The FinCrime Files – Q&A with Francisco Mainez, Head of Business Financial Crime, Risk Data & Analytics, HSBC

In our continuing series of the FinCrime Files, we caught up with Francisco Mainez, Head of Business Financial Crime Risk Data and Analytics, Retail Banking at HSBC Retail Banking and Wealth Management.

Hi Francisco, can you describe your role and a little of your career background?

I joined HSBC in September 2014. After two roles in Compliance and the Financial Intelligence Unit, I currently lead a team in Wealth and Personal Banking performing Financial Crime Analytics across several areas: CDD, Transaction Monitoring, Case Management, Sanctions, Exits, etc.

Prior to HSBC, I was in Standard Chartered in both London and Singapore but my real background is Military Intelligence, where I fulfilled multiple roles in operational missions in both European Union and NATO.

What do you consider to be your top 3 challenges in fincrime today?

1. Data: Banks are really good at gathering data from customers and processes but not so when it comes to storing, structuring and making it available to users. New machine learning / artificial intelligence solutions can be rolled out but if they are not fed with good data, they won’t be able to provide the solutions we design and implement them for.
2. Integration: We’re pretty good at creating and managing AML or Fraud teams but they tend to operate in silos and work like a ship’s watertight compartments. Financial Criminals are not bound or constrained by organizational structures or hierarchies. I believe the future of Financial Crime geos through the progressive integration of “classic” Financial Crime (AML, Sanctions, CTF, Anti-Bribery & Corruption) with Fraud and also with Cyber Risk. We’re seeing more incidents that combine the three elements into one (e.g. 2014 Carbanak attacks)
3. Culture: When I started working in Intelligence, we used to work under strict “need to know” rules. The 9/11 attacks changed everything, as the post-mortem investigation concluded how the attackers had left a trail of data but since there was no integrated analysis framework, they were able to operate without raising much suspicion.

During the subsequent years, the Intelligence Community oversaw a cultural change where “need to share” progressively became the prevalent approach. We still had to be very careful in protecting data and sources but sharing data became crucial to analyse and neutralize threats.

The recent move from the major 5 Dutch Banks into a transaction monitoring data sharing framework, undoubtedly leads the way in that field and will provide lessons learnt that should be analysed by the Financial Services industry.

How much impact do you think technology advances such as machine learning has had on your role in recent years, and can you think of a specific example of where it has saved you time or manual effort?

Machine Learning has already started to make a difference both in terms of Risk Management and Cost Efficiency. I believe that transitioning from rules-based engines to more adaptable Machine Learning models is part of the way ahead. There’s always going to be a dependency on data availability and quality so any initiative in this sense should be matching by data enhancements.

What are the most frustrating things you have to do in terms of dealing with data, such as manual searching, paper trails, or waiting for customers?

Accessing and retrieving data from multiple sources. The good news is that the industry is surely heading to more centralized solutions, where emphasis has been put on easy data access in order to enable advance analytics. The underlying challenge is still data quality and our ability to update customer and processes data so the resulting analytics are targeted and fit for purpose.

What do you think the future holds for AML or KYC processes using technology – do you think things like AI will start to dominate or become “must haves” for banks?

AI will undoubtedly be a part of the future for banks in general and Financial Crime in particular. Explainability and companies’ ability to maintain a balance between requirements and complexity will still be there but I’m confident that AI will help Financial Crime Risk to become leaner as well as more flexible and accurate.

Having said all that, I also believe that AI must be used as a tool but not replace human decision making. I started as an infantryman in the Marines and still remember that saying “all this technology is great but no one helps you during the final 400 meters to finish the job”

How has the current pandemic situation affected your day-to-day role?

While it was taken away the social or face to face interaction in our lives and jobs. HSBC was very well prepared to shift to remote working, so the transition was smooth.

I believe it has also showed great resiliency at corporate and team levels. I’m privileged to have an outstanding team and they have responded brilliantly.

From a more personal perspective, it has put our lives at a bit of a stretch, having to combine work with home schooling and adapt working hours, but overall it’s been a good experience so far.

Finally, where do you find inspiration? What podcasts, books, social influencers, events etc do you follow or recommend to our audience?

I really enjoy listening to “The Dark Money Files” podcast from Graham Barrow and Ray Blake. Also the “Suspicious Transaction Report” podcast from RUSI. I think they both explain a complex subject like Financial Crime in practical terms and in a really entertaining, yet insightful way. Both great knowledge resources. Also, the work and podcasts from Samantha Sheen. They are invariably insightful and a valuable source of knowledge and indication where the industry is heading to.

If I had to recommend a couple book on Financial Crime / Counter Terrorism Financing, I’d always go for “Treasury’s War” by Juan Zarate and “Harpoon” by Nitsana Darshan-Leitner and Samuel M. Katz.