Here’s is a transcript of Martin's recent talk at the Annual Financial Crime & Compliance Conference in Doha, Qatar – 4th September 2022
Thank you Nola and thank you everybody for sharing your time with us here today.
And thank you for the sponsors for supporting this very important event and we hope that at the end of it you will take away from this event, something you can use in your business, in your firms and your Banks.
Before I get into my presentation I wanted to say congratulations to Qatar on yesterday being your 51st birthday of Independence
And look how far as a nation you've come… and you're going to host a World Cup the global game, the beautiful game, the game that connects people and brings us all together, and I think you'll be a wonderful success and you'll show your country to the world of what a great country Qatar is.
A little bit more about me before we dive into my presentation. Neil James and I were police officers together many, many years ago we were a little odd show, and we would grab some comedic attention as we walk around London because Neil actually wanted to be a policeman when he was younger but there was a time when you weren't allowed to be a policeman in London if you were too small. (smirk)
They changed the height restrictions yielding the plate and Neil joined the police and we've been very, very good friends ever since - but I refused to go to Australia with him (my wife wouldn’t let me go)
So ladies and gents we are members of the Global anti-money Learning Community. We stand against the money launderers, the fraudsters, the terrorist financiers, the corrupt people. We stop we try to stop the harmony cause because the lifeblood of their business is money … and that's what we handle and that's what we seek to filter out. We don't want to handle dirty money, but whilst we are anti and immediately it presents this confrontational piece and many of us who work in the business of compliance - we're accustomed on a daily basis to confrontational conversations.
I'd prefer this presentation to be much more positive… what we achieve and what we do together, and how we can stop the bad guys. It's progress we have made … progress we can make and for that emphasis I really like training. Earlier on people this morning talked about technology… artificial intelligence it's no good ladies and gentlemen.
Without real intelligence your experience and your expertise - if the AI is not designed by people who understand a business, know what they're doing, you will not generate the best outcome. Do not let artificial intelligence replace you. Work alongside it. Make sure it complements you.
But what you have done in all your time as compliance officers there's regulators even law enforcement officials is very, very important and contributes significantly to a potential positive outcome in regard to using technology to defeat the bad guys
So the World Cup is coming up. We are equally - as I say to a team - but our opposition is a bad guys but the successful team in the world cup will know its opposition… the manager will have a strategy
In your firms you need a strategy to win and as well as many KYC / KYB there is A KYO (know your opposition) to be successful in this business know your opposition - the winning team in the World Cup final will win in part because they know their opposition / their strengths / and their weaknesses
Money launderers are limited by two primary single factors … their imagination as we've heard you can launder money through many, many assets things … gold, real estate, oil, cash… and the other thing that limits them is our Collective Endeavor to stop them.
Okay - the only thing two primary things that limit money launderers is what we do really matters. And if I may quote a friend of mine Jeffrey Robinson from New York who wrote The Laundrymen … always remember this “dirty money is like water it seeks the course of least resistance “
We have a job ladies and gentlemen, to put some resistance in our processes to stop the money launderers.
So football unites us together. Football does unite us it brings us together… it's a common language. In football there are common rules. Similarly there's a commonality in anti-money laundering.
Important to both businesses is integrity. Ladies and gents football without Integrity is broken… it has nothing. We cannot rely upon it, we cannot trust in it, we cannot believe in it, we cannot invest our passion into it.
We need to maintain the Integrity of financial markets. We stand against Dirty Money corrupting and polluting our businesses, our communities, our Nations
The Russian money has penetrated lots and lots of institutions in America and in the United Kingdom
Many years ago Vladimir Putin determined it was time to throw away the trilby hat and the gabardine Mack - the uniform of the Spy - and he determined the way ahead was to corrupt the money which he had successfully done. And therefore we don't properly trust our institutions in America and the United Kingdom.
I once interviewed a friend of mine Bill Browder – a sworn enemy of Vladimir Putin and author of two books … Red notice and Freezing Order (later on Freezing Order) - and I said to Bill ‘why did the National Rifle Association give Donald Trump 25 billion dollars to his election campaign?’
Do you know what his answer was? He said “Martin the Russian government gave the National Rifle Association 25 million dollars” Gentlemen … money is corrupting other institutions and we stand against it. That's what we do.
There are rules in football. There are rules in money. We're increasingly connected. Football brings us all together in Qatar - but we're connected by our mobile telephones, by computers, by transport, by technology - but the same technology is exploited by criminals.
So let me take you back many years ago when Neil Jeans and I were police officers.
I joined the police in 1983. At that time a common crime was armed robbery. People entered the banks wearing a mask. And not because of Covid-19 - it was to hide their identity. And they were carrying a gun, and they threatened people, and they stole the money, and upon leaving the bank they got into a stolen car .
It's all about the fast getaway and hiding your identity. They'd often abandoned the first stolen car - which everybody saw them leaving the bank in and got into another stolen car - which I hope nobody saw them getting into.
Nowadays nobody commits armed robbery in London or upon Banks. They may rob other drug dealers, but they don't rob the banks. The criminals have found there is far more money to be stolen with your fingers on a keyboard of computer than the finger on the trigger of a gun. It's very simple. At the click of a button - that's how you steal the money.
And so we have the FATF that puts rules across the globe because money laundering - like football - is a global business.
Money laundering is equally a global business. The job of a money launderer is to move the money away from the scene of the crime as quickly as possible…and I'll reference this again in my presentation - but let me reference it now lest I do forget…
Common or transaction monitoring models have looked at value volume and frequency to identify the unusual transaction that may be indicative of something suspicious. We miss something. We fail to see something. I'm not a money launderer neither. Are you?
The Benchmark in all you do is in your account. Most of us in this room will receive one primary credit a month into our account that usually comes from our employer. From that credit we pay our bills. In the UK we pay a huge amount of money for our energy, welcome to Little Britain Post Brexit.
We pay our mortgages, we pay for health care, we pay bills, but we don't do it necessarily quickly. We're structured. My account is calm. The difference between me and the money laundering bank account is velocity….
That's what we've missed - we miss velocity and speed. My job ladies and gentlemen as a trainer, is to think like a money launderer. To try catch your money order. Stolen money, dirty money is on the move constantly. It's trying to outrun law enforcement and outpace them which is why time and time again we see the credit coming to the bank account - commonly in the UK - now stolen funds from another bank account.
We are suffering an epidemic of . It is out of control. People are losing their pensions. They're having money taken from their bank accounts. It is only possible to do that because the criminals have a getaway car waiting to take them away from the scene of a crime.
The scene in a crime is the victim's bank account and the getaway car in 2022 is the money laundering bank account - the primary account - and the way you can identify the problems is it moves fast. The money moves fast.
As soon as it hits the account - as soon as it hits the money launderers account - it moves all of it, or most of it. That doesn't happen in our regular everyday normal accounts. If it does it's very, very seldom very, very rare. So how do you stop it?
Most transaction monitoring systems are post the event. It happened and the money's gone. Look at your terms and conditions of business and notwithstanding faster payments … do they give you 24 hours?
If they don't - ask yourself another question… do you want to offer that to your customers?
In the United Kingdom now it's common practice for most of the major High Street Banks physical present Banks to block debits above a value of three thousand pound / four thousand pound / five thousand pound to new payee in order to establish … is this potentially a fraud? The bank is seeking to protect its customer and hopefully seeking to protect itself and its shareholders. The bank is thinking smarter, but it's undone if there are other Banks who allow the criminals to create accounts using stolen identities and park their getaway car in another bank.
We need to think smarter. If the piece you're missing in your transaction monitoring the training & education – what’s missing in that piece is velocity and you can't stop it in the rooms here …
With football if you're offside, if you fail you get a red card and you will be sent off and you'll be suspended from the game - it might cost your country the World Cup.
With the FATF - if you're not implementing the recommendations that everybody else is - you're a weakness in the system. You’re a weakness in a supply chain of confidence and competence and you will be on the list - the FATF grey list.
What that means for you is- it will cost more money to move money. It'll cost more money to rebuild your reputation. Being on a list is a BAD THING. Breaking the rules is a bad thing. As compliance professionals we need to know this and be aware of this and be on top of this.
Technology helps - but we the human beings. We are most importantly the people stopping money laundering. Supply chains - importantly in the supply chains is the supply chain of risk. Neil Jeans referenced it earlier - banks are now looking. The big banks are now looking at smaller Banks saying “what are your controls?” “can I have confidence in those controls?”
Training is important because it helps you supply confidence to other parties in your supply chain. It's imperative to help you to do that. In the football context the Midfield players supply the ball to the attackers - who score goals. Primarily we're Defenders - we try to stop them. We need all the scoring goals, however if we pass good intelligence to the authorities - we can help them score a goal and defeat the money launderers which is the whole basis of the FATF is built upon - it's to deter, to stop them.
Because there's too much friction and resistance in our processes for them to launder their dirty money in our organizations, in our countries, to detect your transaction monitoring and don't forget the velocity and try to be more real time.
Try to buy time because the money launderer is in his getaway car moving fast. We have to slow them down. To put some speed bumps in the process. To input limiters on them. We're all moving towards electric cars- is coming needs to save the world for our children, and our grandchildren. They'll have speed limiters upon them.
It's not a case of we can't - we can we control now just as you control Iron Man in your Banks. We are in charge and for all of we do and everything we look at lessons. We try to learn. Sometimes we need to look outside of financial services, outside of accounting, outside of banking, and find lessons somewhere else.
One of the best lessons you'll ever find in the world of AML and KYC are at the airport. Airlines and airports are pretty good at KYC. We're all going to get screened. They're going to say to you “did you pack your bag yourself?”
Try saying no – and see how far it gets you. Try saying that your bag belongs to someone else - to a British Virgin Islands company - see if it gets on the plane.
But we in banking tolerate some of this nonsense. Imagine we swapped our jobs and we put some of the people in some of the banks at the airport and said you're in charge of KYC at the airport.
I fly out tomorrow - I'll probably get to the airport two and a half hours before I fly out. If some of the banking staff are in charge, I'd have to get there two and a half days before we fly out because our systems are broken.
We don't manage it properly we will go away and say oh it's a BVI company let me go and find out who owns that for you. When did it become my job to understand who owns your company BVI - it stands for the British Virgin Islands or beneficiaries virtually invisible … your choice
The great thing about the airport is - and it's a great example to us of why we can take control and demand compliance in our banks notwithstanding inconvenience …
When I fly out tomorrow I'll be purely hand luggage. And I'll have a bag 20 centimetres by 20 centimetres that must seal at the top and the maximum liquid I can take is 100 millilitres
When I wrote this piece - many months ago - I put 50 millimetres in it and my editor Nola saved me. Convenient right - it's difficult but we all tolerate it - and we all accept it. And I'm part of our training and education the piece we miss with our customers we don't bring them on the journey at the airport. They may say to me if you leave your bag unattended it may be destroyed or damaged by the security services.
I personally have never seen the security services destroy or damage your bank. What I have seen is empty looking after their bag. Moreover everybody's looking around the airport for that lonely bag the bag without an owner - effectively the airport's recruits all as deputies to help them. To help us - because again importantly what we do in compliance is we protect. We protect communities, customers, shareholders and everything they do at the airport is about not inconvenience - that comes part of it - but it's to protect us.
You imagine being sat in a plane where they didn't search properly. Well they didn't mind how much liquid you brought on board, how comfortable are you? Would you fly to Disney with your wife and two kids or your husband on such an airline with such lax security?
What risks in the risk supply chain are they bringing to you? So remember that bag ladies and gentlemen … people in your organization say you can't do that because it inconveniences customers we can inconvenience customers to protect customers
We can take charge, we can take control, and we can educate our managers as well as our customers, otherwise what happens is the airport searches you you're screened and you're about to get on the plane and the plane stops you says we've got to search you all over again because we don't trust each other, we don't work well together, that's a very important lesson from the airline industry.
The airports work with the Airlines - and the regulators - and the customers. We need to look at our collaboration and draw upon it, and improve the way we do it as a team - we're all in it together. We support law enforcement, the regulator is on our side, our common enemy is the money launderer.
In a football context I have attackers and midfielder. Our Victory is we don't really score a victory - our Victory is the money launderers not winning - but sometimes we block the money - sometimes we block the account - sometimes we give the information to law enforcement, deter detect report and they can become effective if we have a strategy and I commonly asked you some firms and even nationalized countries - one actually is your anti-money laundering strategy.
In too many firms it's a comply with regulations which won't always be the most effective strategy to struck them in order, whereas on the other hand if you have an effective anti-million warning strategy- I believe you will be compliant with the regulations.
If we think about it like that and remember within this team think like a money launderer, think about how your team is going to try and attack you, and counter it - that's a winning team – a team that will win the World Cup - not just on how they play – but on how they stop the other team playing
And it's all about this- it's all about training - so the early footballers going to the World Cup are the ones who've trained hard and play hard – and some others are not going because they're not fit enough anymore, they can't train to the right standards, the winning team in the world cup will be well trained.
The winning team in anti-money laundering is equally well trained. We need to put a cog and stop, we need to put a stoke in the proceeds of crime and stop the wheels turning - that's our job and I assure you having done this … it's very .
So the reason I'm known as a Wachovia whistle-blower - when I worked for Wachovia Bank it was the fifth biggest bank in America at the time - it's now part of Wells Fargo… it wasn't big internationally. Every non-dollar transaction in that bank was cleared in London, Swiss franc, Japanese Yen, Euro, Sterling, US dollars
In the US I discovered lots of transactions were unusual and suspicious including multiple purchases of Swiss watches through Swiss Francs from what was called Casas de Cambio customers
Money service businesses were being used by the Mexican cartels to launder billions of dollars through Wachovia Bank. Remember earlier I said to you I'm not a money launderer - there are people who think there was no money in order to take in a place at Wachovia bank until Martin Woods turned up.
I promise you with my experience my expertise I determined that the account will be new to London money and because my colleagues had never seen it in such a way and put me into confrontation with my colleagues
I didn't stand down, I joined the police force to fight bullies. If you want to bully me in a bank I won't stand down against you - I will stand up to you. So eventually we fell out and able to do a little whistle to the American authorities and the UK authorities and the bank paid a substantial fine.
Now most whistleblowing stories don't have a happy ending. Somebody has a difficult life. Mine is a very happy ending. My whistleblowing contributed to me being stood here in front of you now, sharing my time with you, having this great privilege coming to your country, because I made it an asset and I want to come around the world and both motivate and inspire people - that when you stop money launderers - it is a very, very satisfying thing.
And that's why you need to be well trained- to put a spoke and stop the wheels of money on returning. I could do some training and how to operate the slides early so what do we do in in our job - we aim to stop the money laundering. How do we measure success? Very difficult ladies and gents. Very difficult.
A great example is to one MBD case and Goldman Sachs. There were whistle-blowers at Goldman Sachs who saw this trend, these transactions of bond issuance from the Malaysian government - they are wrong - we are charging a public government 600 million dollars for a five billion dollar Bond issuance
The FBIOS in in the banking Street would charge 30 million for that - why are we getting 600 million? It's wrong. At the time the highest levels of management in Goldman Sachs sanction those transactions. They went ahead and at my estimate I think that those decisions and the penalties and restitutions and the guarantee on the Bond as cost governments actually shareholders seven billion dollars
As compliance officers if you'd stop that transaction- how do you say to the management of Goldman Sachs “I've just saved you seven billion dollars” So our job as compliance officers can be difficult , nonetheless I actually don't think compliance officers should be given bonuses.
My anxiety and my fear of bonuses is they compromise people. They incentivize others - but they compromise compliance officers. A compliance officer should never be thinking about how does this decision, how will this conversation, or this email impact upon my bonus?
Imagine a police officer being asked in a witness box “Detective Constable Woods what was your bonus last year and how did you achieve it?”
Can you now see how bonuses can compromise people who are in a position to make decisions, to manage risk, to protect people, to stop harm and to have a very big long-term view of the outcome of some transactions…?
I advocate compliance officers should be paid more money - so I want you to get a salary increase. But I don't want you to be paid a bonus and please if you think it's very controversial do discuss it with me over lunch. One of the things I like about these events - is I come to learn - because a man who thinks he's the smartest man in the room … he's in the wrong room. He's not going to learn - anything so I assure you ladies and gents - I'm not the smartest man in this room today
Knowledge is power. You have a sense though, with the banking experience of some people in banking that perceive knowledge as contamination, they don't want to know … they want people to be able to prove that they know. Sometimes in firms I don't put stuff in writing because it doesn't need to be put in writing - but ordinarily if somebody says to you in a firm ‘don't put in that into writing’ that will not be for your benefit.
When I was at Wachovia Bank the most powerful weapon I had - remember I joined a police in 1983 … the internet didn't come about until about 2001…. This is my most powerful weapon. And I always wrote in my Diaries everything was written in my Diaries. So when I issued legal proceedings against a bank I had all the notes in the world to draw upon and of course the bank settled with me because propellers served me well and I did put things into writing.
So that's very important to us but in the world what we need to look at in this world about winning and success. We're going to win if we understand … what does our opposition look like? Have you ever given consideration to this … what does a money launderer look like in 2022? What does is a fraudster look like in 2022?
Before the internet there was an identity with the internet and the computer - they can be anywhere they want. Anyone they want, there's a whole marketplace out there on the dark web for stolen identity data
If an organization has 37 billion combinations of emails and compromised passwords that they've collected from dark web criminal Forum chat rooms in 2022 the money launderer can look like whoever he wants … he's hidden behind a computer screen. So how do you find him?
You can find him - he's reflected in his transactions - In a banking context my main my name may be Martin Woods but my bank understand and knows me by my transactions I'm a set of numbers, an account number, a sort code, and my transactions reflect my character, my personality, you can find money launderers by their transactions. That's how you identify them. And their transactions are unusual, out of context, and they're fast, so to succeed we need to think about the numbers.
How much, how often, or importantly how quickly… and all of this brings us around to confidence and ability. We cut that tee off organization. We are successful. We drive success. We're educated and we're trained.
Importantly think about training - not just your staff but your customers. Go back to the airport - bring them on a journey with you. If we are defeatist we will be defeated.
Look at what Qatar has achieved in 51years - that was not a defeatist mentality that was success - it's a can can, will will, do do, positive back to the theme of my presentation - believe in yourselves.
Understand if the airports can stop the terrorists you can stop the money launderer pre-Covid-19 - there would be about a hundred and three thousand passenger airline flights - would fly around the world every day and 3.2 million passengers were flying from one place to another
Since 9 /11 how many U.S planes have been successfully attacked by terrorists?
That's right zero - they're pretty good at KYC. In the airlines - aren't they pretty good at screening - and that's because they have support across everything.
You cannot land an American passenger airline at an airport anywhere in the world without approval from the American regulatory authorities so the airports want the American Business - they have the right level security - it's all about protecting the customer - they can, they will, they do.
They're not at all compromised by the fear of upsetting customers their primary job is to protect customers and if that gives you inconvenience so be it and it does give us all a lot of inconvenience but it gives us confidence to travel. Without confidence to travel there'd be no oil industry.
So what I say to you - what we do matters right. And actually you may have worked out already but surely as I go on - you'll work out I'm MAD okay so I was a whistle-blower - I eulogize about money laundering and a way to perhaps you haven't seen before excites me.
I like to defeat a bad guys but I'm MAD - you are too - you're all MAD because what you do matters you Make A Difference (MAD) so take that away with you today and say you really do have to believe in what you're doing. If you believe in that you'll generate better outcomes because you can, you will and you do.
And that’s why we’re here today – to talk about how we can make a difference and stop the money launderers.
Thank you for listening to me today. It’s been a pleasure speaking to you.
Martin ended on a sombre subject and told the delegates to think of the devastation and suffering of the people in Pakistan impacted by the floods. He advised their suffering should motivate all AML practitioners to endeavour to support and even protect them.
Protect them from evil people who are right now seeking to exploit their suffering, their desperation and need for help. He added there are people the world over who want to help, want to send funds, to save lives, rebuild lives and offer some hope. BUT, there are others who want to steal that hope and the money behind the hope. They are setting up fake websites, drawing people and their money away from those who need it most AND, they can only do this with bank accounts.
What we do matters, we can Make A Difference and the people of Pakistan need us to do so. We can simultaneously help them whilst we deter, detect and defeat the evil people who seek to impose further suffering upon them.
Martin Woods
Chair of the Global Compliance Institute
Martin Woods has a wealth of experience as a detective who once investigated financial crimes, including global frauds and money laundering. Upon leaving the police service he embarked upon a career as a senior financial crime compliance officer, working for and with a wide variety of firms all over the world. He has provided training to regulators, central banks, law enforcement agencies and regulated firms and has been called upon to provide expertise as well as guidance. He has been highly commended by regulators and is passionate about empowering people to fight financial crime.
He advocates we are all here to Make A Difference and he is always on the look out for those who may want to join his MAD – Make A Difference revolution. He prides himself as an enemy of the money launderer, the fraudster and the terrorist, who uses training to equip, inspire and motivate others.