Taking on the established players in KYC

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Currently promoting a three-pronged online compliance tool, RiskScreen, he envisages the coming year as an exciting opportunity to attract some big clients, enter the Japanese market and notably go head to head with established players in the ‘know your customer’ (KYC) technology marketplace.

‘From my perspective, as chairman and chief executive of KYC Global Technologies, this is a new challenge and a huge change from what I was doing previously,’ he explained. ‘My view is that you should try and lead life in chapters and I’ve been very fortunate so far. This is a new phase and I’m very bullish about it.’

Perhaps the one theme that runs through his career to date is the pursuit of financial crime. ‘As a law student, I wrote my dissertation on money laundering – I was bitten by that bug from the age of 20, at the time of the BCCI scandal which was massive around the world.

‘At the time I came to Jersey, to join the commercial department at Ogier, the Island was unrecognisable compared to the way it is today. There was no regulation of trust company businesses and I knew that would have to change and that if I knuckled down and learned about these products and services, I would then be able to identify the vulnerabilities from a money laundering perspective. That was a good decision, because very shortly after I arrived the All Crimes Money Laundering Legislation was introduced.

‘I went to Ogier with the proposal to start a new department, Ogier Compliance, and Jonathan White (managing partner) had the foresight to go with the idea. I did that for two to three years, realised it was a good opportunity to go out on my own and launched a compliance consultancy. Looking back that was incredibly reckless – I was 29 and only able to do that because my wife had a great job which provided a safety net.’

A subsequent meeting with lawyer Stephen Baker led to a new Island law firm, BakerPlatt. ‘We just specialised in contentious work, initially advice on regulatory issues, people realised we were quite good and the firm expanded. It was marvellous, but I got to a stage where being chairman of a Channel Islands firm was all well and good, but there was a big wide world out there.’

Being appointed as adjunct profession at Georgetown University in Washington DC ‘opened his eyes to the possibilities,’ he said. By this stage, he had already founded the Jersey International Business School, subsequently launching Stephen Platt and Associates LLP which focuses exclusively on conducting regulatory investigations for regulators, or for businesses at the behest of regulators.

‘I still do those jobs occasionally, when they interest me. It is a big responsibility and a privileged position, being able to see at first hand the challenges businesses face in trying to manage these risks. The vast majority of people are well meaning, trying to do their best and often in difficult circumstances.’

The nugget behind the latest suite of regtech products came into focus around ten years ago. ‘I started an online portal, free of charge, called KYC 360. The idea behind it was to aggregate relevant third-party sources in one place and we coded a customer search tool called RiskScreen, which proved incredibly popular.

‘I kept this going over the years and about three years ago I became friends with some people who had made a lot of money in the digital tech space and they said I should think about doing something quite serious with the search tool.’

Essentially, RiskScreen works on three levels. At entry level, RiskScreen Core provides basic customer due diligence, free of charge. ‘You just type the name in and we don’t charge any extra for additional users, so there is no need for licenses – we believe that technology should be used to empower, the first line of defence,’ explained Mr Platt.

At the next level, RiskScreen Batch provides a business with the ability to screen thousands of customers, on an ongoing basis, applying metadata to focus in only on the genuine matches. In addition, this can be either on-site or hosted and, from the end of last year, accesses data held by Dow Jones covering over six million ‘Politically Exposed Persons’, sanctions and watch lists, aliases and adverse media.

‘This global partnership with Dow Jones, which went live in October, is completely transformative for our business,’ Mr Platt said. ‘There are no better data sets anywhere in the world. But the challenge is being able to do clever things with the data.’

Those ‘clever things’ lead on to the third level of RiskScreen, branded ‘PanOptic’, a data aggregation system that sits on top of all underlying systems held by a business.

‘I had the idea from the investigative work I’d been doing for regulators, which requires review of customer files. So for example you might ask for a random selection of information dating back two years, in a comprehensible format. But whether you are dealing with a large bank or a small trust company, there is no way they can get their arms around that data within the timescale and present it to you in a comprehensible format – maybe 30 or 40 people might get you the answer in about three months.

‘That got me thinking, because if a business cannot provide that data under regulatory scrutiny, how are they using the data to manage customer risk? It should be possible to create a tool to enable the finance industry to use data in real time to drive better risk decisions.

‘Then I realised that the data was held across fragmented sets such as CRM systems, book-keeping systems, accounting systems, filing cabinets, and that many of these do not talk to each other. What was needed was a system that sat on top of those and sucked that data out so that customer relationships could be assessed and monitored, with alerts for any changes so that the business could react immediately and slice and dice the data for reporting purposes.’

PanOptic, he claims, is capable of doing just that. ‘Let’s say a new sanctions regime is introduced and as a director I want to know every link to this country, the clients resident there, any assets there, whether money has been sent or received. The technology exists to automate the entire process, immediately.’

The fact that RiskScreen has been developed within the Island is, he says, a good example of the marriage of genuine expertise and technological specialism. ‘There are some very good people in Jersey – outside as well, but the core tech team here are exceptional.’

Backers of his company include senior partner at Notion Capital UK Stephen Chandler, feelunique founder Aaron Chatterley, former Chelsea and Manchester United FC chief executive Peter Kenyon and senior partner at Stonehage Fleming Ian Crosby. In addition, Moneysupermarket.com founder Simon Nixon is a ‘great counsel’ in terms of bouncing ideas.

‘We get a lot of feedback, so we knew what the weaknesses were before we decided to build the systems, and we’re still developing and improving. But this year will see less of that because we already have our products.’

That said, travel out of the Island will continue. ‘ I think I have a reasonable balance – I have two sons aged ten and 14 and a very tolerant wife, Melanie, but just now my role is to go around the world, get the name recognised, be an evangelist.’

Currently, although PanOptic is unique as a product, he knows there are likely to be others looking for a slice of the same business. ‘It would be naïve to think that someone else is not snapping at our heels, but this is quite complicated stuff and it would take thousands of man hours to build anything comparable.’

As for the new buzzword, artificial intelligence, where does RiskScreen fit? ‘You could see PanOptic as a form of AI, but it is not designed so that the machine makes the decisions.

‘It is designed to present you with the correct data so that you can make the correct decisions and those finely balanced, nuanced judgments.

‘I fundamentally believe that with the new technologies available, whereas anti-money-laundering failure used to be inevitable, now it is a choice. Many of the failures we see are, I believe, inexcusable.

‘We as an industry, as an Island, are under such scrutiny that every single failure is grist to the mill. That is our responsibility. If we don’t embrace new technology, we will continue to be living in the dark ages.’

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