The last we spoke with Gert Demmink, he spoke on the fact that billions of dollars are spent on futile efforts, like employing the proverbial Chinese Army of compliance officers, most of whom may know a bit about AML, but next to nothing about the actual business and transactions.
Gert offered some valuable insights to what could be done to tackle the issue and how it can so often relate to many regulators, who can only thrive by regulating big banks.
We decided to catch up with Gert, and see what has changed since we had last spoken with him.
The last time we spoke, you mentioned how, in order to tackle money laundering, banks should be authorised specific licences for specific transactions and levied with transaction tax; have you seen any developments in relation to this notion?
No, however in the Institute for Financial Crime (IFFC) in The Hague (partner of The Hague Security Delta) we will for sure pursue this dialogue further.
You stated the most pressing issue was shifting budgets from banks, to the intelligence and police forces; do you believe this is still the matter at hand?
Very much so. There is progress on this topic based on the August 2017 report from The FACT Coalition “Countering AML; Total Failure is ‘Only a Decimal Point Away” where it is stated that the incentives for law enforcement should be changed. From comparatively simple cases and quick arrests that look good statistically, to recognition that financial crimes investigators require specialised expertise and should be rewarded for it.
As Thought Leader, can you share ways in which the UN, US and EU could reform in order to ensure regulatory requirements are met on a wider, smoother scale?
As I mentioned in my previous interview, regulatory requirements could be geared towards the ‘Security Agenda’ thus taking a much more risk based approach as well. They ought to instantly deal with imminent threat and serious crime and do not shoulder financial institutions and corporates alike with responsibilities of handling petty crimes. If our respective governments find that an agenda is worth pursuing, let them make the funds available too. Currently, this agenda revolves primarily on the financial sector and the game is not worth the candle.
Can you share with Lawyer Monthly the challenges involved when you were responsible for setting up the Dutch Antilles FIU? How did you overcome these challenges?
In 1996 – 1997 when I was responsible for setting up that FIU, I was faced with the usual – and understandable: reticence. The legislation was passed and then, all of a sudden someone comes over from Europe to bring to life the ‘devoir’, to report unusual and suspicious transactions to an administrative body – a bumper or buffer between the financial sector and the investigative authorities. That buffer and analysis function of the FIU proved to be helpful in my position to sway the argument towards reporting and being exonerated for carefully reported suspicions. This took away some fears that reports would be picked up by the police immediately and that these would cast a shadow over the reporter and the ‘reported’.
Can you explain how your years of experience enables you to build various regulatory framework including Customer Due Diligence risk-based approach for banks?
Having worked with the Justice Department in exchange for intelligence and investigative information (police, prosecution), and having to set up an FIU as well as the AML/CFT regulatory framework for the Dutch Central Bank between 1998 and 2006, provided me with valuable insights into the ‘metrics’ of how an effective and risk-based framework should be designed, built and implemented. On the basis of a proper and well thought out risk analysis involving the ‘business risk owners’, I can come up with results quickly and convincingly. Actually, all it takes is an ‘iron logic’ to distinguish between a risk and the corresponding risk management procedure or measure; the latter designed by crisp, clear and concise policy choices. As Johan Cruijff, our talented and famous football player used to say: “You will not see it until you have it”.
What motivates you about your role?
Being able to help financial institutions and corporations improve their risk management and compliance framework, achieving more results against lower costs.
Is there anything else you would like to add?
Risk management and compliance must fully embrace artificial intelligence, algorithms, and the Fintech and Regtech developments in order to stay relevant. No doubt that also in these developments there is a need to separate the wheat from the chaff, but there will be gain. With Philip Sidney, we are working on some very promising joint industry platforms, also with the IFFC.
