Interview with Francisco Mainez – Head of Business Financial Crime Risk, Data & Analytics for HSBC UK, part of one of the world’s largest banking groups.

Francisco Mainez leads a team specialising in a range of disciplines including data extraction and analysis, insight reporting, AML and counter financial crime strategies, customer due diligence and tax evasion.

Please note that the comments expressed in this article are Francisco Mainez’s personal views and are in no way associated with his current employer nor any of his previous employers.


How are you coping under current restrictions?

Pretty well actually. Home working is happening for many of our people – and I’d like to think I’m good at coping with working in confined spaces as I have lived on ships when in the Navy/Marines. You just need to get on with things, adapt to a new environment and find ways to overcome the new barriers…It’s essential to keep team focus and cohesion. I’m sure we’ll get through and learn much about our organisations and ourselves from this…

Tell us about your journey into your present role – how did you come to work in this area?

I worked in military intelligence for the European Union and NATO where I covered some of the most troubled areas, such as the Balkans including Kosovo, and also Afghanistan. I then moved into banking and worked for Standard Chartered in Singapore and London, where I gained a lot of experience in areas like overall operational risk, regulatory engagement and management reporting . I then joined HSBC and have worked in Financial Crime Risk, financial intelligence, data analytics and compliance reporting at Group and Line of Business levels.

What do you see as the biggest challenge in the market and how should we address it?

At its most basic, it’s how we stop or better, deter the bad guys…people are often surprised when I say that this sector is actually more difficult than military intelligence, where it is much more clear cut who your enemy and threats are. Those behind financial crime can be very hard to identify and spread out around the world. They are a moving target and are constantly evolving. They also combine cyber attacks as we have seen with changing malware attacks. It is a challenge for large organisations to match that speed and they know it

Where do you see there being the greatest innovation in the market?

It’s not really an innovation but we are seeing new approaches in terms of enhanced integration between areas that traditionally worked in isolation from each other: AML, Fraud and Cyber Risk, although there is still a way to go, there is better sharing of data, internally and externally. Moving from a “need to know” to a “need to share” approach is essential to prompt that change in culture.

What would you like to see in terms of regulatory change?

I welcome the Fifth Anti-Money Laundering Directive although there are some delays to this because of COVID-19, but I hope this will be effective on a number of fronts, particularly in relation to ensuring there is stronger regulation on critical areas such as virtual currencies and prepaid card. The Directive means cryptocurrency exchanges and custodian wallets are to be brought within the scope of regulation within EU law. So, this should help us with detection of suspicious cryptocurrency transactions. It should also mean there is better information on company ownership and the European Banking Authority will also gain more power, which will be used to improve co-operation and the exchange of information between AML supervisors.

Reports have shown there is a spike in COVID-19 fraud. What are your thoughts on this?

Absolutely, there has been an increase in things like phishing and on social media, and we should expect more identity and application fraud related cases. Fraudsters are also extracting money by using charity and NGO scams. The restrictions could also lead to an increase in more application fraud as it may be harder to make checks.
Longer term, and while there may be no connection to fraud, the repercussions from the virus will be ongoing and there are likely to be more pressures for many customers, like some businesses being in difficulty and customers needing to borrow more to mitigate their constraints and/or lack of revenue. Fraudsters might use that opportunity to commit their crimes

Which pieces of technology have allowed the greatest advancements in effectively tackling financial crime?

We’ve seen a lot of advances in the technology space with more computer power and data storage capabilities that enable the use of powerful engines for better customer segmentation and anomaly detection, which enable better end to end processing as well as better analytics. However, I still believe the main change still needs to happen at the organisational and culture levels.
With the current situation with COVID-19, there have been concerns about reviewing machine learning engines and their related tracking patterns due to these engines having been trained on data that reflected completely different customer behaviours. Institutions with these capabilities deployed, are probably now trying to combine with other methods, such as rules-based engines in order to recover accuracy and adapt to these uncertain times

Does Brexit add more complexity when working on cross border AML projects? Could there be problems for the UK?

At this stage we can’t say that there are going to be a lot more problems with financial crime and we expect to see measures being put in place to see that there is equivalent regulation. Clearly though, if there was a move towards deregulation, this would be a concern, as criminals would be quick to try and exploit this.

How can we ensure better cross border collaboration?

We all know there are risks in sharing data, but I would like to see more regulators across Europe look at what is happening in the Netherlands. The four largest banks have formed a partnership with the intention of blocking organised crime syndicates and working together to follow their money. They are gathering a lot of useful data and there is collaboration between financial crime specialists, compliance officers, the police and prosecutors. The work is going to be really useful in finding out more information about both criminals and their enablers as well as screening their assets. I’d like to see a similar project happening here between the large banks. There is still far too much isolated work going on with people monitoring in silos. Too often, SARS reports are sent over and nothing is heard again. The Netherlands project focuses on gaining a much bigger overview of suspicious transactions and ensuring that investigation take place, with active involvement from law enforcement bodies.

What are your thoughts on the proposed new Government levy on regulated firms that is aimed at increasing resources to fight financial crime?

I’m aware of this and we need to be aware that it is only a proposal but overall, it could be a good thing. I’m not a banker by trade I don’t tend to focus instantly on increasing profits, but in reducing financial crime. It could turn out to be a small price to pay if the work it funds is well managed. We also have to remember that all the large banks have at some point been fined or run into regulatory problems because of failings in their AML controls. These can be high costs, but also reputational damage more difficult to quantify – if the levy is set an affordable level and it benefits the regulated firms then it should be under consideration.

Do you think the skills needed to work in counter financial crime are changing?

I think it works to have a range of skills and to have a good balance between internal and external hires. Certainly, data analytics is a key part of what is needed, but someone who is purely an IT expert may not know about financial crime and because this area is so fast moving, you need an aptitude to take on new information, it is a constant learning curve.

Transform Finance has launched a series of Virtual AML and KYC events – how important do you think these will be in terms of staying connected?

Yes – virtual events are proving to be the way forward and are one of the ways we are adapting. They can be a highly effective way to connect and immerse yourself in a topic. I also think we’ll be making more use of online conferences and seminars after COVID-19 – there are definite advantages and ground to explore in this sense.


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