Seize and Desist podcast

S&D E2 - FATF special: inside the world of financial crime and asset recovery

Author
Lo Furneaux
Digital Content & Operations Coordinator

“If it doesn't bang or bleed, no one's doing anything about it.”

In this episode of "Seize & Desist", Aidan Larkin sits down with David Lewis, Managing Director and Global Head of AML Advisory at Kroll, former Executive Secretary of the Financial Action Task Force (FATF) and leading figure in the battle against global financial crimes. 

They address the notorious 1% statistic, the challenges of cross-sector collaboration and explore how seized asset recovery efforts can be improved within FATF guidelines, delving into the need for effective communication, the appointment of accountable figures, and the need for urgent reforms with broader strategies that extend beyond current standards.

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Timestamps

01:00 | David’s background and FATF’s mandate 

05:00 | What is the 1% stat and why is asset recovery challenging

12:00 | FATF’s renewed focus on asset recovery and creating a minimum standard

18:00 | Should the Public Sector leverage Private Sector companies to assist with seizures

22:00 | Improvement of Government resources towards fighting financial crime 

28:00 | The real cost of financial crime and good examples of how to combat it 

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Resources Mentioned

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About our Guest‍

David Lewis (Managing Director and Global Head of AML Advisory at Kroll) and the former Executive Secretary of the Financial Action Task Force (FATF), the intergovernmental organization that sets standards for AML/CFT globally.

As a highly respected leader in the fight against financial crime, David has played a pivotal role in coordinating international efforts to combat money laundering money laundering, terrorism financing and weapons proliferation. He has been instrumental in the development and implementation of policies to identify and mitigate risks associated with financial crime.

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Disclaimer

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Transcription

Speaker: David Lewis

Fraud is a massive problem, and yet because it doesn't bang or bleed, no one's doing anything about it. Yeah. It creates harm, massive harms that people are not talking enough about. So I think communicating effectively about the nature and scale of this problem, appointing people who are accountable for doing something about it is a massive thing that needs to be done around the world and ensuring that there are enough resources to tackle this problem particularly in the public sector.  

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Speaker: Aidan Larkin

Hello and welcome to Seize and Desist, the podcast that takes a deep dive into the fascinating and complex world of asset recovery, the most important sector that you've probably never heard of. My name is Aidan Larkin, and I'll be your host. Today, I'm joined by David Lewis, managing director and global head of AML advisory at Kroll and the former executive secretary of the Financial Action Task Force. In today's episode, we get to discuss FATF's new focus on asset recovery, unraveling the notorious one percent statistic, talking about the critical need for political will to enact change, and also hear from David on some of the practical advice he offers for practitioners in a global best practice. So whether you're new to the world of asset recovery or a seasoned professional, join us as we discover the untold stories, the unsung heroes, and the inscribious villains of this ever changing and largely overlooked sector. I'm Aidan Larkin, and you're listening to Seize and Desist. Our podcasts are for informational purposes only. They are not intended to provide legal, tax, financial, and or investment advice. Listeners must consult their own advisers before making decisions on the topics discussed. Mr. Lewis, hello, and welcome to Seize and Desist. Thanks very much for joining us to discuss all things asset recovery today. 

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Speaker: David Lewis

Aidan, hi. Really excited to be here. 

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Speaker: Aidan Larkin

Okay. It's one that you and I sort of, I do wanna say go way back. I think it's more a case of our paths have crossed a lot over the last sort of couple of years. For those that don't know, I I met David back in his FATF days. We're gonna get into sort of what that is and what that's about now. But I think it's fair to say now we're connected through RUSI together. And, obviously, you've also jumped to the dark side and joined the private sector as well, which we wanna get into. And we'll talk about my favorite phrase, public and private sector partnerships, and also why I wanna make that phrase redundant. I have a bit of a particular Room 101 gripe on that exact phrase, but I'll get into that. But I think that there's no better person to join us today to discuss this, wonderful new focus on asset recovery that's gonna be hopefully led from the top down. But before I've got a lot of people pinging me who aren't normally in the FATF world or in the global sort of watchdog world. And people who are seized asset practitioners or asset recovery practitioners, everyone who sort of touched FATF in their world, it was just virtual asset service providers and Travel Rule was their first sort of, if they don't come in from a traditional financial crime background, that was, like, their first insight into FATF. And now it's like these people are coming into asset recovery. So would you be so kind to give us and sort of explain about your background and sort of give us your short version of sort of FATF 101, if you don't mind? 

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Speaker: David Lewis

Well, first of all, I guess my entrance into this area was back fifteen or twenty years at a serious organized crime agency where I was managing our, agency relationships the private sector. I moved on from there to the treasury where I led AML policy and from there to FATF where I led the secretariat for several years. And now I'm at Kroll helping businesses and countries understand their risks and take more effective action, to investigate, prosecute, and recover assets on, you know, for money laundering cases. So I've been doing this a while now, and I guess the common theme throughout all of this is there's a huge system that kind of FATF has created. And, there are lots of us working in this space now, but how effective is it really? But for those who are perhaps new to FATF, what is it? It's the global watchdog for tackling money laundering and terrorist financing. It was created by G8, I think, back in 1989. It wasn't a G7 then to really follow the money behind drugs trafficking and the cartels. And then after 9/11, it took on a remit for following the money that was fueling terrorism. And today, that's expanded further to the money that's financing the proliferation of weapons of mass destruction in, you know, places like Iran and North Korea. So it's quite a broad remit. It does three things. It researches how money is laundered and how terrorists raise and access funds. It sets global standards and best practices for countries and for businesses to mitigate those risks, and it evaluates countries against how they're doing, how well they're implementing those standards. And it does that by bringing together some two hundred countries from around the world to be part of a collective endeavor to tackle money laundering and terrorist financing. So that's what FATF is today and a bit about my background. 

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Speaker: Aidan Larkin

I appreciate that. And I know that the first time we ever met, which was god, I think it was maybe 2018. I think I was at OECD for the first blockchain sort of policy summit that was held. And at this point, we had just been involved in my old role in sort of seizing crypto assets. And that was the sort of first introduction where we people started to think about how can you seize virtual assets and obviously the OECD and FATF and others were getting asked about standards. But I think for for people's benefit, like, to sort of to zoom out of that a little bit and realize that underneath sort of all of this asset recovery activity, which, you know, shuts down, sort of tries to shut down sort of money laundering, terrorist finance, and all the atrocities you talked about. Underneath all of this, there is no just motivated by crime methods. No. People are making money because they are involved in crime, and we hear this. You know, ensuring crime does not pay was one of the recent reports that came out. And it's a noble pursuit, but the reality of that is is that, you know, crime does pay in a very significant and substantial way. And I would love to sort of for you to just give us your thoughts on this famous one percent stat. And I know the disclaimer we have is that this statistic, you know, originates off the back of a report from Europol. I know it's been updated over the years. Sarah, we and I talked about it as well, at Deloitte. This statistic that sort of suggests of all of the trillions in illicit financial flows, we're actually only recovering a tiny amount of that back. And now FATF have now said, we sort of put the world to rights on virtual asset service providers and we've laid out sort of some good guidance and there'll be lots of controversy about that guidance because that's a new threat that new criminals are laundering and they're using this new system. But we should also not forget that we've struggled with regular non-digital asset recovery for decades and a big portion of that is how we deal with seized assets. And we all know the stories of a, you know, a Lamborghini being seized from a criminal. Criminal gets prosecuted but the car sits for years and years and years through all the appeals and we can all agree what happens to the value of a car if it sits for seven years. What's your view and your take? Because you've obviously heard this stat and been presented this stat countless times over the last ten years. I would love to hear your views on it. And are people getting it wrong? Is it hyperbole? Like, what is it? 

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Speaker: David Lewis

So, look, I think it serves a useful purpose, this stat, and I'm guilty of using it myself. You know, if you wanna show 

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Speaker: Aidan Larkin

I've made a career off it with David so we should… (laughs)

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Speaker: David Lewis

(Laughs) If we wanna show that the system's not working as well as it could, then it's a great one. And the kind of context I use it in is, what is the size of the problem globally when you're looking at money laundering? It's anywhere from eight hundred billion to six trillion. The truth is no one knows. And then there are reports that look at the cost of compliance on businesses. And, you know, in Europe alone, 300 billion for financial institutions. If you look globally, you could probably make an argument that it was around a trillion for regulated businesses. So you've got a problem that maybe is up to six trillion a year, costing businesses maybe a trillion a year. And what do we get back from that? And how do we measure what we get back from that? And this is where it gets super difficult because a lot of the measurement of the activity in this space is things like counting investigations or counting sanctions that regulators place on banks. But is that really a measure of effectiveness or not? And then we get down to, well, what is the point of this? Most crime is motivated by money. So are we being successful in taking that money away from criminals? And this is where we get into talking about asset recovery. And it's true to say that asset recovery has been the poor cousin, if you like, of global act efforts to tackle money laundering over the years. The focus has probably been too much on regulation and perhaps too much on the integrity of the financial system and the transparency around payments. And so we've created a system where FATF and AML has become synonymous with what banks do on a day to day basis. AML, customer due diligence, record keeping, reporting suspicious transactions. And in the light of all this, we've kind of lost sight on the fact that it's not the banks that should be on the front line of fighting crime. It's the responsible authorities, the competent authorities, law enforcement, and so on. And there's been, I think, decades now of underinvestment in the public sector, and we've looked towards the private sector to fill the gap. And what that's led to is, I think, what's represented by this fraction of one percent figure. There aren't the investigations that there need to be. They're not leading to assets being recovered in anywhere near the values that they need to be in order to make a dent on the problem. And so you end up in a situation where you can quite easily say the current system is failing because not enough assets are being recovered. The difficulty with this is in determining, well, what is the right number? You know, if it's a fraction of one percent that's being recovered today, well, what are we aiming for? And the reality is while there is crime, there will be money laundering, and you can't stop all money laundering without stopping all crime. And so I don't think we should be aiming for a hundred percent asset recovery, but it's clear that we could be doing a lot, lot better than we're currently doing. And if we invested more in parallel financial investigations and in following those through right the way to asset recovery, then we could be, you know, denying criminals the profits of their crimes, and that's not really happening today. So I think all of that is behind the current FATF focus on improving asset recovery. And the Singaporean presidency of the FATF at the moment, as a result, just published the results of that and doing more. So I think it's really important. It needs to be done, but there's still a gap in understanding about what that means and how we get there. 

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Speaker: Aidan Larkin

Yeah. It's a really good point because I think that a couple of things I want I've noted down as you were chatting. I think that I agree with you there. We have lost sight. And certainly, as someone that has worked in criminal investigation, has seized assets, managed assets, I'd never even heard of FATF. I wouldn't have even needed to look as a regular sort of law enforcement/civil recovery practitioner. Hadn't even heard of FATF sort of pre-2018. It certainly wasn't something that I thought would be a standard bearer. And as you say, for me, it sort of accidentally fell into that sort of cliched view of it was for banks. And it was the standard a bank had to protect itself against being complicit with money laundering. I wouldn't have dove into everything else and I think that it's really encouraging that there's lots of wider opportunities that you have this, you know, global watchdog now saying we're coming to look. But as you've mentioned, like, what is it we're looking at? And I think that we do have to be fair. I've been criticized in the past to sort of perish the thought, on LinkedIn. How dare they? I've been called out greatly so on the, you know, the one percent. You keep going on about this one percent. You keep going on about, you know, crypto asset recovery and you know who you are. The people going, if you're listening to this podcast. And you're right to call out, then it is important that we put in that disclaimer that we know that we can't catch all the criminals. So straight away, if we just pick on asset recovery returns, it's kind of like if you've got this team of people robbing banks and you only get your hands on thirty percent of all of the bank robbers in the world, then the asset recovery that takes place is only of the thirty percent you got your hands on. So it is an upstream piece, but as you rightly said, I completely agree with you that governments do need to carry the can for this, this is decades of underinvestment. This is decades of trying to get, you know, people to do more with less. And I think what's caught people unaware is this flip into fraud enabled by a combination of modern financial systems with a layer of digital assets, just a new layer of complexity that's just allowed it. Because remember, people keep thinking that no, it's just crypto exchanges. It's traditional financial systems that are being hijacked as the on and off ramps in crypto cases a lot. Like, the amount of no PayPal wallets, Revolut, and credit cards that interact, for example. And I know those companies, and we'll talk in a little bit about how the industry is doing quite a good job. In my opinion, I think it deserves more credit than it probably gets because it's easy for politicians to blame the exchanges and blame the banks and blame everybody else. But as I've now been in this world for a bit longer, I'm starting to see that, like, how many more SARs do the governments want? If you're not gonna act on the hundred thousand you've been sent, what difference would it make if you got a million? If you're not gonna collaborate with sort of private sector agencies and know big data exercises and profiling cases better. Do you think is it accountability? Is that what FATF can bring to the table with sort of asset recovery, like the dreaded gray list? But do you really think that'll frighten the big players? Like are the US or the UK ever going to be gray listed no matter what they do? Author's note, my own personal opinion is the two biggest money laundering entities in the world but we talk about offshore, you know, countries and we pick on the little guy quite often. And again, I'm an optimist on this. I'm very bullishly for it. I think it's wonderful. But again if we were to reconvene in three or four years time and we said that it either goes really well or doesn't move the needle much. What do you think are the factors we'll need to see for it to actually be embedded, and what role can FATF play in that? 

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Speaker: David Lewis

Loads to unpack there. I think what the FATF brings is essentially a global minimum standard. It's what all countries can agree to do and then be assessed against. But as consequence, it's quite a low standard. And if you're the UK or the US, you should be well above it, and it doesn't really put pressure on people like the UK or the US to tackle the the scale of the challenge they're facing. What it puts a lot of pressure on is all jurisdictions around the world to meet that minimum standard. And I think the trouble with that is the greatest opportunity for recovering proceeds is where those proceeds are, where they sit. And the reason why the UK, the US, London, New York are global centers of money laundering is because that's where most of the money is. So, consequently, that's where most of the dirty money is as well. It naturally follows from that. So the greatest opportunity to do better may, in fact, be in those major economies, whereas the system, the FATF system, is designed on bringing everyone up around the world, two hundred and six odd jurisdictions, to a minimum level. And so there's always gonna, I think, be that challenge. And I think coupled with that also, when you look at, for example, a country like the UK, they might be quite good at getting so far, but not all the way. So you look at unpaid confiscation orders, for example. There's a big gap between, you know, a court ruling, these assets need to be seized and the value realized, and then that actually happening. And it can take years, and it means that by the time assets are actually the value is realized from the recovery of assets, the value has dropped significantly, and what you're looking at is a huge difference. They could have been quite successful in getting those assets in the first place, but then there's a big difference between then and those assets being realized, and that's because of the way they're managed or not managed in the meantime. And you mentioned at the beginning, you know, the stories of Ferraris and so on. I heard a story of a I think it was a Lamborghini, perhaps in Estonia, where the allegedly criminal owner of this Lamborghini was insisting that the authorities treat the leather seats of this Lamborghini using camel sperm, which was costing them a fortune just to maintain the value of it while they were sitting on it. So I think there's a huge issue there around how do you realize the value of assets that are going through that process and how do you do that quickly so you're not just sitting on these assets for years? So there's what is the role of the FATF and then how can we do better in jurisdictions like the US and the UK? I think the FATF can push those jurisdictions to get a bit better, but actually, it's more useful in getting other jurisdictions to play catch up. And the best example of that is perhaps in the virtual asset space, where in 2019, it introduced a global standard for the first time to require virtual asset service providers to be subject to the same rules as everyone else is subject to, as banks are subject to. But, you know, four years later, only something like fifty countries out of two hundred odd have actually started to introduce it. And that means that it's really hard for virtual asset service providers who operate across multiple jurisdictions to implement because there's regulatory arbitrage, everyone's working to different standards. Many countries haven't worked out whether they want to attract virtual assets, ban them, or just trying to, you know, rub alongside them through some kind of regulation. And that's, I think, presenting a huge problem in the virtual asset space. But when it comes to asset recovery, arguably, strangely, despite all the issues that we've, you know, maybe the scaremongering there's been around virtual assets, We might be doing better on virtual assets asset recovery than we are in other spaces. 

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Speaker: Aidan Larkin

We definitely are. It's not even for debate. We are to know a factor of five to one. We are seeing I'm on record as saying I think the Met Police, in the UK had a single seizure that was worth more than like the average UK proceeds of crime collections. IRS-CI have collected more than the entire United States combined law enforcement efforts in their published forfeiture figures. And that actually sort of takes me on to that sort of public and private sector partnerships, civil recovery, all of the new tools that I've certainly talked about, and I've heard about over years. I know countries talking about non conviction based forfeiture. They may or may not introduce it. Things like that, I would sort of be banging my head off a brick wall thinking like why is that a we may or may not? Like, there are such obvious things and now we've seen FAT F saying that we expect to see that. And I agree with you, I think bringing in that standard is a good thing. I also agree with you that it doesn't force much more changes in the big money laundering sort of centers. But I do think that accountability and political will and as you've mentioned, sometimes it's the reverse is causing change. I mean, there's only so many times a government will be sued over mishandling of seized assets that will actually trigger change and there are some like extinction level litigation cases coming for government agencies. If you seize a one hundred million dollar yacht and do not have a plan in place, there is no cheap resolution to that. That is gonna be more than the worst like litigation payouts you've ever had to do. We've seen some high profile sort of cases involving SFO and others where there's been sort of payments had to go the other way. Do you think that if we have our magic wand, we know that we have this one thing that I wanna zone in on, the non-payment of sort of confiscations. And for those that haven't sort of experienced it, you have been a drug dealer, you have laundered funds, you have been involved in some nefarious activity, government has locked you up, they figured out out what that debt is, what financial debt they wanna apply to you as a confiscation figure because it's based on all of your illicit activity. And then, again, it's like giving someone that court order and saying, right, David, you're going to jail and we're gonna take no. Here's a ten million pound confiscation order. 

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Speaker: David Lewis

Yeah. 

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Speaker:  Aidan Larkin

But what do we actually get back? And we're not recovering that. And I look at the private sector side of the house and I look at insolvency practitioners and I look at that and I see a sector that we we just have to look at FTX and we look at the astonishing results of securing assets in the twelve months, billions of dollars of assets secured, conviction, there is a for me is a great example of the interplay. Yes, it's been expensive, but if it's expensive and you're getting stuff back, do you want ninety percent of something or a hundred percent of nothing? Do you think that the nonpayment of confiscations, like, in your opinion I appreciate these are your opinion is not of your former or current employer. Is civil recovery, you know, a way? Like why are we not just giving those cases out to the private sector? We do it every day with insolvency cases. When someone's made bankrupt, we appoint a trustee, they're regulated, they go and chase and enforce the court debt, a bailiff enforces a debt. Why are we so hesitant to give these cases across to regulated sectors and say we’re not getting anything or if you can get it back for us you get to keep 10, 15% of it, whatever the percentage may be. Work on the consensus basis. Take the risk yourself but you'll not get sued and we'll give you some sort of cover. Why do you not think that's happening? 

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Speaker: David Lewis

First of all, I think it's a massive missed opportunity. Governments can't do this all by themselves. They're not resourced to, and they're never gonna be resourced to do. 

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Speaker: Aidan Larkin

So it’s only gonna get worse? 

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Speaker: David Lewis

Yeah. It's only gonna get worse. So why wouldn't you do it? Because as you said, you'll get something back for it. It's expensive, but, actually, it pays for itself multiple times over. So and and, you know, you can support industry and be tough on crime at the same time. So I think it makes massive sense. I think there's a kind of cultural barrier to it in the same way that, you know, having the private sector involved in investigations in some countries is still seen as relatively novel. But governments have been quite successful in taking things up to confiscation order stage and then, you know, failing to recover those assets. And that's a massive missed opportunity. And I think, you know, it's almost negligent to not complete the job if you like. So I think the private sector is massively well placed to not just manage the assets, but to realize the value of those at the end and to help recover assets through civil recovery. And in many cases, that just might be more cost effective than going down the criminal route. So I think we're not there yet, but we should be. 

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Speaker: Aidan Larkin

I remember I'll not name them because I would want their permission, but someone very senior in, in UNODC said that, no, sadly, sort of globally, we forget that we're still governed by politically elected people, and no one wants, oh, I'm currently the steward of a 10 year money laundering investigation. They want drugs and guns and headlines and no stopping small boats and that’s the bit that gets you elected, that’s what moves the needle. I even remember I was sitting at a Council of Europe event a couple of weeks ago. A wonderful case study. It's in the public domain, from Kosovo. No where they've secured a pure money laundering conviction. No underlying offense established. No predicate offense. Everyone knows what it is, but they didn't have to prove it. They got the money laundering conviction. But part of me sort of finds it almost absurd that those are standout cases. We have so much evidence, that these are happening every day of the week in the UK and the US and across Europe. And I think that just to be clear, I am criticizing the government for the record and the last couple of governments in the UK for under-resourcement. You know, fraud is the number one crime type that affects people. Forty one percent of all reported crimes is fraud and we have one percent of policing, you know, sort of targeted to it. And people like Erin West are flying the flag for pig butchering and, you know, targeting these cases. And there's just simply not enough resource. And the UK actually, you know, does deserve a lot of credit. The asset confiscation enforcement teams, the ace teams, I mean, I had the pleasure of working alongside them in my last role where these were the teams sent out with those, you know, unpaid orders. They're going to do in prison visits, and the results they had in the ROI for, no coming up with no eight, ten, twenty, thirty people across the UK targeted in these cases. They were bringing in something like 10 x, 20 x like the headcount and the cost. But again there has to be the political will to go after the big cases and governments to really resource it and that's sort of why I'm not jumping up and down with excitement over the economic sort of crime bill and the big changes because anyone who tracked it, you know, through the various sort of bureaucratic layers in the government would have seen that all the things that a lot of the the RUSIi's of the world, the think tanks that people were asking for were voted down. And what we've got is a bit of a watered down version. And I think we've seen this before with new proceeds of crime legislation a number of years ago where we had anticipatory seizure powers, lots of political rhetoric about how we were gonna do this, some wonderful operational results on the ground at the time. But then you find that they haven't enough resources to literally train people. There was a bottleneck at the training academy so they literally couldn't train officers. Wonderful officers, good prosecutors, people willing to get stuck in couldn't use it. I fear we could go down the same sort of rabbit hole but on the sort of public private piece around this again, it's one of the bits that I am demented by because as you've said, I remember when I was in HMRC is like there's the there's one of the big four coming in with their their big expensive sort of day rate, gnarly rate, we shouldn't use them. And then we sort of stand back and realize but we're losing exponentially more money by not doing anything. And people need reminded that everything we have done and all the biggest cases in the world is public and private sector. We make forensic DNA, like none of these cases would be completed if they weren't using private sector tools. 

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Speaker: David Lewis

You and I were at the same event, I think, in Stratford last year. The commissioner of the city London police were saying, historically, if it doesn't bang or bleed, then the police are not interested, and that's the challenge facing economic crime generally and tackling it. And I think it's also a massive missed opportunity for securing funding that should be going into health care and education. 

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Speaker: Aidan Larkin

Reinvested in the community? 

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Speaker: David Lewis

There have been estimates of upwards of half a trillion annually lost in unpaid taxes because it's in black market, it's criminal finance. And so all that money is lost to citizens to pay for health and education and other really important things. So I think, you know, this is massive, and, you know, there was just recently a case that my colleagues in Kroll did for a financial intelligence unit where we investigated a bank, and we froze, I think, up to I think it's in excess of two billion euros now as a result of that. That's two billion euros that's not going into financing further criminal activity and all the harm that causes. And that could be 

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Speaker: Aidan Lewis

Reinvesting the capital. Yeah. 

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Speaker: David Lewis

Yeah. That could be money coming back into the country. And so governments, law enforcement agencies, and the FATF need to be thinking about this more strategically in terms of how do we get more money coming into the country to support the economy and to finance these essential public services. Because ultimately, that's what it'll do. And if you have to pay a bidding commission to get that money, then why wouldn't you do it? So I think it's just a new way of thinking, but it represents the biggest opportunity for a step forward that there exists today, you know, in terms of getting the private sector involved in managing assets, recovering the value, and the whole investigation through to asset recovery piece because the opportunities there are huge. 

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Speaker: Aidan Larkin

And I use this example. I use the example. I've often been quoted about talking about, you know, that crypto asset recovery has the blueprint. And I'm using the example that we have seen not a reliance on the private sector, a collaboration. If you ask and they say it in the public domain all the time. If you listen to Jared Koopman or Jim Lee from IRS Criminal Investigation, they talk about the fact we take the best learnings from the private sector. We bring it in house. We don't always you know rely on it. We use what we get as intelligence. We go and verify it ourselves. But then we use the tools that they've developed because it's faster than trying to do it manually. So I do think there is an interesting sort of blueprint that people are sort of seeing what works. And I think the tough nut for FATF to crack will be what does effectiveness look like? How do you measure that? And I do think that sort of accountability is one of the sort of key pieces. If you I'm not saying we create a, you know, a seized asset czar, but certainly in some of the countries that had corruption problems, we've seen that the creation of an anti corruption commission, the creation of having that focused office holder who has to sort of stand up at the end of the year with the annual report and say okay we recovered ‘X’, you know use the analogy of if someone robs your house and takes your stuff away you want to know what you've got back. Yes it's great that they've been locked up but like I want my stuff back. And then in the private sector we have, I mean an insolvency practitioner, if you do not do your job as an IP you're kicked out of office. If you mess something up you can be sued. So I think that those standards we could look to the private sector to try and create. And I I do believe that the UK is now heading towards creating its own asset management unit, which is one of the big omissions it's had for decades, which I think is strongly needed to create that accountability. But look, in the short time that we have left, we know that the private sector is taking some big strides and there is lots of excellent public and private sector collaboration, something that you and I have both been involved in and the work we've both done with RUSI, but also now with the new the Global Coalition and the fight against financial crime. Could you tell us a little bit, about that and about how these sort of know Interpol and the other agencies and the private sector are coming together and what some of the aims and what we could hope for, what the what these sort of groups could bring about? 

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Speaker: David Lewis

There's never been a more optimistic time for fighting financial crime, I think, because over the last ten years, there's been so much focus on it, largely as I have to say as a result of the US enforcement action including on the banks. But what it's led to is a lot of people in the private sector who are in collaboration with each other, know what they're talking about, who are now coming together and thinking about more innovative ways of doing what we should be doing. That didn't exist ten, fifteen, twenty years ago. You know, when I was in a serious organized crime agency, if you wanted to get information out of the private sector out of a bank, you'd go with a production order, otherwise they wouldn't share it. Now what we're seeing is the private sector banging on the door of FIUs and law enforcement saying, look, we wanna help. Let us help. We've got all this information. We wanna help. And they've got the support of their boards to do that. And what the Global Coalition to Fight Financial Crime has done really well is bring all those people together, not just in the private sector, but also in the public sector with the likes of Interpol and Europol. And so I think what we have for the first time really is the beginning of a global coalition, not just of the public sector, but of the public and private sector that are looking at this through different lenses and importantly through an effectiveness lens. How can we be more effective at doing this? And so we're looking at things from a policy perspective, from an effectiveness perspective, from a legal and regulatory perspective, and there are real opportunities there. And I think we've created global chapters or regional chapters around the world in Africa, in Asia, in Europe, in the Americas to really look at the issues facing each of those regions and bring it together globally. So I think the FATF now has a broad network it can draw upon for these ideas. You know, when I was in the FATF, that was only just beginning to happen. And now public, you know, policymakers have an opportunity to draw on that, that breadth of experience, that thinking capacity to really take the next step in fighting financial crime. And so I think that's what the global coalition has to offer, as well as the likes of RUSI in the UK and so on. 

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Speaker: Aidan Larkin

So what do we think then in our last few minutes? If you had a magic wand, I would like to hear, which I also know the reality is we're not gonna have a magic wand. But if we were to stargaze, what do you think? Well, we've hit on a couple of themes like sort of accountability, political will, you know, highlighting the public reinvestment. I don't think the general public understand the scale. And I know that we mentioned this at the GCFFC was like, this is an emergency situation. It's not treated as an emergency. This is the equivalent of the outbreak of a pandemic. And I don't mean that sort of flippantly. People, I know people might say oh but all these people have died. Look at the impact of crime on the world. Like by not disrupting and dismantling these organized crime groups, we can see that in the at NCA a study that was done just for the UK said the impact of serious and organized crime, and you just touched on an even bigger figure from a tax point of view, but thirty seven billion pounds is the effect. Don't just think about the drug dealer or the terrorist or the person involved in sort of organized crime. Think about the cost of the investigation, the cost of prosecution. If you take that person out and, you know, lock them up for ten years, the cost of that, the impact that has on their family, what then that happens to the impressionable teenage boy whose dad's just gone to prison? The whole impact of it is sort of enormous. So if you had a magic wand, what do you think? And also on your travels of the last sort of seventeen, twenty years, are there any things that you've seen that you've thought that's brilliant? Obviously, you don't have to name the country or the agency, but you've thought if we could see more of that and harness more of that, I know that people would be interested to hear that. 

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Speaker: David Lewis

Yeah. I mean, there isn't a silver bullet to any of this, but there are some things that we should be doing, which I don't see enough. Political support's really important. You talked about having an asset recovery SAR. We need to have people who are at the right level of government, who have political weight, who are held accountable, you know, either annually through an annual report process or through parliament, who can communicate with the public about the impact of this in a way that is understandable to them, and who can be held accountable for the results of the activity we that we put in because as we’ve already discussed the opportunities here to make a dent in the problem are huge. So I think political will is huge and prioritization is another one. What are we looking to achieve here? Are we just looking to maximize financial transparency, or are we looking at tackling drugs trafficking or people trafficking or fraud? What is the biggest problem? You talked about fraud being forty percent of all crime, yet getting one percent of funding. Fraud is a massive problem, and yet because it doesn't bang or bleed, no one's doing anything about it. Yeah. It creates harm, massive harms, that people are not talking enough about. So I think communicating effectively about the nature and scale of this problem, appointing people who are accountable for doing something about it is a massive thing that needs to be done around the world, and ensuring that there are enough resources to tackle this problem, particularly in the public sector. And those resources can be paid for by this activity many times over. So see this as a self financing thing and a way of promoting economic growth and ensuring that you have money in the public purse to pay for essential services. That's how I approach this problem, and that's how I think government should be approaching this problem, but they're not at the moment. In terms of what's working really well around the world, it's difficult to pull out some good cases. There are some great examples of public private partnerships emerging from around the world, but they don't, in my view, go far enough, and they've kind of stalled a little bit, particularly in the UK recently, and I think they need to expand beyond just information sharing into financial investigations, into asset management and recovery, including civil recovery, and really, we're not scratching the surface at the moment. There are some countries that are really at good asset recovery. You know, we've looked countries like New Zealand have been given credit for that in their FATF evaluation. So there are good examples around the world, but it's sad to say that they're rare at the moment. To get to where we need to be, there needs to be a more inclusive approach where the likes of FATF really benefit more from the experience that's out there in the private sector. 

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Speaker: Aidan Larkin

That's a great place for us to sort of to wrap up on. I think that there are those examples we saw that now Singapore being president and they have a three point six billion dollar seizure. I mean, it's a case of it's there if you look, and we've used this theme a lot that all of this illicit finances out there. I think once we start to see more public demand I mean, if you're a UK citizen, look at your council tax bill. You are contributing to your police and crime commissioner right now but there is trillions as we've just talked with potentially out there. We shouldn't be paying this. We're being taxed on a tax for something that our tax pays for to get effective as like a death spiral. And I think that that is the sort of the drum that we're repeatedly banging. If this was a startup, you've got a problem, you've got a very clear solution, and you've got a wonderful flywheel that the more you invest in the problem, the more you recover, the knock on effect it has. It becomes self funding and it gets and it grows exponentially as well, but it just requires those early believers and advocates and investors to sort of take the time. And I think you're you're you're absolutely spot on. I think the likes of the GCFFC and others really starting to get into the weeds of this saying how does this actually translate and bring this into focus is a really sort of one of many. And obviously, you know, RUSI talks about this at length, but the more of this we can sort of see the better. David, thank you so much for sort of taking the time and sort of sharing your insights. I know that everyone's going back onto the camel comment right now and googling. Does that really work for cars? But, yeah. We'll try and share that in the podcast notes. Notes. But thank you so much for joining us, sir, and, I hope to speak again soon. 

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Speaker: David Lewis

Cheers, Aidan. Great to be on your podcast. Bye for now. Thank you, man. Bye bye. 

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Speaker: Aidan Larkin

Thank you for listening to Seize and Desist. Join us next time as we dive into all things asset forfeiture with the incredibly well known Amanda Wick, founder of the Association of Women in Cryptocurrency. We're gonna get stuck into her incredibly diverse career in the asset recovery sector, from a prosecutor to working in the world's biggest blockchain analytics company to then setting up this incredibly important organization. It's an episode you'll definitely not want to miss. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by asset reality employees are those of the employees and do not necessarily reflect the views of the company. 

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