At FINTRAIL, our US and global teams have been closely watching the swell of protests unfolding in response to the shocking deaths of George Floyd and Breonna Taylor - the latest victims of ongoing and unjustifiable police brutality against black people. However, racism isn’t just the existence of bad actors engaging in criminal acts of violence; police brutality emerges from systematic and deep-rooted racism that has infected justice systems in the US and around the world for centuries. And unfortunately, the anti-financial crime sector, integral for feeding information on suspected money launderers and terrorist financiers to police, has been complicit in this institutional racism. At FINTRAIL, we are constantly working to do more to promote diversity within our ranks and to support and learn from black voices. But we can do more as a firm to not just avoid racism but actively reject it, particularly through our work supporting anti-financial crime teams. Together, as consultants and as community leaders in the FinTech FinCrime Exchange (FFE), we can help make meaningful change to improve the treatment of black customers and to hold ourselves accountable when we get it wrong.
We promise to help champion and support non-white perspectives within our own team and the teams we work with. Implicit biases exist not only in day-to-day anti-financial crime activity, but also in senior level decision-making. People can unfortunately be prone to ignoring or undermining opinions given by black people in the room - and this is even more so the case for black women. In the worst cases - the room may be entirely white, eliminating the chance for non-white voices and perspectives to influence decisions on financial crime. How else can we be held accountable and understand the impact of our processes and decisions across all areas of financial crime risk management without ensuring black people are involved in the work and have the space to make constructive challenges? Thus, as FINTRAIL, we will make sure that we use our privilege to ensure there is always diversity in the room and that we listen to any and all challenges to our approach, especially from black people.
We promise to work with clients to take extreme caution in the consideration of demographic factors when evaluating customer risk. Firms building out their customer risk assessment (CRA) models may choose to include demographic factors, including nationality. While under very specific circumstances, demographics may be strongly correlated with risk (e.g. cheaply purchased nationalities), we will not advise or support the inclusion of demographic risk factors into a CRA methodology in a way that could unfairly lead to the application of enhanced due diligence (EDD) measures to a customer solely based on their racial, ethnic or socioeconomic background. In practice, this means strongly questioning whether such a factor is necessary in a CRA model in the first place and, if included, ensuring that only specific risks to the business are targeted and that there is no undue bias in the weighting of such a risk factor.
We promise to be aware of racial biases that may exist within ourselves and our clients when it comes to clearing and investigating screening or monitoring alerts. Even when demographic factors have not been included in the calculation of a customer’s risk, racial biases can still cloud our judgment when evaluating one customer’s financial activity versus another’s. It is well documented that people are prone to more negative perceptions of those with darker skin, often without even realizing they are doing it. This can have dangerous effects for a customer, leading to their account being frozen or offboarded and their activity being reported to police. To help mitigate implicit and explicit bias in alert clearing, we will seek to support internal and external anti-racism bias training in the context of alert clearance and will push for the provision of clear decision trees to help analysts more objectively work through potential suspicious activity.
We promise to do more to recognise and help mitigate the racial biases that can exist within European and American identity verification RegTech platforms. Within the US and Europe, we are really lucky to have a variety of robust identity verification tools to suggest to our clients that help automate the onboarding process. Innovative solutions allow for FinTechs to match customer selfies, live selfies or videos to a verified ID document - allowing them to onboard the customer within only a couple minutes. However, some solutions can struggle with non-white faces as their facial recognition technology hasn’t been adequately trained in correctly matching non-white faces to IDs. This can lead to serious negative consequences - non-white victims of identity fraud may have their documents stolen and used to open financial accounts without being spotted, or alternatively, genuine customers may be routed through a laborious manual review process simply because they aren’t white. We will work closely with FinTechs and RegTechs in the community to identify practical solutions to ensure that identity verification tools can more effectively verify non-white customers.
We promise to take more initiative to build out innovative onboarding solutions for non-standard non-face-to-face situations. Under some circumstances, customers may not have the typical documentation needed to onboard - they may not have a passport or driving licence, or they may have recently moved country and have no address history. The good news is that more and more regulators expect financial institutions to have onboarding processes in place for customers who may be unable to provide traditional documentation - though some regulators go farther than others in their guidance. The bad news is that, in the absence of meaningful guidance, firms may end up with extremely manual onboarding processes, which require robust sensitivity training for front-line staff and which can delay financial access for those most in need of it. Some firms may even inadvertently avoid establishing a written approach to non-standard identity verification cases. We will do more to work with clients to help them establish more innovative approaches to non-standard onboarding and ensure that the approach is well-documented and that necessary training has been given to the front-line.
By working with the community on these practical steps, we hope to help inspire greater change within anti-financial crime best practice. No one should have a worse banking experience or be treated as a criminal solely based on the color of their skin, and we are committed to actively fighting for an actively anti-racist approach to financial crime.