Podcast | S2E8 Fighting Financial Crime: Sherry Madera

TRANSCRIPT

Kimberley Cole 0:01
This is Risky Women Radio show to connect, celebrate and champion women in risk, regulation and compliance, sharing insight and perspective from the most influential members of our global Risky Women network. On the latest developments, we need to think about, the challenges we should all talk more about, and innovations we are most excited about in governance, risk and compliance. Bringing together the hundreds of senior women professionals already connected with a new emerging group of leading women and men. I’m Kimberley Cole, your Chief Risky Woman.

Kimberley Cole 0:37
This episode is brought to you by our founding sponsor Refinitiv. Refinitiv serves more than 40,000 institutions in over 190 countries. Refinitiv provides information insights and technology that drive innovation and performance in global financial markets. Refinitiv enables the financial community to trade smarter and faster, overcome regulatory challenges and scale intelligently.

Kimberley Cole 1:01
Welcome to Risky Women. Today’s risky woman is Sherry Madera, the Chief Industry & Government Affairs Officer at Refinitiv. Welcome, Sherry.

Sherry Madera 1:10
Thank you very much. Glad to be here, Kimberly.

Kimberley Cole 1:13
So today we’re going to talk about the very important topic of fighting financial crime. It’s a it’s a really interesting area. So we’ll get into that a bit later. But first, let’s look at your career. So you joined Refinitiv from the City of London Corporation, where you were the economic ambassador to Asia. You’ve had more than 20 years experience across both public and private sector including corporate finance, banking, asset management and entrepreneurial ventures and more recently, global policy leadership and advocacy in financial and professional services. Sounds amazing!

Sherry Madera 1:47
I mean, how did I manage that?!

Kimberley Cole 1:48
Exactly! And prior to that role at the City of London Corporation, you were minister counselor for the UK’s Department of international trade based in Beijing, so close to my hometown in Hong Kong. So fascinating career, very global, and one that sort of spanned public and private sector. So can you tell us more about that journey?

Sherry Madera 2:09
Yeah, Kimberley, I could tell you it was all planned. And this was all kind of clicking over as predicted at at age 20. But, but certainly, the decades in between then and now have been more of a journey and an adventure than a following a map. And that suits me because I do think that the movement from being entrepreneurial being part of the banking sector as an investment banker, having done real business in multiple locations around the world, moving into government was was very rare. And actually, it’s a real kudos to the UK government at the time, who was looking for just that – someone who was going to be able to speak the language of business in order to be able to lead our trade with a very important nation, I think we can all agree, Greater China and more widely Asia. Working across borders into Europe into the UK was really important and remains so. So I was very lucky to be at the right place at the right time and got someone to recommend me after I after I said, Why on earth would you think that I could join the government considering my CV being completely commercial, we went from there and it was the best thing I could have possibly done. Of course, after five and a half years of government and always being that slightly different voice, realizing that my DNA is etched in a profit motive, I’m coming back here to Refinitv in order to be able to bring a fresh pair of eyes a new perspective, and indeed a new push to our government and industry relations when Refinitiv was born. I’ve been here for six months and absolutely loving it. But goodness knows the pace is amazing.

Kimberley Cole 3:45
So obviously, there’s been lots of highlights. If you’re going to pick out a couple of them what what would be those highlights?

Sherry Madera 3:52
Yeah, I mean, I think my time in Beijing was really special. And I always say that I was there at the absolute best time, particularly in UK China relations at the time, this was a time when George Osborne was still our chancellor and was very pro China. And the development of that relationship was very core and financial services, which was my specialty was was absolutely fundamental to the growing of that relationship. So I think that was very special. At the same time going back, I’m lucky enough to go back to Beijing, at least four or five times a year. And actually, I would say right now would also be a fantastic time to be there. But for me being a part of the G20. Being a part of the B20 when it was in Hangzhuo in China was a incredible way for us to really get a perspective on what was going on globally, in a place that I knew very well. So that balance was fantastic experience.

Kimberley Cole 4:47
Yeah, that would that sounds amazing that you’ve you’ve done that and I guess that’s something you can continue to use through your career, just that understanding of that China relations.

Sherry Madera 4:59
Most definitely. And I that, you know, when you when you talk about Asia even a decade ago, it was a specialty subject. And Kimberley you’re from from Hong Kong so you’ll you’ll be, you know quite aware of all of the different changes in the pace and the excitement that’s going on in Asia. But the reality is today, especially when you look at things like the US China trade war, the frictions that are going on there, actually knowing and understanding perhaps where some of the drivers are, for China and for Asia, to interact with the rest of the world is a huge benefit, I think to businesses and those that I work with stakeholders, those in other parts of government, those other parts of regulation, that are trying to understand perhaps the direction of travel. And while none of us have a magic ball, you can look into and see the future, at least having some perspective on the past helps.

Kimberley Cole 5:47
And your current role has a very broad and wide scope and covers you’ve got a global role. So what’s the kind of focus given that given the you know, incredibly broad scope that you have?

Sherry Madera 5:59
Yeah. Absolutely, it’s it’s exciting to have a really big picture. But when you think about what’s going on in geopolitics at the moment, you can be very much spoiled for choice as to what it is you you wake up and you do in a day or how you direct your your global team in order to prioritize. So we’ve chosen four areas which are still quite broad in their own right, but things that add some value to the business at a government and regulatory perspective too, the first one is thinking about sustainability and the drive to a more green financial system. The second one is looking at infrastructure and how infrastructure investment at the moment is a very hot topic across governments thinking about how that can potentially become infrastructure as an asset class, thinking as well about data legislation and looking at how the trends in the various regions around the world are shaping how data is used for making decision useful financial portfolios and decisions for our clients. And finally, looking at privacy and thinking about sort of finance crime and thinking about how it is that we can make sure that it’s it’s a discussion that is top of the agenda, because it not only affects the financial services industry, but much, much wider.

Kimberley Cole 7:10
Yes, absolutely. So let’s sort of dig into that a bit deeper. As I said, we’ll talk about finding financial crime. And at Refinitv you and your team, engage with customers, with industry groups, regulators and governments, and helping to tackle key customer challenges and advocate for fair, efficient and sustainable financial markets. So how is Refinitv looking to help the financial community and helping them thrive in a dynamic and, you know, geopolitical and regulatory environment that you just sort of talked about?

Sherry Madera 7:44
Yeah, it’s, we hope we’re adding value on on a daily basis at a time when things are changing almost on a daily basis in terms of both good and bad news across the piece. So I mean, I think it’s first important to step back and say, well, why, you know, why is this important? And if you look at the recent statistics, 2 to 5% of global GDP, is the amount that illicit fund flows are flowing around the globe at the moment. I mean, that is absolutely unprecedented. And it seems to be on the rise and according to UN statistics, and you know, that’s unacceptable, we should be seeing that as citizens of the world. And that is unacceptable. Here in Europe alone, only 1.1% of those illicit flows are captured, that is woeful in terms of being able to not only capture funds that are being derived from, from illicit sources, and criminal activity, but actually stopping that criminal activity at the beginning. Because if it’s easy to move those proceeds around the world if it’s easy to benefit from crime, we’re not doing all we can to stop it. And when we’re thinking about crime, you know, often people default to white collar crime, but actually, if you think about people trafficking, if you’re thinking about wildlife trafficking and, you know, crimes against the environment as well, this is not victimless. And this is actually something that kind of cuts to the core of our society. So it is meaningful, it is important. So from our Refinitiv’s point of view, we are very active in terms of looking at research and reporting in order to be able to shed some more light on what is happening globally. We’re lucky we are a global business that deals in 190 countries around the world. We have access to a customer base, second to none across the financial services stack. So not just banks, not just central banks, not just regulators, not just investors that you would know but all the way through that stack and how it is they’re working together. So we have a wonderful unique perspective on sharing. And our role, I think, is to build up capacity. You know, that’s a word we use a lot in government. Capacity Building. And what is that, it’s knowledge and understanding as to what the problems are and how it is to solve them. And we have product sets that can do that, because thankfully, this is not just a lone voice. You know, many, many around the world are seeing this, and particularly the regulatory environment. And I’ll laud Europe on the fact that they’re really looking at this in promoting anti money laundering and know your client rules. And that’s fine to have the rules, it’s fine to have the regulations, but if complying with them becomes debilitating on the business, if it becomes completely inefficient or ineffective, or if those that are subject to that regulation, have no idea how to fulfill those rules are actually meaningless. So we step in at that point to be able to offer solutions. But even more importantly, to shed some light on where those flows are creating real problems.

Kimberley Cole 10:50
And I think your point on the Why is just incredibly important because when people lose sight of the why, you know, it becomes almost a box ticking exercise in so many cases. So, you know, that’s fantastic. But also yeah, follow the money using data. Yeah Refinitiv’s in a very unique position. How do you see the public and private sectors working together to sort of drive more collaboration to drive efficiency and maybe more transparency?

Sherry Madera 11:19
Yeah, I think Kimberley, it’s actually already happening a lot from the top down, if you if you think about the G20 and the G7, this topic of how data is passed, how the balance between privacy and being able to use data for the public good is is is well trodden path, you know, this is something that has been discussed and you know, Refinitiv believes that this is a very important balance to get, right. So, if you look at, unfortunately, some regimes, particularly emerging market regimes, but not all, are looking at trying to create a lot of protection around data including privacy, and of course, most people know about GDPR here in in Europe. So the General Data Protection Act is is is unbelievably meaningful, when it when it was released and how it’s being implemented. But the the it cuts both ways, you know, personal privacy is on the rise in terms of being able to protect that. However, with more personal privacy, we also have more limits to being able to share information about those clients that are coming into the financial system and where those funds are flowing from. So I think that there’s a real role for the public sector to start becoming involved and understanding where that balance is right for not only their citizens of each country or each region, but how sharing across borders is fundamentally important for protecting the financial system for all and frankly, that goes straight to financial stability. So it should be top of the agenda.

Kimberley Cole 12:56
Yeah, I mean, the complexity of some of these webs that have been created obviously means that yeah, you’ve got to get that balance, as you say. So Refinitv is at the front in the fight against financial crime. You last year Refinitiv released a global survey report on the true cost of financial crime. Looking at the impact not just on companies and governments, but also human victims, which we’ve sort of started to mention and why and how they’ve been exploited by criminal gangs, which, you know, launder their gains through the financial system. How can we work better together to solve the global challenges like financial crime?

Sherry Madera 13:37
It’s, it’s a big, big ask, you know, and I think that there has got to be collaboration and there’s got to be a coalition of the willing and and I think we’ll, we’ll talk a bit about where Refinitiv is going with that. But, you know, frankly, I think that the the fight against financial crime has got to start with some of the detail as well. I like to think about a story you know, that’s still raging through the news at the moment which is the scandal with the Swedish and the the Danish bank, so Danske Bank, 230 billion dollars worth of illicit financial flows. Were going through Danske Bank, not through its home market, but actually through the Estonian branch of Danske Bank. And then you think, Oh, well, this is related to Estonia. And this is related to Denmark. No, actually, this is related to a web of activity that is coalescing so many different data points, that it makes it really difficult to track. And that’s the point is that criminals are clever. And we really need to be just as clever or at least give ourselves the tools to be just as clever and it’s about correspondent banking, it is about know your client and know those sourse of funds. Know who is actually responsible for some of the ownership structures that are through the the various different tracks and the reality is how it is you can use tools that are already out there. Because I don’t think that what we need is a whole load of new ways of doing things, brand new regulations. But what we do need is to be able to build up the knowledge of how to use the tools we’ve got now. And of course, Refinitiv has a number of different risk mitigation tools, enhanced due diligence, but very basic World-Check. And this is a check service that is used by most of the banks around Europe in order to be able to check the and verify the know your client rules so that if there is anything flagged through that, they are able to take action. And yeah, a database is only as good as those that use it. And we saw that in the Danske Bank example. So often, these were these were checks that just weren’t done. And so I think that our responsibility and you talked about sort of what is the responsibility of the of the of the community, it is definitely in order to make sure that the knowledge is there as to why this is important, what tools are there to be able to be used and please use them for everyone’s benefit.

Kimberley Cole 16:02
And how can, obviously there’s a lot of talk about tech, so how can artificial intelligence and machine learning and cloud based API technology, for example, how can that sort of assist what are often seen as very stretched compliance teams already looking at this ever changing regulatory landscape?

Sherry Madera 16:25
I think I’m going to pull pull back something, as you said, which is criminals are clever. And networks are clever and actually distributing so that you’ve got $1 million dollars through many, many different sources, is quite a clever way of being able to launder money to push illicit financials flows through a very strong international financial system. And so therefore, we need to be just as clever and using AI we can think about not just the data points we have, but the understanding of how those form and network and how it you can use those data points to extrapolate or find a larger, wider cloud of those that perhaps should be checked again, and not only at the personal level, but also at the affiliate level. So how they’ve been affiliated in the past, how have other shell companies, other companies, been part of this mix. And being able to do that quickly is really important. Because if you think about the influx of new technology in the front end of banking, so there’s a lot of alternative banking, that’s going on that you never go into a branch you never smile and sit down and fill in form. And actually, I think all of us feel that that is the you know, the sign of the times, it’s a very good pace of change. But take for a minute, the problem of knowing your client, if you’re not even meeting them, you have an extra layer of having to understand who they are and how they network. And if you’re actually coming into a banking system, you do need to have those extra layers. AI helps immensely there. Machine learning in terms of being able to continue to understand where those links happen, when there are flags that go up what has happened, how do we learn from that? How does that factor back in? So I think that there’s a real opportunity there not only to look at AI as a magic wand, but also for it to continue to update some of those receptacles of information so that both public sources can look at it, but it can be incredibly useful commercially,

Kimberley Cole 18:30
Yeah okay, that’s that will make some dramatic dramatic changes, hopefully, in terms of how these these problems are identified and acted on. Last year Refinitiv established the Global Coalition to Fight Financial Crime, which I thought was an amazing initiative it was done in in conjunction with the World Economic Forum and Europol. Can you talk more about the coalition, its mission to tackle corruption and promote greater public private collaboration?

Sherry Madera 18:59
Yeah, it’s It’s been, I think, a big point of pride around here at Refinitiv that we were part of a group, a coalition of the willing. This is something that came very naturally together, because like minded groups across the public and the private spheres that felt that there was a need for understanding what the next steps for fighting financial crime were, and having a forward look as to how it is that actually this can continue to evolve as opposed to stay fixed. You’re right. We launched it in Davos last year. So January of 2019. Goodness, it’s still the same year! And and between, then and now, there has been a number of reports including the reports that that you were talking about in terms of the true cost of fighting financial crime from a definitive, but also from our from the members of the coalition and the coalition members have also grown so Rusi, Europol, Interpol and IIF, the Institute for International Finance, have all joined together, including the World Economic Forum to represent their members, and also to contribute some of the thinking in terms of work streams going forward, looking at how AI and ML can enhance and improve the system of checking for illicit flows and protecting against anti money laundering. But if you’re looking at the private sense, they’re also trying to understand how they can create a balance in terms of educating for privacy, thinking about how it is you can do either carve outs or changes to some of that legislation in order to make sure that those those pieces of data are being used effectively. I think it’s really important for us to just not stop on this one. And I think that’s what the coalition is looking at doing. Because it’s not only about where we’re at right now and regulation in the public sector and those public good regulations are going to be essential, but actually they do need to evolve so they need contribution from the private sector, they need to get new ideas, but also have some cautionary tales. Because we don’t need to have regulation for regulation’s sake. But we definitely need to find a way to make this a global initiative.

Kimberley Cole 21:13
Yes, absolutely. And so I think we have just sort of touched the surface of some of those great reports in terms of the true cost of financial crime, we will have a link to that in the notes. So I recommend all of our listeners to take a read of that to get into even more of the detail, but that’s been a fantastic insight into what Refinitiv’s is doing and some of those reports, so thank you for that Sherry. I want to move on to some more fun bits now.

Sherry Madera 21:45
That wasn’t fun?

Kimberley Cole 21:47
That was fun, but this is more fun!

Kimberley Cole 21:51
Connecting, celebrating and championing women in risk, regulation and compliance Risky Women Radio takes an intimate look at the Rants and Revelations of the top women shaping the debate of the industry.

Kimberley Cole 22:09
Now we have our Rants and Revelations, which I love getting our Risky Women Rants and Revelations. So we we try to give a bit of mentoring and advice to the up and coming women and men in the community. So what’s your top piece of advice that you’ve been given or that you would give that you think has sort of really helped you as you’ve progressed through your career?

Sherry Madera 22:31
Someone very early on in my career, said, Sherry, do you want to be rich, or do you want to be right? And actually, it’s something that often resonates because of course, we want to be both. We always want to be both. However, there will be moments that you think, actually, it’s okay to just relax and just know that you are thinking about it in the right way, but maybe the time isn’t quite right. So you you have to balance that as you as you move forward in your career, and maybe you are in the perfect place for your career. And so someone tempting you with a higher salary or something else that’s sort of a sweetener to move. Maybe it’s not right for you at the time. So I think that it’s always thinking about how is it that you’re being driven? And and listen to yourself.

Kimberley Cole 23:21
Great….rich or right? That’s a very good top tip. So what is your rant? If you were ruler of the world for the day, what is that one thing that you would change? You know, get your magic wand out waive to change?

Sherry Madera 23:36
Yeah, and I would say the the trend that’s going on in the world at the moment of creating more protectionism around borders, and we’re looking at the G20, the G7 all the big multilateral discussions. There’s more protectionism going on right now. And I have an 11 year old. You know, when you think about her future, you know, she has a Canadian passport. I grew up Canadian and my husband’s British, she’s got two. But how many passports does she need in order to be able to function in order to be able to appreciate this world that we’ve built up, both in emerging markets and in mature markets? Where can she work? Where can’t she work? Where can she travel and experience and understand people? I think that is the real nub of it. If we start creating borders, our youth are not going to appreciate what’s going on elsewhere and appreciate other points of view. And that’s not a good thing for anyone.

Kimberley Cole 24:27
Absolutely. We want diversity in the broadest sense. I love it – a very global citizen trying to bring up two global citizens myself. So yes, I hear you and I think if if you can get that magic wand happening, fantastic. Final section, the Rapid Fire Round.

Kimberley Cole 24:48
Risky Women is a vibrant network at the center of the global community in a rapidly growing, evolving and influential industry. Given the continued pace of change our rapid fire round revisit the most pressing topics to share ideas and offer listeners new perspectives.

Kimberley Cole 25:08
So one word that you would use to describe the world of governance risk and compliance?

Sherry Madera 25:13
Dynamic.

Kimberley Cole 25:16
Excellent. And the cure for the cost of compliance and the waves of regulatory change that we are seeing?

Sherry Madera 25:23
Balance.

Kimberley Cole 25:25
Now are you optimistic pessimistic or neutral in your outlook for the year ahead?

Sherry Madera 25:31
So hard to give one word Kimberley. I’m gonna have to go with neutral, because of the lack of clarity.

Kimberley Cole 25:40
Yeah, it’s a confusing time at the moment. And then just a few questions for fun. What would what’s a book you would recommend that everyone reads?

Sherry Madera 25:48
The Alchemist by Paulo Coelho. Really inspirational. And if you’re talking about a journey, both internally and externally, it’s a great book.

Kimberley Cole 25:57
I’ve got so many on my reading list it’s fantastic. Something to watch?

Sherry Madera 26:03
I’m not a big movie person. But I like some of the classics. I mean, I am a Sound of Music buff.

Kimberley Cole 26:10
Oh my god, I love Sound of Music.

Sherry Madera 26:13
And if I’m not watching it once a year, I feel unfulfilled. So perhaps high cheese content but but there you go.

Kimberley Cole 26:19
Excellent. I love it. And you favorite podcast?

Sherry Madera 26:23
Risky Women.

Kimberley Cole 26:25
Oh, thank you! Well, it’s been a pleasure to have you Sherry, and we look forward to hearing more about all of the great reports and work that Refinitiv does. So thank you very much for joining us.

Sherry Madera 26:35
Thank you very much, Kimberley, and thanks for all you’re doing. Thank you.

Kimberley Cole
Hi, we’re always looking for sponsors. And if you’d like to get involved and help celebrate and champion women in risk, regulation and compliance, please get in contact at info@riskywomen.org we’d love to have you join the show.

Kimberley Cole
Thank you for listening to this exciting episode of Risky Women Radio to connect, champion and celebrate women in risk, regulation and compliance. I’m Kimberley Cole, based in Hong Kong. For more information on the Risky Women global network, head to our website and the episode notes and please be part of the ongoing conversation by subscribing to this podcast, connecting with us at Risky Women on Twitter or even reaching out to me directly by email.