The FinTech FinCrime Exchange story

Observing that fintechs in the UK are exposed to criminal activity but they lack a way to communicate with each other, FINTRAIL and the Royal United Services Institute (RUSI) have decided to establish the FinTech FinCrime Exchange

The FinTech FinCrime Exchange (FEE) was established in January 2017 in partnership with FINTRAIL and the Royal United Services Institute (RUSI). Both entities identified that fintechs operating in the UK were exposed to similar criminal activity and to the same organised crime networks, yet there was no mechanism for fintechs to communicate this with each other. So together we decided we must do more!

The first iteration of the FFE, which was a very humble affair, a round table discussion, participated by just five fintechs in London. During the discussion, we shared our experiences, identified our exposure to financial crime, and worked in collaboration to form the basis of an industry best practice.

Fast forward, and the FFE has grown exponentially since. Having established a strong and thriving community in Europe, in 2019, we expanded and set up hubs in APAC and the US. We now serve the entire spectrum of the fintech ecosystem and the community spans the globe. FFE members include Banking as a Service (Baas), challenger banks, cryptocurrency, foreign exchange, insuretech, international money transfers, investors, lenders, payments, prepaid cards, wealth management.

How does the FFE work?

FFE membership is free and open to FinCrime professionals working for fintechs only. Since mid-2019, we have been hosting regular meet-ups in London, New York, San Francisco, and Singapore. In early 2020 we had to adapt due to COVID-19, so we are currently hosting virtual meet-ups, three each month for our community hubs in EMEA, APAC, and the Americas.

Shifting to a virtual setup has certainly been a collective gain as we have been able to serve more fintechs as a result of not being bound by geographies.

A typical meet-up involves two to three members presenting their FinCrime experiences, sharing new typologies and trends to the community; how the criminal activity was detected (red flags) and then sharing the controls they have since put in place to manage the risk (best practice). Specific typologies and best practice discussions would cover, compliance, regulation, money laundering, human trafficking, drug trafficking, terrorist financing, bribery, corruption, sanctions, tax evasion, and fraud.

At meet-ups we are often joined by external speakers from the wider FinCrime community such as academics, law enforcement, charities, regulators, and industry bodies, to offer our members a bigger picture outlook, broaden horizons and ensure we remain deeply connected to the importance of our work.

As a community, we also explore other initiatives to add value to our members and raise the profile of the fintech industry amongst our peers in the wider FinCrime community. Such initiatives include preparing thought leadership insights, producing a podcast (FinCrime Spotlight) now entering its third season, leading on Expert Working Groups to discuss and report upon fintech approaches to common challenges, and finally, we host an annual conference known as FFECON.

Law enforcement engagement

Since the inception of the FFE, we have extensively engaged with law enforcement.

FFE Law Enforcement engagement includes:

Sharing Data Protection Act (DPA) requests - In 2020 we shared almost 300 DPA requests from law enforcement agencies to our members.

UK Financial Intelligence Unit (UKFIU) - The UKFIU offers quarterly Suspicious Activity Reports (SARs) updates at FFE EMEA meet-ups. In 2020 we also hosted a dedicated SARs workshop in partnership with the UKFIU for our members. We also disseminate all UKFIU materials with our UK members.

Joint Money Laundering Intelligence Taskforce (JMLIT) - We receive and share JMLIT alerts to our UK members. In the past, we have also participated in a couple of the JMLIT working group sessions alongside some of our members.

Joint Fraud Taskforce (JFT) - We are often in communication with the JFT and most recently supported DWP and HMRC in their efforts to prevent fraudulent activity concerning the COVID-19 stimulus packages.

Europol - In 2019 and 2020 we were invited to join the European Money Mule Action (EMMA). On both occasions, we worked closely with the City of London police and our members to make a valuable contribution to the action.

Project Black Wallet - We supported the Finnish and Swedish Police, in project Black Wallet, an EU-funded initiative, on a mission to identify the risks of terrorist financing and money laundering in the fintech sector.

In 2020 we launched Fintech Awareness for Law Enforcement training and have since trained over 500 agents from over 70 international, national, and regional agencies.

The training provides agents with a deep dive into the unique financial crime risks of the fintech sector and how fintechs utilise innovative technology to mitigate their risk exposure. It breaks down the nuanced product offerings within the fintech sector and their commonly observed risks as well as the tools and techniques fintechs use to carry out CDD, monitor transactions, and investigate suspicious activity.

Final note...

We are highly motivated to ensure that all fintechs, no matter their size or funding, have access to the FFE community and that we as a collective can support each other, as well as our colleagues in law enforcement. By adopting this approach, we are actively enhancing the resilience and robustness of the sector and having a measurable impact in the fight against financial crime.

This editorial was first published in our Financial Crime and Fraud Report 2021 - How to Fight Fraud and Master KYC, Onboarding & Digital ID, which provides a comprehensive overview of the major trends driving growth in fraud prevention, identity management, digital onboarding and KYC, transaction monitoring, financial crime compliance, regtech, and more.

About John-Paul Eaton

About FINTRAIL