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now we've got a great panel of extras we'll share their insights best practices and practical strategies will cover enhanced religious techniques compliance Frameworks might catch up on Technology Solutions and the importance of more actually ongoing monitoring of these relationships and we aim to you know as much as we can leave you with the knowledge of the tools you need to navigate this is a fascinating world of private banking and and highest customers in general so let me introduce you to our panels I'll start with a lady in the room Anna Anna is from Cyprus same place I am coming from She's the founder of AML tube uh compliance with the ml experts and obviously a faculty member for GCI Anna brings over two decades of experience in the financial industry sector we actually work together in none of the banks in Cyprus a few years ago as the founder now famous Cube uh her company aims to demystify Financial crime and educate individuals on its workings with an extensive background in banking electronic Money Services and the investment industry Anna possesses a deep understanding of compliance requirements within the financial sector Anna's passion has not stopped there I know that Anna has a particular affinity for the crypto industry and this is especially knowledgeable in the field of crypto AML keeping a close eye on regulatory Financial crime developments both in the EU but also globally Anna Works tirelessly to ensure that companies meet their AML regular applications uh Holger called el Paco t-shirt um friend for many years a passionate senior Financial crime professional who brings a wealth of experience and expertise to the table um he warned me that his CV is quite long but I'll try to make it as as small as I can with a remarkable International background he has gained a strong reputation in the national International anti-financial crime field he has a unique blend of knowledge and handsome experience he's recognized as an SME in financial crime he's actively involved in in conducting uh comprehensive training programs and frequently invited to speak at International conferences and symposiums um his professional journalists quite impressive he started as an analyst but he worked his way up the ladder to eventually show the global responsibilities at one of Germany's largest banks and you know driven by this passion and desire for new challenges whole care made a transition into the Consulting field where he continues to make a significant impact last but not least five alyssum um great friend coming all the way from from Canada um director of compliance and direct Tech at Paradigm fintech who actually offer uh services to European fintech Advance specializing in go to market strategies platform development and integration and Regulatory Compliance training he plays a pivotal role in assisting fintech companies and banks in devising and executing their compliance to diligence and payment product programs and within redtech he also focuses on SMU and strategy providing valuable insights and guidance to drive success his expertise obviously extends Beyond his role he's also a writer a trainer and a speaker and his passion lives in making tangible difference in the world of compliance so thank you all for being here today and joining me in this exciting webinar and I think you know given time constraints let's start with a discussion and Anna if you don't mind I will stack with you how important do you think it is to identify those hardest customers we talk about risk assessments we talk about risk rating customers but how important is it to you know out of all the customers in your portfolio to identify those various customers and our topic today is private banking what are those risk factors that are unique to private banking customers compared to say a retail banking or Commercial Banking or corporate banking so hello from me to everyone thanks for the introduction great uh now why it is important to identify high-risk customers it's important not only important it's essential it's vital foreign entity to identify these high-risk customers why because if an entity refers to identify this client it's exposed to extreme reputational financial and compliance risk why because these high-risk customers are the customers which have a higher probability to be involved in criminal activity and money launder interest financing or fraud or any other criminal activity they have specific characteristics that increase their uh their irregulated entities exposure to money laundering because if they are involved in any criminal activity they need to pass their illegally derived funds through the financial system so how are they going to do that with the use of the bank and this is why a bank is exposed another only Bank any regulated institution can be exposed to extreme money laundering terrorist financing risk if they fail to identify the risk associated with each and every high-risk customer that they have now regarding the second part of your question what are the risk factors uh that are unique to private banking customers as you have stated in your introduction uh private banking customers offers uh private banking department offer their services to wealthy and in some cases to ultra wealthy clients and this clients they have specific needs that retails clients don't have uh for example uh a retail science what does a retail client need they need a bank account car payments to pay their bills um and this type of uh of uh Services now the wealthy clients have other needs to preserve their wealth to grow their wealth and they need um hedge funding Structured Products investment advice family offices in some cases tax planning advice also so this um are the difference between wealthy clients and Retail clients and to achieve these objectives uh higher and Wealthy clients they often need cross-border services in some cases International services and they have links to multiple jurisdictions they are part of a conflicts they use conflict ownership structure for tax efficiency and these are why they they have higher risk of being involved in any Finance any criminal activity or money laundering and this type of illegal activities additionally private banking often attracts pairs which are vulnerable to corruption and bribery and again it's important to identify these steps and conduct enhance due diligence to ensure that the company understands the risks associated with this type of clients thank you very much Anna and we'll come back to enhance abilities in a bit but before we we um uh we do that uh Holger um I know in the past we have had some discussions on this um you know with the with the Panama papers back in 2016 or 2017. there was a lot of discussion around shell companies and we've done some trainings together on shell companies um that that you know and how they can be used to launder criminal funds um you know how do you how can we Define shell companies and how are shell companies used in private banking there are some definitions out there and some Regulators have you know have made it a bit more streamlined and a bit more specific um but uh you know over the definition do you have some examples to share so that we can understand the risk with shell companies absolutely um so first of all um a shell company is nothing bad or evil um a shell company um can be used them for um multiple um completely legitimate reasons um and it's very often used um in a private banking um for um some reasons which I will explain in a moment um so first of all um to answer your question what is a shell company a shell company um it's a company with no physical presence um with no employees who's no actual productive activity um it's just there in the context of private banking um to hold assets and to hold wealth in a lot of occasions and there's something we have seen in the Panama papers um it is actively managed by what we call a trust and Company service provider um which Mosaic Fonseca was and um because of the various risks connected to Shell companies in private banking and this trust and Company service providers are also nowadays um obliged entities under many AML laws and regulations um so when the company is used for the sole purpose of shielding The Beneficial owners of avoiding um that Banks and other financial institutions um comply with their legal obligations to identify the persons behind it then it is something going into the field of illegality and that this is the same as with criminals it can be exploited sometimes there are legitimate reasons um for using a shell company to Shield The Beneficial owners especially um for people um in high risk jurisdictions where we have a high level of crime where people rich people are also getting um getting kidnapped for for resume automl companies are used also to protect them this um Rich individuals so as a private banking organization or someone else dealing with shell companies the important thing is to understand why is there a shell company why are we not dealing directly with the customer but why is it shielded by a shell company or a series of shell companies until we reach what we call the ultimate beneficial loan and this is our legal obligation companies or any other legal entity is never founded never funded and never acting on its own there's always a natural persons behind it and this is what we need to identify so what are reasons um for a shell company in the context of private banking and Anna already mentioned some um sometimes it is for a tax optimization um which is not the same as tax evasion so if it's used for tax evasion obviously it is illegal but they are complete complete legal means to reduce your taxes one example is um that in some of the states in the United States if you acquire property as an actual person you need to pay property tax if you acquire it as a legal entity you don't need to pay it so and this is a complete legal loophole to reduce your tax um another reason is companies don't die people do so if I'm a filthy rich individual and all of my assets are hold um by by a shell company um and I die it's just the the business is going on so that the banks don't need to stop um it's just a continuing um to manage my wealth um and um it's only that all of my um my wives and boyfriends and girlfriends and kids and whatsoever are just quarreling in the background and at one point um the banks will rewrite who's the beneficial owners and who's the controllers um but um if I'm holding it on my own name there is a full freeze because I'm dying until all of this quarrels are set um so this is one of the the main reasons um to really hold and manage assets and to ensure that there is a consistency independent of a natural person yes and I guess you know all these um falls under um the the the the basic definition of private banking right you know they've got all this wealth they need to sort of um tied it in in a way that that makes sense usually the uh the customers get advice from different uh past and Cooperative service providers as to how to set up their their different structures and you know it does make sense for them to use uh these sort of companies at some point uh but going back to um uh our discussion with Anna um you know we've got this complicated structures these complicated customers what happens when you come across a private banking uh customer or you know high-risk customers for that manner um you you mentioned in hospitals what is enhanceability yourself a lot of times people are confused right and I I think we reached the point where um the customers to delicious in some cases is not very different and there is a bit of confusion but what what is enhancer diligence and how is it different to customer due diligence so first of all um I had to diligence is building on customer due diligence and this is what a lot of people um don't don't see or understand um Our obligation is to um comply with customer due diligence so legally defined steps um in the laws and regulations um and um if we identify higher risk then we need to do additional steps which is called the enhanced due diligence and then of occasions enhanced due diligence is doing more of the same so we are identifying now 10 percent ownership threshold instead of 25. we're having further approvals we are doing further due diligence and one of the things we need to do and I think we will also come to this later on um is to identify um the source of funds for our specific relationships um so and this is important to remember EDD Builds on CDD and it's different from what we call kyc even all of this is sometimes mixed um we are in a position and this is a very good observation of you um where a lot of banks increase their normal due diligence measures their CDD measures already to a point that the difference between enhanced due diligence and customer due diligence um is not So Much Anymore um but um in in general enhanced due diligence means um we are doing more screening we are having more scrutiny um and um the most important part is um we are reviewing our customer relationship more often um than we would do it um with um a normal um customer so in in most International Banks um we have review Cycles um of one three and five years um so low-risk customers every five years um and in the same time we review our high-risk customers um five times in order to ensure um that all of our information is valid um that nothing changed and that we are aware of all the risks and no new risks emerge so this the reason of this periodic review cycles and this very tight review Cycles um is to ensure um that we are aware of the risks yes I would say that customer due diligence is mainly comprised of some steps identifying and verifying the customer identifying verifying The Beneficial owner understand the purpose of the business relationship and ongoing monitoring which includes customer reviews and transaction monitorings enhanced due diligence is actually customer due diligence plus plus work plus additional information so in high-risk customers we need to obtain additional information about the customer more information to understand the risk associated with the business relationship establish the source of wealth and social funds already stated by hoga information about transactions enhance transaction monitoring for example for a retail client we can identify verify the client with the use of an ID maybe we can ask a YouTube utility bill for the address and payslip to confirm his salary but for a high-risk customer this is not enough uh we need to gain additional information to understand this complex risk profile it's like taking our customer due diligence to another level we need to establish sorts of wealth for example we can ask a business ownership documents sale of assets document we can ask for uh inheritance documentation tax information dividend information to establish the source of funds and other information to identify the source of so there are differences between customer due diligence and enhanced due diligence uh in my mind I have it customer due diligence plus additional information equals enhancing diligence true true um and Faisal give me one more a minute I will I will come to you before I do though I want to ask okay actually um one more question in private banking there's a lot of talk about gifts and entertainment uh and we had a discussion before right in private banking gifts exchange can sometimes um you know be far from symbolic you know formula tickets private high profile events your parties cruises and I like I I know you like your parties and cruises and it seems like expensive but you know Michelin star restaurants expensive hotels to name just a few how is this impacting the management of risks in private banking do you think of high-risk customers and then this is um bribery and Corruption risks and so you just mentioned Formula One tickets and and I remember um and and one situation um where customers were invited to Formula One race with a plus one um everything is paid including hotels and so on and so on um and um they even got um an iPad um where all of the um all of the um that Stables all of the um drivers and so on all of the information you need um is um already there um and um what happened is um there was an escalation um of these customers up to the global CEO um because um how dare they they invite us with the plus one and they only give us one iPad so we're talking about people um having dozens of millions of views and US Dollars and they are very demanding and because they know um that uh um their Wells with the business the bank is doing with them um they are also providing a lot of revenues and private banking is very competitive because all of these individuals they're not only dealing with One bank and they're dealing with multiple banks with multiple jurisdictions um so um they can also play those against each other um and uh get what they are demanding um I also know that some wealth management banks have concierge services for their ultra high net worth um uh individuals and where um you can call the bank to get um plane tickets to get um the concept tickets and so on and so on um and uh this this this is a challenging situation because um up to what level it is still appropriate and just um to maintain a custom relationship and at what level um it is getting inappropriate um and it could be perceived as we are paying like Kickbacks um or um we are trying to give if a client extensive gifts in order to get a relationship with him so this is a very short line and unfortunately there is no Silver Bullet for this um solving the problem it is really on a case-by-case basis um to decide what is appropriate um there's also this this element of social adequacy what is adequate um for this kind of customer and at what level we are already getting in a cray or even um in um in a criminal or forbidden area thank you thank you so much Walter and Faisal thank you for your um patience um and you know you are the guy I tend to for anything crypto related and we've been doing this we have having this back and forth for years why are cryptociries you know we talked about private banking customers and I'll try to put the two together in a bit but you know why are people starting and how is enhanced due diligence that Holika and Anna discuss different in cryptos and what is it that we need to be comfortable with in this case sure uh thanks a lot Greg so cryptocurrency customer groups fall into this really interesting category uh not unlike sort of your uh retail category where you've got your base customer profile and private banking customer profile and crypto customers also fall into the same category where you have your retail based customer profile and you also have high net worth individual High net worth entities as well in the crypto space uh the the main reason um is is really twofold first and we have to go a little bit to the basics here uh we've already you've always known the three cycles of money laundering but when it comes to cryptocurrency layering itself that stage is highly complex in cryptocurrencies um and so deconstructing layering attempts requires a higher level of sophistication because the amount of certification required to impute layering was that much more difficult that in itself is already very difficult second is integration in terms of cryptocurrency related illicit illicit crime is much easier and that's one of those things where in the traditional space it's not as easy so for example at the end of your cycle what do you want to be able to buy yourself real estate uh real estate with illicit funds there is quite a bit of cost and it also takes a little bit of a Time whereas with cryptocurrency that last session of integration is far easier and then finally um you know I always say that my laundering Cycles are not three steps there's actually a fourth step which is repatriation in other words enjoyment um there's no point in laundering illicit funds if you can't enjoy it there's absolutely no point to it so in terms of traditional spaces the repatriation takes also time and it also takes a lot more effort whereas in cryptocurrency you can there are fairly enough amount of suppliers in the service provider space that are willing to let you enjoy Elizabeth illicitly gotten gains uh from cryptocurrency so that's the first reason why it's inherently difficult second is more a question of numbers for every million dollars in the cryptocurrency space roughly about three thousand of it is illicit whereas in the traditional space for every million dollars roughly 80 cents is elicit that inherit disproportionate risk in terms of density of illicit funds with regards to financial flow just makes it inherently more uh you know higher and we were talking about something in the order or magnitude of 300 to 3000 times more and so if you are a financial service provider that has that provides services to cryptocurrencies it's one of those things you have to be aware of and finally with regards to why enhanced due diligence is more difficult is that delayering part has to do with not just a single cryptocurrency a lot of times in your private banking clients that look whole cryptocurrencies they hold multiple portfolios across multiple different types of cryptocurrencies and different Investments as well and a lot of the activity might sort of imitate an illicit actor but not necessarily itself and so sort of demystifying that D that layering complexity that's inherent to cryptocurrency is just inherently uh more difficult thank you Faisal and you know today's sort of discussion is more about private banking customers but you know we have those private banking customers in banks that actually deal with pictures right uh you know it's it's becoming more common um nowadays so what about the private banking customer dealing with cryptos uh and perhaps the product of you know the subs of funds is cryptos what do we need to ensure in this case sure I mean let's start with why we even deal with private banking clients in most commercial institutions private banking clients and their returns are subsidizing the bank's effort to be able to cater to uh Main Street customers right the only way a bank or financial institution can afford to submit to provide a very low cost checking service almost at a loss to Mr and Mrs Jane and Smith out there the only way they can afford to do and and have lost leader products is actually catering to private banking clients right there's just no other way to be profitable in the banking space even in the lending space without resorting to having private banking clients now a lot of this private banking Clans unlike other customer categories are not sort of single-minded they have multiple different risks and tastes and profiles across that spectrum and so a few of them actually have a higher higher taste for a risk appetite and want to include cryptocurrency as part of their portfolio as a result one of the things they will do is that they will assign the private Banker to come up with certain solutions to be able to do it whether either exposing five percent to ten percent of their portfolio to cryptocurrency and let it ride so to speak a lot of times for example a lot of the private banking clients instead of taking the asset route we're going to take the lending route and essentially take collaterals based on cryptocurrency Holdings they have and then take on further risk as a result the main reason why it's more difficult than than not is it's hard to estimate sometimes what a private private banking client's tastes might be uh private clients that have a taste for cryptocurrency might have tastes that change quite often and a bank might not be capable enough or flexible enough to be able to switch on the go especially with the way cryptocurrency uh Market works and how fast it works and all the different innovations that come into space it's just not capable sometimes for a bank to be able to adjust to that same profile one of the interesting things that I've always found interested with my clients that are in the private banking space is that they have profile meters so they know for example certain their private banking clients what they prefer buying which type of Manufacturers they go to which which designers they prefer which artists they generate gravitate to or at least the type of art that they gravitate to and whenever they look at their purchase history and so on a lot of the ml compliance folks actually look at well which type of painting did they buy what category was it in and if it differs from the category let's look into those further because that's obviously out of their profile which designer handbag did they buy that's usually not a designer handbag they in actually buying so let's look at it a little further why that differing taste this kind of sort of profile customization that a lot of these institutions know very well about it's hard to do for cryptocurrency because if a initial cryptocurrency private customer was initially only in Bitcoin but suddenly wanted to get into ethereum and a few of the all coins and certainly jump on and go on this latest new nft or web3 and whatnot it's hard to keep track of it because you don't have you don't have certain profile that you can pick to and make sure you monitor the risk ingly that's that's the main sort of difficulty in that fantastic um we might talk a bit about a bit more about cryptos in a bit um but there is a question I I would like to ask a vulgar um and you know it has been a sort of a long-standing discussion uh and it is a discussion about content passports you know inside especially we've had a lot of discussions about Golden passports in fact a couple of years ago there was an investigation by uh the Al Jazeera News Channel that revealed that the head of parliament was called making it easier for criminals to get a passport into Europe by making investments in Cyprus with possibly uh funds sourced from um criminal activities assassins immediately canceled the program and even canceled the number of passports and they're still doing it they've canceled a few passports a couple of weeks ago um you know what what is your take on this why is this still happening around Europe and what does that have to do with with private banking what is the connection there so why does this still happening in Europe um is something that I really cannot um answer because some there's so much negative media around it already um especially also um nowadays in the context um of the Russian belarussian sanctions um where um the um the relatives the sons and daughters and wives and whatsoever of the oligarchs um can still freely travel through Europe um with European passports um acquired by this golden Visa programs um and um first of all what is a golden um a golden passport or golden Visa means and it means that you are investing a significant amount of money um in a jurisdiction um and um by this um you are getting the citizenship um and uh by this also the passport and the entrance to the European Union and obviously um SM you need to invest a significant amount um this is something which is very appealing um to our private banking customers who have significant amounts of money and I just want um also to have the benefits of passport access to the European Union and so on and so on um originally they were set up as an investment programs and so if you have someone investing heavily um in your economy um it is um it was seen as a kind of a reward um for um supporting the country but nowadays um it is more like you're buying a citizenship um and this is in my view fundamentally wrong um it also poses a quite significant risk for organizations and so first of all um is taxation risks so if um we all know about this this fat guy about this come reporting standards and so on and so on we all know that we are sharing um this text information nowadays with our government that the government is sharing it with other governments and so um and this um it's making it very complex for us um to assess is a customer who's having um it's a really in text compliance or if ever we are exploited to support some tax evasion of this customer um it's um also um opposing significant challenges um with regards to the current sanctions programs which for the very first time um is not only aiming at a jurisdiction or um at a specific persons and entities but also at the at persons holding a specific citizenship um which is um the Bella Russian the Russian citizenship so um if you are Russian citizen um living in the European Union um you are also subject to certain restrictions um if you are not also a European Union citizen so um with this um the European Union citizenships acquired um through golden passports um you're just being able to circumvent um the sanctions um completely legally and with this it's just adding um a lot of complexity and address and to what we are already seeing and there were some private Banks right in the past that would help um people um actually complete the application and submit the Investments and uh you know through the whole thing you mentioned the Panama papers um and um everything that we we read about the Panama papers um about what private Bankers um have been doing for their customers is that all of this is true um and it is still true I I said that some banks having a concierge service um for the high Network customers so if you're a Russian oligarchs um and um you are having your account as a high net worth um individual um with a Swiss bank you can just call them that look here where I'm getting my European Union passport and they are doing everything for you um so this this is still still nowadays um it is true um that Banks um are going the extra mile um to please this ultra high net worth um individuals including also so advising them on the Golden Passport schemes and and how to acquire um the citizenship for sure and you know during this discussion we mentioned peps a few times um both you know in the private banking context but also you know talking about even golden passports you know Anna if you don't mind me asking there are a couple of questions also in the chat you know what about peps you know what is the issue with peps how can we protect ourselves from from product peps you know if we work in financial institutions and also is the solution you know to all these peps other highest customers just kicking kicking them out you know just you know not dealing with them um you know what is your take on this a person with a [Music] with them and what are the risks associated with uh perhaps uh they have power they have influence and it's very easy for them to abuse their position for their benefit uh some helps also have access to public funds how difficult is it for a pep talk said the bride for example from a company to secure that that company uh enters into contract agreement with the government or how difficult is it for a pet to embezzle public funds for his or her own benefit uh so these are the risks associated with have it's very easy for them to be involved in money laundering interest financing and other illegal activities now uh when dealing with peps and other high-risk customers the financial institution has two options uh first the risking meaning kicking out the client saying you know I cannot accept this high-risk customer or the second option is accept the customer and take measures enhance to diligence measures to mitigate the risk and ensure that the funds used throughout the business relationship the wealth of the client are not obtained through illegal activity and we need to remember that peps also have banking needs they have high risk but isn't indeed there is another way to mitigate those reasons no whether or not bank will onward or continue offering services to pets and other high-risk customers or whether it will kick out the client it has to do with the risk appetite of the regulated entity it's the entity in a position to accept the client and continue foreign services to that client and mitigate the risk through enhanced diligence or uh do we decided okay we will not accept this client I will kick him out we don't want him it both are options it all depends on how much risk a company is willing to accept to achieve its objectives so it all depends on that thank you thank you and I think quite people agree with you yes Olga please just just uh one one thing to to add um and uh um Greg is that a very smart thing at the start of the webinar obviously you're saying a lot of very smart things and this this one um it just is just a fitting in here and very nicely and you said something about risk and reward and this is something um a lot of compliance professionals um are ignoring we are not doing business without taking risks um and um high risk is nothing bad because a high risk should be also including a high reward um and no regulator around the globe um is is telling a bank um not to take on high-risk customers um the only thing they are telling them is you need to be in a position to adequately manage the risk you need to be in a position um where you have food transparent um about the risks you are taking and if so um then go for it because with high-risk customers um also normally um higher rewards came and it does just want to share one discussion I had with a private banker and he came to me and said oh Holger if you're doing all of this enhanced due diligence with the customer um anymore um and he thought that I'm saying that come then let's don't do this or don't do that but my answer was that your pricing is wrong so would you give a person like Gregory um would say a triple a credit rating the same interest rate um in the loan than you would give for some um some poor freelancer like myself um with a C or D credit rating close to default no you would not um because the risk with Holger is higher than with Gregory so holga is getting a higher interest rate um because um he needs to pay for the additional risk and the same is also true or should be true um with our AML measures if we have a customer um where we have a high risk where we need to apply enhanced due diligence where we need to apply an annual review cycle instead of every five years um then you should also price them differently to make the risk worthwhile to have the reward for the risks we are taking and I think this is a very important concept also for compliance professionals um to remember yes because many times we forget where the money is coming from where salaries are coming from we are working for businesses that want to make profit right so yeah totally agree with you on that and you know we we often talk about high risk customers meaning customers involved in in Harris Industries we've already touched up on private banking cryptos gaming um which we have not discussed yet Forex and so on uh Faisal when we were discussing this this webinar together between us um you mentioned something that I found very interesting Telehealth as well as the pharmaceutical industry you know and the issues that Merchant acquires payment facilitators and banks have been facing over the last few months especially the period since uh Kobe could you perhaps take us through these challenges and what we can possibly do about them sure I mean prior to covet the concept of sort of purchasing your Telehealth needs and pharmaceutical needs online was not a very mainstream event uh it was mostly only done in in real life situations on a counter basis face to face and so on but because of covet a lot of these type of services and open to the services got turbocharged where more and more people adopted Telehealth Services by Consulting the doctors and Physicians Online in a virtual matter um the uh prescriptions being prescribed also in a virtual Manner and the medications also being Acquired and purchased and shipped and all in an online manner as well as a result the public just sort of got more comfortable and confident with this but it didn't sort of erase a lot of the high risk histories that are associated with Telehealth and pharmaceuticals and mainly is a few things sort of whether the a patient is qualified and legally authorized to be able to ask for the service in the place that they're in and whether the practitioner or the service provider is authorized and and lead us to be able to provide that service as well and on top of this is more additional risks uh with regards to medication who is supplying the medication where is it coming from and so the problem statement is that acquirers and payment facilitators that board these type of submergents they really have a very difficult task in order to de-risk a lot of these service providers and pharmaceutical companies and pharmaceutical product suppliers as well when they want to onboard them because there's just a high amount of natural demand for this now than they used to be in the past so there are sort of multiple steps that a lot of acquires on Farmer pharmaceutical companies can do of course onboarding these Merchants verifying the registration checking the licensing permit reviewing the prescriptions and so on it's quite important but also checking the legality of where the jurisdiction of the patient is as well as the practitioner also review you know sort of deliver any type of delivery method of the of the prescription whether it's compliant with shipping laws patient data itself whether it's stored in secured and compliant uh uh places and at the same time what are you de-risking methods for these pharmaceutical Merchants now I've compressed basically in five minutes what is naturally a very large compliance program but the concept is that a lot of the onboarding for Telehealth and telemedicine first of all should be considered a natural approach and more and more in demand because we are just more open to it now and the public will be demanding for this and so the level and quality will go higher as a result and we want to make sure that if you're in a choir or a banking partner or payback and you are coming across these type of traditionally high-risk customers which still will remain high risk that you know how to be able to onboard them well and just to look at them a little bit closer um when there's demand for these type of services it's amazing how the world is changing you know it's it's this is happening in a very high speed and one of the things that I've seen change which is quite a basic thing today but you know a few years ago we were not really paying attention is how exposed we are to public information and public media um Anna I would like to ask you you know in the within the context of highest customers how important is adverse media today and how is adverse media integrated in our house due diligence and why should we incorporate adverse media screening in our ongoing monitoring so adverse media is a very valuable information we get information about our client publicly available information and it helps us uncover hidden risk that the customer may not have disclosed for our company now how do we treat adverse media it's like Eric's lab for us it doesn't necessarily mean that the customer is involved in illegal activity but must be an integral part of our enhanced due diligence so if we have adverse media we conduct more background checks about the client and of course we consider that information in the risk profile of the customer as a first step and we treat the information in a way you know what if the information what if they knew or the adverse media information is indeed true but also consider the other side what if the news are not true and this takes us to the seven step to evaluate the source of information does the information come from a regulatory body is it an announcement from the regulator is it from an official government publication from reputable news agency or is it from a website that we never heard before and then we move to the third advert media should trigger an investigation to check the customer activity whether there are indications that the customer may be involved in the specific activity indicated in the news so uh it's very important uh on onboarding and during the business relationship to perform background checks and adverse media checks especially for high-risk customers yeah what you said is true I mean we um it's very easy nowadays to write something about somebody and that that thing can go viral right um it doesn't mean it's true it doesn't mean it's um reliable uh you used to always check your sources always check you know maybe there's a bit of bias uh behind something that's that's out there um yet it is really important to take it into account because usually where there is smoke there is fire uh so you know taking this into a tunnel is is really interesting um and we did say I mean I would say quite a few times that the world is changing and I remember you know from the time I was a private Banker I didn't really have access to to a laptop at the time I'm not old it's just technology it's just something new a laptop and a mobile phone was a luxury uh but today you know we we're when we're talking about private banking we talk about the robot advisors we talk about sophisticated investment platforms so you know technology has grown especially during the last few years and it's so around us so I would like past Volker you know you know with this booming technology how has technology impacted the criminal abuse of private banking relationships how has it made it easier for criminals to help use this sort of relationship do you think so I think that technology is changing um a lot on both sides or on all three sites I would say both on the side of organizations of customers but also on on criminals trying to exploit um all of this products and services a bank or other organizations are offering um and um in in the context of private banking um I think it's it's getting um it's getting more and more sophisticated on how we service our customers and providing them around the clock um services for advising with all of these robot advisors and or other technical means and it also means that our customers are getting more and more in touch with us um so it's changing also with the um the introduction of um like real AI with a jet GPT um I think um the the way we are servicing our customers will also change tremendously and we also need to be aware of the risk associated with it and this could be and we we all see um what AI is capable nowadays of um in um providing um news in providing um um photographs um so when um we we are dealing with a customer um via remote access and Via cameras um who's saying that um this whole guy here is actually a whole group and not someone else just using um all of this all of this AI capacities um to look and sound like Holger um so um this this here it's just a webinar so no harm done um if I'm not Holger but someone um sitting um I don't know in India or the Philippines and pretending to be all good um but um if ever um I'm a private banking customer and my private Banker is getting instructions from me um to send funds um to a shell company um and um this is actually not Holger but someone from Nigeria the Philippines or South America or whatsoever um then um it's posing um significant risks and threats um for um both the relationship but also Financial threats for all sides um so it it's it's changing um but um we need and as with all other emerging threats and Technologies um we just need to think about um how we cope with it and how to implement further safeguards um and how to make sure that we we are not the ones being exploited here thank you Holger Pfizer um you know we already talked about this but I would like your take on you know how can we use technology in our favor and how to ensure we're one step ahead of criminals usually we're one step behind but how do we you know do we find that you know balance and and you know be one step ahead we're one step behind because we're inherently less competent than criminals as a compliance Community antimony logic could be unfortunately the truth is we are much dumber than criminals are criminals are our first adopter of new technology of new methods we just are not um it's actually the only field where the countering individuals have equipment that is far less sophisticated than criminals I mean think of it for a second criminals in the real space have guns so the police officers have guns in a situation where criminals for example have very fast cars David police also reinforce their cars solidly and also quickly to be able to chase them in the compliance community in AML and financial crime space we just are always one step behind criminals for example use Tor networks to be able to connect onto their platforms you decentralize services use private messaging services in the compliance Community there is not a day that an analyst has to help for how to be able to hook up their Outlook so we just are inherently more confident in more incompetent than criminals and we have to just get smarter about it so one way is to be able to use a lot of the products and services that criminals use they use Torah we should use tour they use air dot computers we should use their Gap computers there's a natural habit that's created and the way you counter a certain Risk by adopting the same type of tools of the people that are trying to harm you you get smarter you learn devices and methods here's another one you know how to talk about the need for adverse media screening how important it is here's the unfortunate truth we're not going to win this war and I'm sorry to feel this way but a lot of private banking clients hire specialized firms who they pay a thousand dollars a month per customer to be able to make sure there is deep cleansing and I'm talking about deep cleansing in the time of web media to be able to make sure that there is no incriminating evidence and in any type of type of negative media against them that's how much they pay they invest up to a thousand dollars a month to be able to do this for them compliance companies and financial service providers spend a thousand dollars a year on adverse media screening technology so there is there is just a not there isn't an area where we seek to win I mean we're not going to seek by just God's good gracious if we just go ahead and invest use the same equipment and invest equitably or at least close to equitably we'll be able to get the sort of 8X Roi we're trying to get on the compliance front a little bit of a pessimistic view but unfortunately that's the truth we have to sort of have to live with yeah I totally I totally agree with with a Faisal that we are and not only with all of this new technologies and we are always a step behind the criminals and that what we need to make sure um is that it's only one step and that we are not um getting falling back like two three four steps um because then we are getting in a bad situation and I was asked by a participant one time um that we are losing the war and Faisal said that we are not winning it and I told we are not winning this war but we cannot afford to lose it and this is why it's so important for us um to um further educate ourselves and make sure it's one step that we are behind and not more thank you thank you very much guys we have discussed so many things over the last hour it just flew by uh and we still have three minutes left so uh I will take a question from the Q a box and I will ask all of you um to uh you know to respond to that question in your final thoughts uh one it's one question we all get many many times right we talk about social work we talk about sorts of fun we talk about enhanced due diligence getting more information address media so much is enough um I have a you know some experience from a few years um ago when we had a regular visit and we're producing these huge box files um of information we actually which actually meant nothing so you know how far do we go and how much is is enough in terms of um enhancement religions source of wealth source of funds documentation uh you know to protect ourselves from Paris customers I'll start with anime so very briefly I will say that until we are in a position to prove to the regulator effectively header the results associated with the customers and that the customer is not abusing our products and services we can collect 10 documents and the information provided to be enough we can collect 1 000 documents and the information provided might not be enough so the overall uh what we need to do is to be able to prove to the regulator that the customer is not abusing our products or services holder any thoughts on that absolutely a lot but I'm trying to keep it short um so um first of all and we talk about kyc and ctet on the one side and it's different topics CDD EDD is legally defined steps um that we need to do where kyc is the big picture the same is true with source of wealth and source of funds those of funds it's legally defined as the fund due to fund a specific relationship product or transaction and by law with high-risk jurisdiction or specific high risk sorry high-risk customers we need to identify the source of funds I'm not aware um that we need to identify the source of wealth um in many jurisdictions as a legal requirement still in the risk-based approach it's often done and source of wealth is the bigger picture and to ask what is enough enough is when a knowledgeable third party like an auditor or regulator reads through our source of words narrative and the social works now is telling a story and after he read it you feel comfortable to know why this guy is filthy rich and numbers help so if you can write down the customer worked for so many years in this position this is what he was earning um so this is why he's accumulated this wealth um over time he sold the house for this amount of money he sold the company for this amount of money numbers help um then it's all adding up to a picture where we feel comfortable to know about the source of wealth and sometimes it is one sentence and this guy is just Elon Musk this guy is just Warren Buffett and this explains where the world is coming from um if you would explain where Gregory's or my wealth is coming from um if we would be Filthy Rich obviously um then it would require significantly more documentation and explanation um from where it is coming um and um we also need to have um at least a sufficient level of evidences around it this could be articles from the newspapers um where it's stating that he sold the company um it could be um declarations from previous years and so on and so on so numbers help a bit of evidence we need um but when is it enough it is like with every other topic in Risk Management it could always be scrutinized ones will say it's too much the other will say it's not enough so actually making making sense for people that that's that's where we we're heading high value your final thoughts yeah I mean I have to disagree with my other two panels there I think the regulatory requirement is sort of like a really bad meter in a reel to find out what's enough if the regular prescriptions was what was needed to be able to mitigate Financial crime they would have been solved down right and it's not which means a regulatory prescriptions are sort of what allows you to be able to tell to the public that you're doing it right but secretly you have to know that no there's so much Financial crime still going through it but hey you've met the regulatory prescriptions you should be fine it's unfortunately the only meter we have to be able to expose and test ourselves that we are doing the right thing the way you should be able to do it is how much actual dollar risk do you lose by reviewing let's say a thousand dollar transaction versus a one million dollar transaction and then you have to push your efforts towards the one that has the high dollar amount of loss unfortunately that's not what regulatory prescriptions are you're scrutinizing a lot of 500 transactions and really not focusing all the experts and exposures to 100 000 transactions so my recommendation was if you really care about thwarting Financial crime directed only towards where you have the highest amount of exposure from a dollar and economic point of view because that's also what your adversaries care about they don't care about regulatory prescription or meeting or requirement they care about their profitability in those transactions and these are directly reports towards that thank you so much guys I'm really sorry we run out of time I already a couple of minutes over uh it has been a wonderful discussion thank you all for participating thank you to all our attendees for their wonderful comments on on LinkedIn and and in the chats um and hope we can do this again I think we can be talking about these topics for hours thank you so much and see you again very soon thank you very much take care