fraud, AI based solutions need Interpretability  


Another take away from this conference is that regulators were now placing increasing weight and focus on Interpretability of AI to help both understand but also further mobilise these critical, advancing technologies.