Thought Leaders in Artificial Intelligence: Charlie Delingpole, CEO of ComplyAdvantage (Part 4)

Sramana Mitra: I’m thinking about what you said about these lists of people who have been sanctioned that you can access easily. What are the spheres of influence of these people? There are corruption rings all over the world. There are terrorist rings, drug cartel rings, and all other questionable groups. How do you map those out?

Charlie Delingpole: There are government policies around sanctions. You have different factions programmed. You have North Korea, Venezuela, and South Sudan, for example. Part of it is geopolitical to the extent that there is wide UN or US disdain for a particular group. That then merits the nuclear option of sanctions. 

Sramana Mitra: Does that mean that North Korea is sanctioned altogether? Do you label everyone from North Korea as sanctioned and off-limits?

Charlie Delingpole: No, there is a group called Fighter Action Task Force. They will do evaluations of countries based upon mutual evaluations. They will look at the systemic risks within countries and determine if that country would be on the gray or black list.

Banks and other counterparties will often refuse to work with other companies that send or do business with those countries. For instance, one of our first clients was a Somalian company, and they were sending payments to Somalia, Afghanistan, Pakistan and so you have problems with Al-Shabab, Taliban, and ISIS in those areas.

If you are a bank, then you are saying, “I can make $1 million a year off this client but the risk is that I will be fined $10 billion if that money goes to a terrorist group.” Countries are sanctioned, but they are considered as high risk.

Many companies will refuse to interact with those countries because of the risks associated with it. What will happen is that there will be programs or regimes which say, “Given what has happened in South Sudan and given the Jonglei militia are attacking the people in South Sudan, we will sanction the 20 members of that regime. We therefore make it impossible for them to gain funding or to fly overseas.” It’s more a question of individuals as part of a foreign policy objective who are considered sanctioned, which means that they have limits put on their ability to act.  

Sramana Mitra: If there were regular civilians from North Korea, would your system be able to let that person do business with banks?

Charlie Delingpole: You have things like transaction monitoring and behavior class analysis. When you are onboarding a client, they say, “I am intending to sign up and I am trading with China. I am selling them plants.”

If they then start sending high volume payments to Iran or North Korea, then there is an obvious discrepancy between their stated natural behavior. We would then say, “This is not within our risk appetite, because we can’t verify the identities and their beneficiaries.”

The core thing that we are doing is a database of entities. We are looking at particular people with no known dates of birth, connections, facts, and patterns of behavior. Whereas separately, there is the behavioral pattern analysis around user’s behaviors once they are on board.

Even separate from that is fraud detection. How do you know if that person is who they claim to be? If the IP address doesn’t match the passport country or if they are using black email, those are all indicators. In terms of risk, you have many different forms of it from credit risk to money laundering risk. A huge part of business and finance is the management of risk and the various dimensions of it. 

This segment is part 4 in the series : Thought Leaders in Artificial Intelligence: Charlie Delingpole, CEO of ComplyAdvantage
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