Risk Screen – Planet Compliance RegTech Interview (2021)

Interview with Stephen Platt, founder and CEO of RiskScreen

Stephen, what got you started in this industry?

I’m an English barrister by profession, and I focused, as a lot of young barristers do, on criminal law. I’d always been very interested in financial crime and white-collar crime – I’d written my dissertation at university on money laundering back when AML wasn’t even an offence in the UK – and I went to the US to study drugs and money laundering legislation, and was very fortunate to be able to meet lots of people in the public and private sector there. I was always fascinated by the idea that the state was going to try to enlist or recruit the private sector into the fight against financial crime.

And then the chance came up to move offshore, which at the time was synonymous with financial crime. Initially I was involved in a wide range of things from aircraft leases to collective investment vehicles and securitization structures. But I hated it. I’d gone from the cut and thrust and the characterful environment of a barristers’ chambers in the Temple to a rather sterile and clinical environment of the commercial department of a law firm. I almost didn’t last the course. I’d gone from cut and thrust to cut and paste.

But I resolved to double down, and to learn as much as I could about all these products and services, because in that way I’d know a lot more about their vulnerabilities to exploitation. And so having learnt as much as I could, I then suggested that the law firm that I worked for establish a new practice group focused on compliance, because I knew that money laundering laws were going to be introduced offshore and I wanted to be ahead of the curve. The timing was perfect.

Having set up this compliance practice group, Stephen then started his own offshore law firm specialising in financial crime and regulatory matters. Over the next fifteen years he also founded the International Compliance Association (ICA), various professional qualifications, and took a position as adjunct professor at Georgetown University, teaching classes on the criminal abuse of international finance centres.

How did all this activity lead to the founding of Risk Screen?

Along the way I’d established this little anti-money laundering knowledge portal, almost like a virtual drop-in, coffee-and-cake meeting place for money laundering reporting officers, because although they may not be the most unloved people on the planet, they’re certainly the most unloved people in industry. I wanted to establish some place online where they could get information and exchange ideas. So that was KYC360.com – which now has over 30,000 AML professionals from around the world signed up to its industry emails, and almost 100,000 users a month.

On the website we also had a little search tool called RiskScreen, which returned basic results when you typed in someone’s name. It wasn’t very sophisticated but was free to use, and became increasingly popular. And one day I was having a chat with a friend of mine called Simon Nixon, who’d founded and listed Moneysupermarket.com, about the future and he said that we should turn the portal and its search engine into a really significant RegTech business. We were not just some ordinary tech firm – we were – and are – a team with deep subject matter expertise, who genuinely understand the nature of the compliance challenge, the ethical challenge, and the nature of risk.

So, I invested a tonne of money, hired some data scientists – because the tech still had to be cutting edge – and some more subject matter experts, and we transformed the business, retaining the KYC360 knowledge portal, but also really investing in building out the RiskScreen product into the AML platform we have today. We now have hundreds of customers around the world, including regulators and law enforcement agencies, and the RiskScreen platform provides complex, risk-based processing across all stages of the customer journey, while being configurable to internal systems, and, just as importantly, easy to use. I’m super proud of it.

What do you think are the factors behind RiskScreen’s success?

You know, I really believe there is a better way to combat money laundering – and I think most compliance professionals believe that too. A lot of what industry has invested in and done in its efforts to combat this threat historically has been wasted. All that legacy tech is now far too clunky – and instead of reducing friction, it just increases it, with the added consequence that businesses, in addition to having invested huge sums of money in the tech, have then had to go out and invest huge sums of money in hiring more and more and more people to deal with the challenges that have been thrown up by that technology. And that has just given anti-money laundering an even worse name within these organisations, because it’s just a headache. But it doesn’t have to be like that.

Could you give us how compliance processes can be improved?

False positives on screening technology is a really good example. If you go out and spend a million pounds a year on a screening tool, but that tool limits you in the parameters that you’re able to set and prohibits you from screening in a risk-based fashion and throws out lots of false positives, the only way in which you’re going to mitigate that is to put bodies on it. And then you introduce the risk of human error, which we’ve seen in so many cases. And it is no wonder that people who steward these organisations sit there and think, “Well, you know what, we just got to throw more money at it.” It’s a massive problem.

As a business we’re dedicated to making sure that companies get maximum return on the investment that they make in their technology, and a key metric in that ROI is cost-saving efficiencies. Now I can’t prove how many scandals our technology might have prevented businesses from being involved in. But what we can prove is that we’re materially reducing false positive numbers by up to 95%. We’re allowing you to screen in a risk-based fashion. We’re allowing you to reduce headcount and/or redeploy all of those expensive compliance staff to do the jobs that they should have been recruited to do in the first place, which is actually use their brains and make qualitative decisions rather than just doing the donkey work of trying to figure out whether something is a false positive or a true match.

What are some of the important developments you are seeing in the RegTech industry?

If you look at this from a societal perspective, society is becoming less and less tolerant of what they see as unethical business practice – what they what they regard as the facilitation of criminal conduct by financial institutions. The financial services industry knows that if society’s becoming less tolerant, then so are the regulators, the prosecutors and even consumers. And the officers of these institutions, these people who sit around boardroom tables, of course don’t want to launder money, and they’re also becoming less tolerant because they see so much of their balance sheet being committed to compliance functions but yet they continue to be hammered. So, everybody’s becoming less tolerant. And out of that, change will come.

Could you elaborate on those changes?

Well, the answer doesn’t lie just in technology, the answer lies in a different blend between people, process AND technology. You’ve got to get the blend between those three things right. So technology that enhances workflows and is easy for people to utilise is great, and the benefits are easy to see. 

Does that mean there’s going to be less money laundering? Probably not. Because there’s more and more crime, generating more and more money. It’s an infinite challenge, that’s never going to go away, and we’ve all got finite resources. But I do think that organisations are going to become more sophisticated in the way that they tackle it. And I don’t think that the answer is going to be found in artificial intelligence solutions, for example. There’s still so much work to be done in getting the basics right. There’s no point in investing tens of millions of dollars in AI solutions, when you can’t even get the underlying data together.

What’s next for RiskScreen?

We focus on getting that underlying data right, giving you elegant AML solutions that work, and help you demonstrate a material return on investment. And I think the businesses are ready to hear that message. They’re ready to embrace this. And that’s where we’re going to go over the course of the next five or ten years. And that’s why I’m super excited. It’s why I was very grateful that I took Simon Nixon’s advice. I don’t think I’ll ever be as wealthy as he is. But I nevertheless I’m pleased, really pleased, I took his advice. We’re making a difference, and that makes me happy.

Planet Compliance

Planet Compliance is a marketplace where institutions and corporates can discover RegTech and LegalTech solutions. Planet Compliance also operates a content platform that provides information and insights on technology, regulation, compliance, finance and innovation.
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