Silent Eight x The Dark Money Files: James Booth in Conversation with Ray Blake

James Booth good morning good afternoon and good evening everybody and welcome to the latest installment of silent eight talks uh you know who i am james booth i'm the global head of aml counterterrorism and sanctions here at silent eight they do say never meet your heroes but i've met mine a couple of times now and ray blake of the dark money files ray it's an absolute privilege to have you join us today thank you oh that's very kind of you it's

Ray Blake always fun to talk

James Booth to you james that's kind right and now obviously i've been a avid listener of your of your podcast with your dear friend graham barrow the dark money files in case anybody's lived under a rock but aside from that i've had a privilege to work with you and engage with you a few times now and meet you at various parts of of the uk and i think my earliest memory ray was was it the leadership event that we had at celtic manor where i got to grace the stage with you after oh wasn't that nice yeah yeah that was lovely wasn't it yeah i don't think that actually made it to public air and did it what we spoke about that day but no it was it was good fun and i think we were well lubricated after if you

Ray Blake weren't in the room

James Booth you'll never hear it no maybe there's an episode two there oh okay we met recently of course in london didn't we and it was uh it was nice but you've you've you've been very kind to me over the years ray so i just want to say thank you because everyone sees the the wonderful ray who's the who's the fabulous uh you know expert and the podcast but you've done some very nice things privately that has been very kind to me so thank you for that oh no no you're

Ray Blake you're most welcome and and how delightful that you've pitched up a silent eight who i remember as being the first in the ring when we called for sponsors for our first dark money files conference so i'm delighted that you've you've pitched up with the good guys it's nice it's it's nice to

James Booth finally get on the mic together isn't it and i think that the the dark money fight and i'm told i have a face for podcast and i don't think that's a good thing is it but i think yeah no i don't think that's meant kindly no no no but we'll take it because any publicity is good publicity right but look it's it's a privilege to finally get together on the mic and i know we've been talking about this for some time and i think that you know that for many compliance professionals globally you know the dark money files is as you know has shaped so many people's understanding on the hidden mechanics of illicit finance and you know we and part of the reason why i've come to silent eight recently is that the business spent time trying to stop some of that illicit machinery in action so it feels like the perfect crossover and the the episode we we didn't know we needed i think uh well yeah quite so we we've got a an objective today uh rain i was hoping to sort of lean on your um your past in the world of mlro or the or the designated function and um i think you know we see uh there's been a particular shift in the landscape i think i think arguably since the fatf recommendation is coming in i think the world of ai has is almost as revolutionary of that from opinion and what speaking and engaging with mlros through training which both you and i deliver to mlros i'm seeing a significant shift in the landscape of what's actually needed by a nominated officer or an mlro so if it's okay with you ray i'd like to talk about that your journey as an mlro of course caveated with what we what we can talk about within the remits of financial crime yeah um how that that's that's those competencies are shifting to being that modern nominated office or modern mlro okay speak about those fundamentals of leadership and and what good looks like and i know we all know the buzzwords but i think actually doing it in practice is very different um our ai and technology might complement the role of an of an mlro and and really advice straight from yourself ray on on what that might look like how does that sound

Ray Blake it sounds like a good use of uh of 45 minutes to me wonderful i'd like i'd like to uh catch a bit off

James Booth guard because i know that we we had a brief conversation around things that we'd like to talk about but i'd love for the listeners to just know a little bit more of the nuances and the nooks and the crannies of what makes ray blake tick if that's okay with you and i'm gonna catch you off

Ray Blake guard with this

James Booth okay so i uh come up with a set of questions and some are interesting some you might have absolutely no interest in answering and that's fine okay um we well we we are avid readers we um like to watch financial crime documentaries so my question ray is and you can't um you can't mingle this answer what was the last thing you watched on a streaming

Ray Blake platform like netflix or amazon prime uh it was probably well i've just watched the whole of the last series of wednesday with one of my sons uh opportunity um and and i i'm always up to date with slow horses because it's magnificent uh but the last thing that i probably actually watched was a weird korean reality show called prime scene zero which is absolutely bonkers it's on netflix and it is absolutely worth your time is this like a

James Booth modern day takeshi's castle are we going to see loads of tasks being undertaken

Ray Blake no no it it's kind of like a a modern day mystery dinner or a kind of a mystery uh hotel stay there's been a and a number of people in character try to solve it but they're all korean they're all incredibly polite and it's just wonderful okay good content warning yeah i'm

James Booth glad you didn't say love island otherwise the podcast might have been the shortest i've ever recorded so

Ray Blake we couldn't have offered that one no apart from the korean stuff the only reality tv that i must watch is the great british sewing bee which is magnificent well i recommend mobland

James Booth if you're that's very pg though and i watched it on a plane recently and i wasn't expecting some of the things to appear that did so maybe in the confidence of your privacy of your home would be good there's

Ray Blake nothing distressing nothing at all distressing in the sewing bee okay good so

James Booth that's that's the takeaway from this one definitely okay next question what was the last thing you purchased

Ray Blake on amazon ray uh well it was an odd mixed package of two things um some some plumbers ceiling tape because uh my my shower hose has got a little bit cross-threaded from the main unit so i wanted to seal that on the cheap um and uh a christmas present for my youngest son which is a book about uh the influences of proto-indo-european because he's a linguist okay we should have had a

James Booth disclaimer at the start then to your son that you shouldn't listen to the podcast before christmas otherwise he now knows what he's what what he's receiving so it's never gonna happen we don't

Ray Blake need to worry about that at all he's not gonna listen to this okay well i'm

James Booth not legal disclaimer anyway in case it comes after me but mine's nothing exciting mine was mine was i was trainer protector because it's terrible weather here in the north at the moment so people would think we have these normal lives would they would they uh right

Ray Blake okay and and and as someone with a with a son who lives up north i think the unnecessary bit of that last sentence

James Booth was at the moment well you you were visited the north recently didn't you to see your son and uh did you remember passport and currency and things or uh well i took

Ray Blake i took a phrase book uh absolutely crucial in leeds to um to be able to communicate effectively

James Booth yep yeah for those uh those individuals around the world that may not know where leeds is i i am from leeds and i this is how we sound so you can understand that raising need for an interpretation or his translation through his airpods okay good um what's what's the last book

Ray Blake that you read uh i'm always uh reading books i i read about 20 books a month probably wow yeah but they're virtually all fiction right um and i think that the last memorable book that i read because i read a lot that that sort of comes and goes really but the last memorable book that i read was probably hyperion uh by dan simmons and an extraordinary um bit of science fiction from the 1990s which stylistically and sort of thematically represents uh the canterbury tales you know the old stuff and um it's just one of the giants of science fiction um almost universally lauded and um i was quite embarrassed about now never having read it so i did and uh everyone's right it's magnificent but i i'm asked all

James Booth the time and especially if i'm delivering training from home people to see my bookshelf should maybe start a bookshelf phrase that's something that we could patent and we could maybe uh sorry not a bookshelf a book a book club what am i talking about well

Ray Blake yeah i'm yeah no absolutely i i must admit though what i don't do is i don't do self-help books which is what everyone seems to kind of recommend and and devour in our business um because i must i think most self-help books should have been a paragraph or an article really um but but somehow they've been turned into books because you know that's the that's the basic minimum unit in which they become saleable yeah and they look they're

James Booth they look nice on the bookshelf as well they look you know they do serve a purpose that way as well

Ray Blake they they do but like anything that you buy and put on a shelf uh it doesn't do you any good unless you actually open it and and read it and think about it uh which is what i think a lot of people miss you know they go out and buy uh i don't know the seven habits or whatever i think ownership of the book is is you know 90 of the job uh and and sadly you know it's not i mean i read a a lot of than than anything else because actually that's the engine of of i think giving you mental flexibility and and and assisting your problem solving your empathy and all of those things by something that immerses you deeply in somebody else's problems and and you know yeah solve them i think there is much more depth in pretty much any novel than there is in most of the self-help books that we read there is and they're more fun they are well if anybody's

James Booth interested in particular a particular um recommendation for fiction i recommend five or six different national risk assessments which i could probably send to you directly on linkedin

Ray Blake you're being naughty james stop it a little a little but you've got to be cheeky

James Booth to be kind okay the last uh the last the last question and then we'll move on to a slightly more serious thematic what was the last song that you listened to and i'm obviously a considerate that it's december so this could go anywhere what was the

Ray Blake last song that i listened to i mean it's embarrassing i don't know but uh it's embarrassing to admit it was probably um a piece of 1970s prog rock sorry okay

James Booth no well okay i mean

Ray Blake it might have been genesis it might have been vandergrift generator uh it might have been yes and i probably wouldn't have been yes uh but one of those all i want for christmas

James Booth is you and then i listened to the mariah carey song as well so okay good and i okay so good come on move on before it gets awkward let's move on because it is getting awkward and these next questions become very pg and we haven't got time for that okay so we um let's let's we've got to touch on the dark money files because uh in the spirit of in the spirit of candidacy um when i worked for the international compliance association i had to drive to the birmingham office it was undoubtedly queued up in my car listening on on on the way down how many people have you met around the world where that that recognize your voice and graham's voice and then

Ray Blake when you're standing in front of them yeah i mean it's it's become you know quite a common experience and it's it's very very difficult i still don't know quite how to deal with it but the interesting thing is when you start talking to somebody there is a definite look of someone which is hang on a minute that's a very familiar voice yeah why do i know that voice and you you know it it's like if if you're doing uh neurolinguistic programming and you're looking at eye access cues there is a facial expression which encodes for that and and i've learned to recognize it don't know how to deal with it but you know

James Booth there it is well thank you on behalf of the global financial crime and compliance community rate because i know that it entertains many people but crucially it's extremely educational and knowledgeable as well and i think that's critical right is in the role of an mlro that we're going to come on and talk about is discharging that message yeah thank you can you

Ray Blake give us any juice on graham uh well i probably could um but he could give you a lot more on me so let's i'm not going to start that arms race i think that's a very sensible approach

James Booth as well but but there is um let's let's come on to the journey then let's come on to aml which is which is why people are here um storytelling is uh is is i think one of the key components around aml and especially in the form of modern storytelling so it's like each transaction tells you something doesn't it but you just got to know sort of how to read the plot so as somebody then that you know you you know i don't want to be speak out of term but you know you tell a lot of stories for a living to bring these messages to life do you see aml as narrative work or what makes that story compelling

Ray Blake to to educate people yeah yeah i mean it's a really um it's a really insightful question actually and i think you know narrative is pretty much that that the key cognitive skill um that that leaders in aml need to develop narrative motivates narrative makes things understandable which otherwise wouldn't be because there's no shortage of complexity in what we do and that can be tamed when you turn it into a story which has got logical progression and links and outcomes and influences and that's you know told or recorded in a compelling way i mean one example of this and the way that stories engage in the way that that i other things don't is if we take um the modern crime of uh slavery and human trafficking yeah there are 27.6 billion victims of that in the world at the moment um yeah and you know you hear that statistic and it doesn't mean anything it doesn't move you it doesn't affect you you might reflect on it for a moment and think oh blimey that's bad isn't it you can't have empathy for 27.6 million people that's not how empathy works but you could have empathy for one person so if i tell you the story about the the young woman who was was trafficked into sex work on the other side of the world and i tell you about what she experienced on that journey and on a day-to-day basis and and how that was was resolved if i tell you the story about um the the young boy from asia who was trafficked across the world to um throw cannabis uh in in a small house in the north of england for instance i can tell about what he went through i can let you see these crimes through their eyes on the inside and that's motivational um and that engages your empathy in a way that no statistic ever

James Booth will storytelling comes from pain doesn't it or whether that's pain or a failure or a blind spot or in this instance

Ray Blake tragedy well the story isn't a straight line is it james the story has to be uh a sine wave there or a series of sine waves there have to be ups and downs challenges resolutions and and and

James Booth so on yeah i don't know what your opinion on this is ray but i feel that storytelling in aml as we said comes from those experiences and those and those blind spots i feel that aml professionals globally underestimate the power of narrative and storytelling and let me add some color to that context it feels like that we have become extremely defensive in our approach to identifying money laundering in a firm and my data point behind that is the sheer number of stars which are filed every single year whether they're from transaction monitoring or unusual behavior whatever they might be and the and the key issue is that it feels like there's more of a narrative on protecting that reputation of a firm not being on the next netflix special that you and i'll talk about in a future episode or um then seeing these victims of financial crime so how is that how is that tipping point being established because if we understood the true storytelling and the power of really why anti-money laundering matters that would probably disrupt the way that enforcement happens and the way that investigations happen or am i speaking totally out of turn with this uh no i i

Ray Blake think i i think i agree with you i mean we we have an unmanageable number of sars in pretty much every country um in the world you know law enforcement is not geared up to deal with the number of sars that we send them and and and certainly most of the sars they receive aren't really actionable um yeah because they're defensive and and and as you suggest they're they're kind of lazy and and and reason that many of those worthless sars get filed is that um people leap fairly quickly to the bar of of threshold suspicion and don't look beyond it and say okay that's enough to engage suspicion i will now report whereas actually what what ought to be happening there is okay i've reached the bar of suspicion i need to investigate and understand and if you investigate and understand quite often probably more often than not that suspicion goes away if you end up in a position where you can tell the story and say okay i understand why that suspicion arose here's what actually happened here's what i discovered when i investigated it and spoke to people and maybe even spoke to the client um and i can now explain that in the context of this relationship here's that story and i'm going to record it i don't need to trouble law enforcement with it um versus you know i i'm going to try and write this story but you know what it doesn't work it doesn't hold together it's not compelling there is a more um there is a more compelling explanation of this which has to do with malfeasance you know there's criminal activity here i now absolutely have to alert law enforcement and i will do so with urgency what's fascinating

James Booth about that perspective because i'm inclined to totally agree that we have seen as particularly intelligence units over the last couple of years ask uh investigative uh individuals or even the technology like ai that is replacing some of the narratives to remain spaced but actually if we stay fact-based and say mr or mrs x customer deposited this amount of money and was uncontactable that's a fact that's what happened and actually what that's contributing is to the problem but what i'm hearing ray is actually the aspect of storytelling actually is a more explainable approach to investigations well not only investigations but

Ray Blake recording reporting and everything and and and the the framework that i encourage people to use is is in three steps what do you know how do you know it and what do you conclude from it so what's the fact what is it you know what's your evidence how do you know it and what do you conclude from it so what what's your interpretation of what it means and and it strikes me that if you want to if you want to get what's in your head and your understanding into someone else's head you need all three of those elements you can't do it with just one or just two of them you need to go all the way so that's whether you're recording a file note that's whether you're you're writing a star that's whether you're you're doing a training session whatever it is that i think that's a framework um for your narrative

James Booth the principle of explainability has shifted the paradigm significantly in my view so we we're trying to develop individuals to have these competencies but this is again where technology and ai is really starting to come into its own but i want to i want to just nudge that spotlight back on to people people are critical importance in the whole aspect of this and and start to think about the traditional role of an mlro and right what the modern mlro looks like because i feel the expectations and challenges i think today and correct me if i'm wrong here the role of an mlro today is is predominantly unrecognizable from where it was possibly 10 years ago because i think yeah expectations

Ray Blake have changed i i think that's a an absolutely fair observation now i mean i have to caveat this um with in terms of my personal experience because i haven't been employed by anyone since 1996 james i've been independent since then so yeah in terms of mlro positions i've done it on an interim basis um i have been an mlro and i've helped firms find mlros when there's been a gap um or when there has been a challenging situation and they've needed someone to to come in and and kind of get the reins uh back yeah on the vehicle so well what i've not done is been an mlro from the start of a venture right through and into business as usual so i've kind of got a a slightly blinkered view uh and and also i've never been um an mlro in a firm where things

James Booth are going well well i will also add a caveat here as well ray but i think we need to we need to um maybe some color why i think there's value in this conversation i have never been an mlro either however what what both you and i have done is you played one on television

Ray Blake right well but i played

James Booth one on the next netflix special that's dropping but what but what you and i have done ray is that we've delivered training to mlros across sectors and jurisdictions and have this very you will have this very unique perspective that an mlro wouldn't have been very siloed into a firm of a real cross range of different skills and culture strategic issues and so on so i guess thinking about it from that helicopter view which we're very lucky to have had what what do you think people misunderstand about the role of an

Ray Blake mlro today okay uh so i mean this this may be personal but for me an mlros job um that the public impression of an mlros job is this is the bloke or the woman who says no um and for me uh if an mlro has to say no that's a sign of failure that's a sign that the organization or the mlro i suppose um is dysfunctional or misunderstands the role of an mlro um as an mlro i don't think even in some you know fairly hairy situations i don't think i've ever said no what i've said is if you want to do this here's the controls we have to wrap around it to make it work and to keep the company um and and you know maybe i'm splitting hairs maybe um you know it's fairly clear that in extreme situations the controls that i then go on to describe are uneconomic but i'm prepared to apply them if that's what the firm wants to do um so i will i will kind of never say no basically

James Booth yeah now that's an interesting economic perspective of this because there is um there is some reports out there and some interesting academic papers i've read about this there was accountability aspect of being an mlro and the fear that enforcement of organizations is kind of its impact has dwindled away because i know this is a rhetorical thing and we can be slightly controversial here our money laundering finds the cost of doing business so would that is that regulatory scope now about to shift to people and has that does that mean as an unintended consequence then that the role of an mlro is actually getting too big for one person to do realistically well

Ray Blake well no i i don't think it is because there always has to be someone who holds well certainly in the uk that smf 17 position there has to be some ultimate accountability now that's not to say you can't have deputies and you can't have an old a whole office of people working for you but but there needs to be that single point of accountability and and and that's you as as the mlro um and yeah you know sometimes it's it's not an easy job but i tell you what it's a lot easier than trying to run with split accountability on on on that very crucial uh point yeah do you think it's actually do you

James Booth think that role now that the the dynamic dynamic of the role has shifted that is it truly just a risk function now or is it more of a leadership role or is it a shield for the board well it's

Ray Blake not that because the board are also uh sms um in in the uk system and that's how it it should work i mean i i think sometimes we come at this from the wrong angle and we say that the mlro first of all is the risk role it's the risk specialist in a firm yes whereas actually the mlro is a leadership position in the firm first and foremost for me you know the mlro sits along with the other senior leaders in the firm and has that in common with all of their their colleagues that collective responsibility for the firm's endeavor overall um now you know and to an extent the whole compliance function is is is like that as well uh i mean traditionally we've said well look if you work in compliance if you work in aml um your your main stakeholder really or your only stakeholder is law and regulation uh that's what you're there to do so whatever it takes to satisfy law and regulation that's your entire focus well i think the more senior you get and even at junior levels that's really not true i think you've got a responsibility to four different stakeholder groups you yes you've got law and regulation you can't ignore that it's kind of in your job title effectively and yes they are your stakeholders and you have to honor their interests um but also you've got a responsibility to the customer because let's face it the majority of customers aren't money launderers um so actually if if if what you do is you um make the customer experience unacceptable for all of your customers because of the activities of less than one percent of them that that's not effective either that that that's not right um yeah so your your your customers or the organization's customers are also one of your stakeholders um so are the shareholders of the business the business imperative you know if the business fails um so does the compliance team so does the the mlro so so you you have to have some kind of responsibility for for the financial performance of of the company as well and its ongoing sustainability and then you've got this this other accountability as well which is to society more broadly um which is to make sure that that that you do what you can within your role firstly to to protect society from criminal risks and secondly to to make sure you do your bit and retain in making sure that there's still a viable financial system that serves society

James Booth the job description of a of a nominated officer or an mlro if it had to talk about the various traits that that were needed for somebody to do that i mean that that that what that list would look you would be a psychologist you'd be an investigator you'd be a diplomat you'd probably be a prophet all at the same time i think in the in the absurdity and the reality of the role now

Ray Blake right yeah i think so but i mean you know the this isn't unique there are lots and lots of jobs like this in the world um we we're just

James Booth really really close to this one yeah i mean there's lots of different competencies that the modern day mlro needs and again i don't disagree and i think there's some science behind this isn't there and i think there are seven leadership styles um right

Ray Blake okay with

James Booth autocratic leadership which i'm sure you heard of so you sort of make a decision unilaterally sort of very clear direction and quite good in a crisis so you i always think of a surgeon and in this example or a pilot where something very critical is going wrong and they sort of make that decision um democratic i think kind of speaks for itself i'm always a bit pessimistic of democratic leadership although i think it encourages engagement i also think it can be a stick to beat people with if it's um if they don't agree or they're not strong enough to make that decision and the reason why i'm telling everybody this raise i think that as people are listening to this whether they're at home or traveling to work for people to pause and reflect where they where they might see um transformational leadership so i think that inspires people through vision and purpose and regardless of what anybody's political allegiance might be i think steve jobs and elon musk are examples of these transactional is interesting so transactional leader because this is sort of structured and focused and can work quite well in the context of organization uh fifth i'm on five out with servant leadership which is what i i think with myself sometimes where i put other people's well-being first which is a good thing because it gives trust but then it can be a weakness that people use laissez-faire laid back that's very simplistic and i think that's quite good if if you surround yourself with and you know speaking about the role of mlr or not being an individual but being collective surrounding yourself by better people and then the last one is the carrot and stick approach so i think offering somebody something in order to to to achieve that an mlr kind of needs to be all

Ray Blake of those right well i guess so i mean what what i think we're probably saying the same thing if i say that an mlro needs quite a diverse toolbox yes as does as does any leader you know uh i mean yes there's a hammer in there and and sometimes it'll be right to use the hammer um yeah so there's calipers in there as well you know that that that there's carpenter's pencils there's uh you know whatever i need for the occasion and the situation i i don't think you can you can kind of decide your leadership style or craft your leadership style in a vacuum and you know kind of without having due regard for the organization that you're in the people around you the people you're leading the people who are leading you and who you're accountable to um and the situations that that you're facing i think you could probably deploy all seven of those in one day sometimes

James Booth yeah you absolutely can and i do think there are more factors than ever before now that influence that so aside from the shifting regulatory landscape and the challenges and the commercial acumen um working with people is probably one of the greatest privileges in any leadership role and and what matters to us as people i think has greatly shifted since the pandemic our working requirements our family time and that's another dynamic an mlro is having to possibly contend with more awareness around mental health and mental well-being which i think isn't spoken about enough despite the noise around that um excuse me so let's stay on this on this thematic of leadership because um i have a lot of fascination and you know we were talking about self-help books i've got so many books on leadership that sometimes um we say leadership isn't loud but it is but i do feel that lead being a leader is quite a consistent and a principle um based approach and about it matters now i'm sure over over your career when you've deployed or supported deployment of mlros you've seen good ones and some not so good ones what separates them um

Ray Blake the bad mlro wants to be indispensable the good mlro wants to make themselves redundant okay that's

James Booth interesting can you elaborate more i didn't expect that would you elaborate more yeah yeah

Ray Blake i would i mean i didn't expect it either i just thought of it off the top of my head really no no but i but i think it is something that that that we observe you know if the mlro wants to be uh completely indispensable to the organization and you know hooked into everything um and uh kind of absolutely vital and irreplaceable then you know irreplaceable people are really dangerous to an organization um because they drag the organization into into serving them rather than the other way around um so that's that's quite difficult um i an mlro who wants to to make themselves unnecessary is is is fantastic and it's what i've always done in the mlro row post possibly because you know i've gone in as an interim but what i actually want to do is i want to upskill the the the people that are working for me i want to um empower people to to make their own decisions and to increase the value of of their work and also the enjoyability and rewards from their work because they're working at a higher level i want people to come to me as the mlro saying look here's what i think we should do and i want to be in a position where you know nine times out of ten i absolutely agree with them um because they've got you know well-developed instincts i want to be in a position where i could hand that over to pretty much anyone to to pick that up where i left off i want to gradually make myself dispensable to the organization you know by by the systems controls and the people and it and if you don't want to do that um for some reason because you know because you are insecure um or because you know you you you think that that you bring special skills and insight that nobody else can and you're going to guard that knowledge domain to yourself then you're dangerous because you're trying

James Booth to make yourself indispensable by not well it's that poor culture right it screams poor culture and what i wonder if this is yeah sorry sorry to interrupt right i wonder if this is a byproduct of maybe i am speaking out of turn but i'm reflecting on a lot of the conversations because i've seen over the last couple of years more new mlros than i've seen in a lot of years and i think that's an emergence of newly regulated sectors and the insatiable thirst of fintechs that are trying to get onto the map and tick these regulatory boxes yeah so our ml leaders are actually leading are they managing crises at the moment uh well i think there's

Ray Blake a i think there's a spectrum isn't there uh i mean you know in your in your typical startup the mlro may not be leading any people um they may be you know managing a desk effectively and they're they're responsible for for absolutely everything um which you know is is is one situation in which um you can you can find yourself um or you know conversely uh you are uh entering into a period of growth and you're bringing on people and everyone's new um and and that that's both challenging because there's lots to do and also exciting because you you get to be able to build on a on a greenfield site and set things in the

James Booth right direction from day one yeah i and again i would i feel that we are consolidating what i of an mlro has always been regardless of what's changing in the regulatory landscape or anything but what i think is changing ray and i'm i am so looking forward to hearing your your true opinions about this no bias i don't want us to hold back i said at the start of today that i think that we're seeing the biggest shift in aml because of ai since the fatf recommendations now i'm i'm very aware that is a huge statement to make but every conference i attend every white paper i read is about ai augmented decisioning explainability true automation reduction in false positives what is your view on this evolution with technology at the moment oh

Ray Blake i've got i've got as many views as you like on this because the the the thing is i'm not uh an artificial intelligence expert but i would go further that's not a problem because james no one is an artificial intelligence expert and anyone who tries to convince you that they are um is overconfident because the domain is so new yes of course at best we are we are um enthusiasts we are nascent expert users um of of the technology um you have to you have to put so many rails and safeguards around doing anything uh with ai um at the moment that i don't think any of us can can say hand on heart this is how we'll do it this is how it will work these are the outcomes that we'll get and we know exactly what all of those outcomes will be positive and negative and anyone who says that that they know that um is lying on the basis that at the time you recommend the implementation of ai the models that you end up implementing don't actually exist yet yeah so being able to to to see ahead uh and see through all of that um is is is unrealistic and you shouldn't trust anybody who says that they can do it however somebody who says look let let let's let's venture into this let's do it together we will offer continuous um advice and assurance as things evolve and we'll see where we get to i would trust that a lot more i would trust somebody who says well i i don't know exactly what difference it's going to make i'm fairly confident it will make a positive difference but but but i know um that we can get there if we work together yeah yeah yeah of course there

James Booth is tangible outcomes though there's tangible outcomes and that's i think just to add to what you're saying you can say you know this will result in a a net reduction in in say false positives or what this will do is improve your capabilities to resource and i want to burst a myth here and i'd like to get well hopefully your endorsement on this but open to challenge as well there is a significant misconception that ai will replace humans in fighting financial crime and aml and i think that is a load of rubbish that's not the case i think but what's your perspective yeah no i i don't

Ray Blake think it will i mean what it might do um is make our our some of our tech a little bit leaner so i mean for instance i cannot tell you how many firms i've been to that that have one machine correcting the work of another machine so you've got the transaction monitoring system that churns out a mountain of alerts that you then have another machine trying to qualify and automatically close for you um and and my challenge there is always well look why are you letting this machine make you a mountain in the first place yeah you then have to have another machine that that deals with it for you um isn't the more intelligent thing to do to be doing exactly what you're saying which is reducing the first false positives in the first place you know having a better machine in the first place that doesn't you know build you a mountain that you then have to somehow um destroy or or shovel out um at the other end i remember back many

James Booth many years ago now when i started my investigative career i used to and this comes back to a cultural issue again and understanding and training there's so many links that and thematics that that are linked here and i just remember the noise of everything that i used to have to deal with that will land on my desk so i would be looking at a transaction that's just happened and it's one off a one-off transaction that doesn't match the cdd profile of a customer because it never bloody would ray because the cdd profile is already 10 years out of date oh god yeah but i'm gonna have to make a decision around this that i can't really do anything so i'm gonna i'm gonna forgive my terminology cya and protect myself and protect the organization so i i had this this cape like superman thinking that i was actually making a difference and i wasn't all i was doing was reducing numbers so i go through all this training all this skill and all this passion of of preventing human trafficking preventing wildlife trafficking stopping terrorism and i'm not and what what i'm now saying is that my skills and my competencies as an investigator is going to mean that i'm on the juiciest stuff the sexiest stuff more and deploying my my brain to making decisions around this so from an operational perspective i'm thinking well technology is is is is dealing with a lot of the noise that shouldn't be noise and meaning my resources my time and my effort sit where i believe it firmly matters so the

Ray Blake problem that we've always had or for quite a long time that we've had um in in compliance in aml is that we we face two risks one of those is is financial crime risk the risk that criminals will abuse our circumstances and will commit crime using our facilities and the other one is financial crime compliance risk which is our regulator finds that we are not fulfilling our legal obligations under the you know the financial crime regulations now in an ideal world those two risks would would mesh completely there would be no overlap um it wouldn't be a venn diagram it would just be a circle um unfortunately over time that has turned into quite a diverse venn diagram there isn't the overlap that there should be between managing your financial crime risk and managing your financial crime compliance risk managing your financial crime risk is harder and requires people increasingly i think managing your financial crime compliance risk is something that the machines can do a lot of the heavy lifting on now traditionally we've not had the bandwidth the capacity do both of those to cover both risks and we've defaulted to managing our financial crime compliance risk because that's the one that gets us the fines and and and you know that's the existential threat criminals can't shut our organization down but a regulator can yeah um so so that's where we've we've kind of invested our resources where they're limited so i i mean i'm i'm fairly excited if it plays out the way that it might do which is that the machines kind of take care of much more of that side of things freeing you and me to go out and do what we've always wanted to do which is actually make a a difference um to society and and you know take

James Booth the criminals on absolutely but it is important to reflect and think about you know boards and where they want to see operational efficiencies and cost saving and all of the stuff that matters to running a business because let's remember fighting financial crime if we if we were to risk we would there would be no business ever there'd be no industry right and we we make risk-based decisions all the time um leaning back to an example do i have a second glass of a sec or before i got on stage with yourself and graham there was a risk-based decision that was made in that in that in that way but thankfully that worked out but when you're when you're dealing with crossing a road and you're doing a risk assessment or whether you're onboarding a customer there still needs to be commercial acumen around those decisions that that we make so here's a million dollar question and i say it's million dollars it's probably actually worth a trillion if we've got a good answer for this oh blimey where where's where are we where we go with technology in the next 5 10 15 years uh i've i do you

Ray Blake know what i've genuinely got no idea i mean there's this there's this one dream um uh in in which you know james cameron's terminator uh takes over and and and skynet are in charge of us all uh that that that that's probably fairly uh that's a bleak one isn't it really um yeah and and there's the other one which is is the kind of june vision in which we have this butlerian jihad and we decide that that machines can't do thinking anymore that that should be you know reserved um for human beings now interestingly both of those are dystopias of different times aren't they um yeah so i i think what that's saying to you uh and we're back to fiction again aren't we i think what that's saying is that is that this this it isn't binary there isn't uh yes machines will do everything versus actually machines will do nothing because both of those outcomes um are fairly disastrous uh i i think we end up somewhere in the middle don't we where where machines do the heavy lifting that they're ideally suited to um and that humans um do the uh strategic thinking um and make the important decisions which is you know what they're ideally suited to doing yeah i mean i mean agree

James Booth and and what i'm trying to think of as you're saying this way is if i'm a new mlro coming into the world of financial crime what what are those components what is that strategic thinking what is the landscape that i need to consider when i'm stepping into an organization for the first time but i need a couple more minutes to think on that right so i want to i want to pivot back to some quick fire questions i think would be fairly relevant so i guess then if you weren't working in financial crime what would you be doing writing fiction by any chance yeah why not have you got any any aspirations to publish in the future i mean i haven't i mean i have

Ray Blake published in the past but it's been sort of in a small and fairly frivolous way yeah um so i mean you can you can find books by me on amazon for instance and and and my favorite ones are the uh uh the series of books that i call very short shorts which are uh 50 word stories i am

James Booth on my amazon as we speak ray and the next time i interview a guest i'm going to be asking what the last thing was that was purchased so for those listeners because i'm sure many people will and we should also give you a surging income before christmas how would i find these publications oh you go and

Ray Blake search for my name on amazon and uh and you'll find them okay so i currently

James Booth have uh murder the pinkies you is it no that's not me no okay so i'll keep finding those and we'll put those out there but maybe we'll get you a nice christmas bonus okay um what's your what's your favorite episode of the dark money file then why uh my favorite well i mean there's so

Ray Blake many answers to that the yeah the one that um the one that people want to talk about most uh because that's a that's a good guide to it probably is the third episode we ever recorded um and it was the one where we we took apart the bank account statements that we got hold of for the danska bank laundromat companies yes i remember that one and uh we looked at some of the things that typically transaction monitoring uh systems don't look at but which were absolutely nailed on indicators of um industrial money laundering absolutely juicy though

James Booth right you've actually got the the statements and i think that's what people particularly liked i must say my favorite episode and i don't know if i'm pronouncing this right i don't know if it's if it was my oh my or mi oh mi what a wonderful day i think it was the second one the latter wasn't it yeah i liked that one and actually the final one was uh that you may remember the one on the nat west radford laundromat because that's based very very close to where i i i graduate anyway but i'm sure that if people are listening they're already a subscriber but if you're not well i cannot speak highly enough of how informative and fun it is there's such great camaraderie between yourself and um and graham as well as you know well okay

Ray Blake i will let you into a secret and it's a it's a little game that you can play if you want to when you're listening and the secret is this every episode that we've ever recorded um is prepared in advance and it it's largely scripted not entirely but it's largely scripted and every episode is scripted by one of us okay and the game is can you tell which one's i script and which one's graham

James Booth scripts i think i can and my basis of the methodology of this approach i'm taking a risk-based approach here some have absolutely terrible jokes that only graham laughs that and i think he writes those episodes you might be surprised okay okay so everybody's heard it here first um maybe i need a thematic maybe i need to get the lyrics of an abba song into every episode or something i'm not sure

Ray Blake i i i won't volunteer information but if you want to come to me with a guess i will confirm or deny in respect to specific episodes james

James Booth rest in peace to your linkedin inbox i say to that one so we're coming into the last couple of moments and again i just want to say thank you it's been a it has been thoroughly enjoyable and i know you know i'm actually looking at a card that i keep on my desk that you sent me for many years ago um around this as well so your kindness isn't certainly wasted on me but i'd like to think about now the advice the practical advice that you would give for for new mlros whether that's skills competencies willingness to embrace technology how would you deplore that message because what we don't want to do and i'm sorry i asked a question then interjected we don't want to discourage people from doing what is a fabulously rewarding career right

Ray Blake yeah oh yeah completely uh and i mean if we're if we're talking about a career in anti-money laundering uh more generally yeah the rewards are are enormous and extraordinary and and um there are some mundane and routine jobs but seriously once you work your way through those you you you get exposed to things that that really are incredibly compelling and you end up making the most extraordinary contribution to society at large as well as the institution that you're working for i i can't recommend it highly enough um but you're thinking about particularly people approaching the mlro role right yes yes okay uh so so there are a couple of things um that i would recommend that anyone doing that um should do the first one of those is um use your network and if you haven't got a network acquire one as quickly as you can um and you can do that by you know going to conferences and engaging in webinars and and reaching out to people on on linkedin and having conversations because um you are the only mlro in your organization but you are not the only mlro in a similar situation and i think you need to uh for for your own mental health um as well as you know as a technical assistance in doing the job be able to contact like-minded people that you trust um and have things like hypothetical conversations have you ever seen a situation where this happened what did you do what did you think about because i'm a bit stuck yeah um so get a network firstly secondly don't make assumptions um and particularly don't make assumptions when it comes to the basic fundamentals that you are reliant on in your firm so let me tell you why i say that and what leads to it if you if you go and look at any number of enforcement actions you know final notices from the uh from the fca and from other global regulators and you read them fairly closely what you'll find is that the headlines are never they didn't have they didn't buy the right technology um yeah it's never you know they made this key decision in this case wrong it's mostly well the cdd wasn't very good they didn't do their risk assessment properly they didn't have um a proper assessment of the effectiveness of their controls yeah it's real basic stuff so bearing in mind that that seems to be you know endemic um across the industry certainly if you read regulators reports um it's endemic across the industry don't assume that it's any different um in your firm um if you want to to be able to assert that yes we get the basics right have evidence for that make sure that you know that from experience not just from assumption and continue gathering that evidence as well yeah and then i think i would say make sure that you read carefully and if there's the opportunity engage in the writing of your your statement of responsibility as the mlro um and and know exactly what you're accountable for and what you're not accountable uh and where there is a a blurred line or a dotted line how does that work in the organization talk to the people that you have to interact with in the senior management team get their perspective they may be aware of gaps that you're not or or you know um gray areas that you're not make sure that you build that into a common understanding of exactly where your accountability is um and that the people that you need to to work alongside and communicate with and then i guess in in terms of something practical that you can do straight away um and and i would try and do this before you actually accept the job um is is get somebody to to find for you the most recent um mlro annual report um read and and and annotate the thing and then talk to um the the board and the people that it was reported to and get them to talk you through the governance get them to tell you what discussion happened on those points um what the follow-up was and and trace those actions through their governance across the organization and make sure that they actually happened how they happened and how timely that was that will give you a really really good idea of how responsive and and functional the organization is uh managing those risks that are highlighted and discussed

James Booth at a high level very practical and valuable advice way actually and i think even for those of us that are you know maybe seasoned physicians or you've been an mlo for some time i would still deplore those those those skills and those looking at recent reports and staying on top of the game because i think now is not the time to be standing still as an mlo or a leader in this space

Ray Blake at all no completely it's absolutely not and and you know a practical example of that james is i i've just said that nine out of ten regulatory uh final notices are about basics well you know where we are now last month there were two um that that broke that mold in a very similar way there was uh coinbase in in ireland and jp morgan um in germany and those enforcement actions were were really quite different and and i think signaled an an interesting expectation of regulators that that's never been quite as explicit in both of them there was a focus on doing the right thing and reporting but

James Booth quickly enough yeah which has subjectivity in its own right but this is a real um this is a shift isn't it because now they're not saying we're not saying you've done you've not you've not laundered money no you need to react quicker in your control environment no i mean even

Ray Blake further in in the jp morgan there there was no indication that they had failed to report anything at all it was just yeah you've reported the right stuff you just didn't do it without undue delay now i mean you know that that's subjective i guess but a great a great exercise um to set members of your team if you have a team um is to say well look you know there have been um there have been three final notices um in in in this quarter for firms of our type um take those and and and you know put together a a little spreadsheet a little checklist what are the key findings of each of those and then advise me uh what's our position in respect of all of those are we similarly vulnerable to that censure um would you say and and and if we are what might we do about it

James Booth what a nice little task for people to do as well that may be taking the first foray or going for an interview or preparing for that career to set yourself um a little challenge to do that as well yeah why not race with great sadness that it brings together our time together today to to a close but no doubt it's not goodbyes it's just a temporary see you later until we uh we bump into each other again but ray i want to say thank you sincerely for taking the time to come and speak to me and i wish you and your family a very happy end of year whatever whatever you you choose to get up to but thanks for

Ray Blake joining us way oh you too it's been absolutely uh brilliant thanks jb cheers thank you thank you

James Booth ray and everybody please do like subscribe see you all and i'll look forward to the next episode take care everybody