By Our Correspondent
In this interview in the run-up to the Leaders in Finance AML NL Event taking place in the Netherlands on Thursday next October 3 2024, Jeroen Broekema sits down with Rabobank’s AFC chief Philippe Vollot to speak all matters financial crime.
Jeroen: Thanks a lot, Philippe Vollot, for taking the time to speak to us in the run-up to the Leaders in Finance AML event on October 3rd, where you will be one of our keynote speakers. First of all, thank you for making time for this.
Philippe: My pleasure.
Jeroen: Could you start by giving a brief introduction about yourself and your background? You have an impressive career, so it would be great if you could highlight some of the key milestones so far.
Philippe: Thanks for having me. I am French, born and raised in Paris. I am a lawyer by background and started my career working for the French Market Regulator, though it feels like yesterday, it was actually back in 1991. Since 1997, I have been in the banking sector, working for different institutions and living in seven different countries. Half of my career has been dedicated to financial crime, compliance, and legal roles. The other half, I have spent as a Chief Operating Officer, responsible for all infrastructures and control functions. Over the past few years, I have returned to my initial passion: financial crime. My last major roles included Global Head of Financial Crime at Deutsche Bank, Chief Compliance Officer and member of the management board at Danske Bank, and currently I am the Chief Financial Economic Crime Officer at Rabobank, where I am also a member of the management board.
Jeroen: If you had to pick one or two aspects of your current role that you enjoy the most, what would they be?
Philippe: Obviously, contributing to making the bank regulatory compliant is satisfying, but what is more rewarding for me is knowing that if my team and I do our jobs well, we are contributing to society. Our role involves identifying and reporting suspicious activities to prevent criminals from misusing the financial services and jeopardizing the integrity of the financial market. Through my career, we have been contributing to making the bank and the financial market safer on topics like money laundering or terrorist financing, sometimes by providing useful information to law enforcement agencies which led to arrests and convictions. Knowing that we help protect society from crimes like drug trafficking, weapon proliferation, human trafficking but also wildlife trafficking is motivating. People often forget that financial crime is not just about money; it is tied to very real and dangerous crimes.
Jeroen: I can imagine that must be motivating. Having worked in several countries and institutions, what do you see as the biggest challenge for Dutch financial institutions in the AML/KYC space?
Philippe: I might surprise you, but I do not see drastic differences between the Netherlands and other European countries. One thing that did surprise me, however, is that in the Netherlands, financial institutions file “unusual transactions” rather than “suspicious transactions.” This leads to a lot of reports for the local FIU. If you look at data from, for instance, 2022, the financial institutions in the Netherlands submitted far more reports compared to other Countries like France, Germany, or Italy. I believe this will change with upcoming regulations like AMLA and AMLR. Beyond that, like many European countries, the Netherlands faces challenges related to drug trafficking. Effectively, most of the dirty money in the Netherlands comes from drug trafficking more than anything else. But this is not unique to the Netherlands. The bigger challenge, as everywhere, is to stay ahead of the evolving criminal techniques; to be able to face new threats and be quick in reacting since criminals are constantly looking for new ways to abuse the system.
Jeroen: In terms of workforce, I have heard that in the Netherlands alone, between 12,000 and 15,000 people are working in the financial crime field. How does that compare to other countries you have worked in? Relative to the size of the bank?
Philippe: First of all, it is extremely difficult to make comparisons between banks or countries because each institution has a different way to present things. For example, at Rabobank we are fully transparent about everyone working on financial crime. Other banks may report only on the first or second line of defence. In every place I have worked, the pattern is the same. Banks have an important role in the fight against financial crime, and they have to comply with laws and regulations. That means they have to invest in systems, technology, data integrity and of course they need talented people to do the work. There is often a surge in hiring, but eventually, banks try to stabilize the workforce with better systems and processes.
Jeroen: Is that the phase you are in now?
Philippe: Yes, at Rabobank we are at the top in terms of cost and headcount, nearing the end of our remediation journey, and we will start scaling down the external workforce progressively.
Jeroen: So, in a positive way, things will start to scale down?
Philippe: Absolutely. But it is important to understand that this is not just about reducing costs. Having thousands of employees introduces its own operational risks. The goal is to use technology more effectively to minimize human error and risk, while maintaining the necessary talented workforce. You will always need the smart people and a good team, and if you reduce the operational risk, you will also reduce the costs.
Jeroen: Makes sense. Have there been any trends or examples in the past year that particularly concerned you?
Philippe: Good question. Since 9/11, everyone has been extremely focused on terrorist financing, and I do recollect successful cases in which some financial institutions helped identifying financial flow. This is satisfying, because terrorist financing is very complex since it often involves “clean” money, not “dirty” money. But more recently, what concerns me the most is how skilled criminals are infiltrating legitimate businesses. A drug dealer that shows up at the bank with a suitcase of cash, that just does not exist anymore. Criminals nowadays are extremely well-organized and are specialized in providing money laundering services. For example, instead of creating new accounts, they take over healthy businesses and use them to mix dirty money with clean money. This trend has grown and makes it difficult for banks to detect suspicious activity because it becomes harder to segregate between what is clean, and what is not. Criminals are getting more professional, and this is one of the more challenging issues we face.
Jeroen: You mentioned technology earlier. Do you see it as more of an opportunity or a threat?
Philippe: I have been raised in a world where my job is to be paranoid. So, for me, it is more of a threat. Criminals can adopt new technology much faster than we can because they do not have the same rules, procedures, or regulators to worry about; they do whatever they want, and they have a huge financial capacity to invest. So, we will always be in a reactive position. That is why I set up an innovation lab six months ago at Rabobank. We focus on predicting how criminals will use new technologies so we can react faster and stay ahead. Of course, technologies like AI and Gen AI can help us focus on high-risk areas, but we must be aware that criminals are very smart in leveraging that technology to their benefit.
Jeroen: So, you are looking at it from a criminal’s perspective first?
Philippe: Yes, that is what we always try to do. When I started at Rabobank, there was already an investigative team, but I directed them to focus on threat and network analytics. The goal is to identify patterns of bad actors beyond what we do with the traditional detection tools like transaction monitoring, media screening, and know your customers processes. We are working hard to understand how criminals might use new technologies to infiltrate us, especially with digital onboarding. We are working very hard to identify new patterns and threats.
Jeroen: Now, a bit of a philosophical question: What should be the role of governments versus banks in the fight against financial crime? And is this a relevant question to ask?
Philippe: It is a very relevant question, and sadly, the current system does not deliver enough, there is up to $2 trillion being potentially laundered per year globally, and only a little more than 1% of this money gets back to society. That is why I have been advocating for years for better public and private partnerships. Banks have an important role to play, but without enough skilled law enforcement officers to track the money, and strong laws to prosecute criminals, and send them to jail, society will not succeed. Globally, the system is ineffective and the return on investments is disproportionate. We need much better coordination between governments, Regulators, law enforcement, and financial institutions. Right now, the criminals are winning.
Jeroen: That is a very direct answer, and I appreciate your honesty. My last question is a bit more practical: what advice would you give to someone just starting in the AML field?
Philippe: My advice would be something that has motivated me throughout my career: never forget that you are a financial crime fighter beyond anything else. This is what it is all about. There will be challenging days with feelings of frustration, but always keep in mind the impact you are making.
Jeroen: That is a wonderful end of the interview. Thank you, Philippe Vollot, for your time and insights. We are looking forward to hearing more from you at the upcoming AML event.
Philippe: Thanks a lot, Jeroen.
We hope you enjoyed reading this article
If you would like unlimited access to AML Intelligence premium articles, newsletter delivered twice a week, access to our Global Bank Fines and Penalties database, free access to Boardroom Series events and much more, select one of our subscription options and become a subscriber!
