Transcription:
Penny Crosman (00:03):
Welcome to the American Banker Podcast. I'm Penny Crosman. Our guest today is an old friend who has been on the podcast several times before. Ian Mitchell is the founder of the Knoble, an organization that works with law enforcement and with banks to fight human crime like human trafficking. He recently wrote a blog in which he suggested an interesting idea that I want to ask him about today. So welcome, Ian.
Ian Mitchell (00:29):
Hey, Penny. Thank you for letting me be back on. I'm thrilled to be back with your listeners.
Penny Crosman (00:33):
Great. Well, for those who aren't familiar, what does The Knoble do?
Ian Mitchell (00:38):
Love the question. The Knoble is a network of amazing people that have expanded their aperture just a couple percent to care for the human being behind the transactions and fight human crimes like trafficking and child exploitation scams, elder financial exploitation, and the Knoble's now, well over 7,000 members, over 600 financial institutions around the world of amazing people, like I said, that are just trying to make a difference and protect people along side of their day job, which is a lot of financial institutions, tech companies, but our core is the financial services financial institution environment.
Penny Crosman (01:15):
And then you've also got a organization or initiative called Mission Omega. What is that?
Ian Mitchell (01:21):
It is a highly specialized fraud fighting fraud services organization. I co-founded it with a gentleman named Ben Wallach, and for me it was to find a way to fund the mission of the nonprofit, The Knoble. And so we give 10% of our gross revenue on all consulting engagements to The Knoble, and we help the largest financial institutions in North America right now and the smallest overcome fraud challenges and do fraud assessments and have managed services where we work alerts. I mean, it really is mission driven when it comes to the fraud fight because there are a lot of gaps in this ever-growing fraud threat. And I just love that I get to work with people there as part of supporting the Knoble, but the best fraud fighters. I mean, I think our team has over 500 years of combined anti-fraud experience. It's just amazing, amazing group of folks that are coming together to try to also live out a purpose-driven mission or life, if you will, in our work.
Penny Crosman (02:15):
And we also talked last time about your music. Are you still involved in that?
Ian Mitchell (02:19):
Oh my goodness, yeah. I am a creative at my core, and so I've been writing and recording music for over 20 years. So now I'm on Spotify and all the rest, and I really write music now that's trying to encourage people to live that life of purpose. And I was not able to record for a good year and a half due to some illness. And I'm back in the studio, and I've released several songs this year, and I've got a really cool one coming out in December that talks about there are more good people in this world than all the bad people. And there's more good people doing a lot of great work at financial institutions and other places that are really trying to protect people. And that's what the song in December I'll be releasing is about.
[Short clip from song]
Penny Crosman (03:18):
How did you get into this area of trying to address the problem of human trafficking?
Ian Mitchell (03:25):
Yeah, it definitely wasn't planned, but I had retired early thinking I was going to go focus on my music and I didn't retire because I got to afford to. I just was done with banking. And I met somebody named Matt Friedman and he opened my eyes to this human trafficking problem and told me it was a financially motivated crime. And I just started realizing after a brief conversation with him and several weeks of introspection that I missed something in my career. And I had fought fraud at the highest levels, managed fraud in over 14 countries, thousands of people on my team, some of the best fraud fighters. But I realized that I had missed something and I had been trained for 20 years at that time to look for patterns and look for anomalies, and I didn't appreciate the human being behind the transaction. So that's where the idea of The Knoble came from.
(04:10):
When Matt Friedman had told me there weren't enough resources, and I realized there were so many amazing great people at institutions around the world. By my estimate, there's over 600,000 people that wake up every single day fighting fraud and financial crime worldwide. And if we could get a fraction of those involved protecting people from human trafficking and detecting these criminal rings, we'd have an unbelievable army of workforce that can do a lot of good. So that's where the idea came from, and I founded it in 2019 in March. And it has been growing exponentially with just an amazing network of, like I said, just wonderful people that live with their heart.
Penny Crosman (04:47):
And I know the first time we talked, you had created a campaign around a Super Bowl event. Are you still focusing on sporting events?
Ian Mitchell (04:58):
We do actually. The sporting event — this is an important nuance — is just the catalyst for organizations to come together for the excuse of putting in detection in that case of human trafficking. So we're getting ready to kick off our planning for the next Super Bowl event. That'll be our fourth one. I think we've had over a hundred institutions involved combined involved in looking for human trafficking, sex trafficking around the Super Bowl and working with law enforcement. I think 30% of all the institutions that were involved in that effort didn't have detection in place before they get involved with the Super Bowl project. And they do now. And I think these projects like the Super Bowl project and other ones we do, whether it's to detect child sexual exploitation in financial transactions or some of the scam stuff we're doing, these are great excuses for us to learn together to be a catalyst for innovation and for us all to learn with each other.
(05:52):
And so those projects and initiatives are a byproduct of a lot of wonderful people trying to come together. Some of the projects we're doing, I know you didn't ask, but we're doing projects now that are going to reshape the way that the attachment process for suspicious activity reports is being filed. There's a lot of momentum around that, creating a national awareness campaign around things like sextortion and scams. I mean, these employees of financial institutions are really innovating and trying to work together. And there's social media companies involved in that, too.
Penny Crosman (06:30):
What is some of the work involved in monitoring transactions for signs of this behavior? Is it basically creating templates of patterns of behavior that might be reflected in transactions? Is it figuring out who the people in these rings are and then looking for them and the aliases they use? What kinds of signals are people looking for?
Ian Mitchell (07:00):
Well, we definitely need to mature our detection efforts across the board and get to the point where we're mature enough to use technologies like the ones we use to detect fraud on a regular basis. Some advanced technologies and neural networks and such are used for that. We will get there. But in the interim, while we're getting there, we are using basic rules that look at geographic concentrations. We look at suspicious patterns at massage parlors and nail salons. And actually prior to our last major sporting project, we had a team of some of the top solution providers in the detection space came together and helped us really advance the rule set that's used for detection. So that's actually a free rule set that everybody in The Knoble can access. And so we're really trying to mature the rules that we're using. Eventually though, I think, as we start having enough of these events identified both the criminal organizations that are underpinning it and the victims to identify them and hopefully be a part of a rescue effort, we're going to mature our methodology and our approach to more advanced uses of analytics. But in the meantime, we are in this maturity journey of rules-based and scenario-based solutions in a lot of the systems that exist at financial institutions today. And that's really important to us. It's not going to have to buy something new. It's getting a rule set that can actually be put into place with the current systems that all financial institutions have in place to detect money laundering and fraud today.
Penny Crosman (08:28):
So it sounds like it shouldn't really be expensive to do, although you need the time of some people who are willing to put the work into figuring out these patterns and making them putting the rule sets in place.
Ian Mitchell (08:44):
Yeah, I don't necessarily know that it's expensive, and this gets into our human crime officer topic we want to talk about, and I think it's a great way to do a primer on that. But I do think that, for example, child sexual exploitation, I hate saying that just as much as you hate hearing that, but a group of financial institutions, I think there's over 20 of them now that are working on a project for Project Umbra phase two to detect this activity in financial transactions to look for high risk exploitation of children. There is some data that isn't currently being ingested by financial institutions that does have a cost to it. And so while as we go up the maturity scale, initially it's not expensive, but then as we want to get better and protect, there is an opportunity for measuring a return on investment because there's a cost there.
(09:30):
And that's seen clearly in this scams fight we have right now where for the most part, there's not a liability for financial institutions around scams. And yet we know scams are absolutely a scourge and around the world, they're hitting all of us. We're all victims, potential victims of scams and financial institutions need to do some investment and innovation around how to protect all of us from this scams problem that's been since the pandemic. It's been productionalized with human trafficking scam centers. And so there is some investment of time initially, and then as we start maturing, there is some investment on third party intelligence and then bespoke type solutions. But I don't know that we're quite on that journey yet. But the investment needed right now for the mature programs is a challenge, and that's where something like a human crime officer could come in and really help.
Penny Crosman (10:23):
Okay. Well, that was my key question for you today. You recently wrote a blog where you floated the idea that banks should have human crime officers. What does that mean? What would a person with this title do?
Ian Mitchell (10:38):
Well, early in the 2000s, identity theft was a problem that wasn't getting enough attention from financial institutions. And it really was proliferated with the online applications that were popping up everywhere to solicit new customers. It's a great channel for us, obviously. But when we first ventured into this channel, we were venturing into an unknown and we were all hit by identity theft. And one of the things for the institutions that some of them took it very seriously, but some of them were still trying to learn. The U.S. government required that financial institutions put in an identity theft officer to do a bunch of things, but to include reporting to the board on a regular basis, creating some high level reporting on the identity theft risk and the controls that existed that needed to be in place. And then there were some specific type suggested rules to look at, it was for the more advanced institutions, it was something that they were already doing, and maybe it was more of a nuisance.
(11:36):
But for the almost 5,000 financial institutions that exist in our country today, the vast majority were still a little bit early in their identity theft journey. And so what this human crime officer is basically taking that same model where there may not be on its face a return on investments but there are a lot of institutions that want to do good, and some of them are just waiting for regulation to come and tell them that they need to. And sadly, that's kind of where we are in some of these human crimes. It's not because people don't want to do good, it's just because there's so many priorities. And this human crime officer is appointing somebody in financial institutions that have a very similar role to that identity theft officer where it's requiring or asking the human crime officer to go in front of the board and talk about these crimes of exploitation and how the institution is putting in controls to protect our society and our customer base from these crimes of exploitation.
(12:32):
And that by itself, that first move with a human crime officer doesn't require a lot of investment. This is just like the identity theft officer. This can be somebody's additional assigned duties. And what I've found in our 600 financial institutions around the world, actually I think it's closer to 700 now, there are people already existing in FIs all around the world that already want to do this job. And so this empowers them a little bit, and it will help the financial institution to justify some of the investment of time and potentially some data needed to advance the fight to protect people. And so that's the whole premise of the idea is by naming somebody that already exists, it'll advance us to the point where we now have detection of child sex trafficking, human trafficking, child sex exploitation scams, and elder financial exploitation. And it'll be consistent across no matter the size of the FI. it's been received so well since I published that blog just last week.
Penny Crosman (13:35):
Do you think there's a financial incentive for banks to do this? I mean, obviously if you could have less fraud and less crime going through your network, that has reputational benefits and also the benefit of not getting sued by victims. Are there any other bottom line incentives for banks to do this?
Ian Mitchell (13:59):
Love this question. So much so that several months ago I went to the top 20 human crime fighters that I know that have mature programs across these human crime elements in one or multiple of them. And I asked them, what is the reason? How did you justify putting in a program? And I asked them for their reasons. And the number one reason, I'll tell you that punchline right now, the number one reason is intrinsic good, which it's hard to justify that when we come into the financial institution world where everything is, we need to make sure we have a return. That's just the business model. But underneath that, there were some really other good reasons. One of them was reputation, both on the negative and positive sense. So no institution wants to find out that the organized criminal rings have been operating within their financial institution walls and being used to traffic people.
(14:48):
No institution wants that negative reputation. But then there's the positive side where by doing the right thing, especially around things like scams, which are some of the most sensitive transactions all of us have with our banks, is feeling protected from fraud. So when we have situations like scams and some of these others, there's a lot of positive reputational benefit that can come from feeling like your financial institutions protects you. So those, and then the more advanced financial institutions actually found a return on investment financially with some of the human crime types, be it scams, making sure that you don't kick everybody out that's been a victim of scams multiple times, you're remediating them, they're helping them because all of us, I mean, scams aren't just attacking a certain population of citizen base, just the elders, for example. They're attacking all of us, educated, uneducated, young, older, all those. And so at some point, those customers are going to need a mortgage and an automotive loan. So there's a return for helping customers through, for example, the scams problem that there is. So there's a lot of positive reinforcement and saving of customer accounts that has been a return on investment for some of the more advanced financial institutions for sure.
Penny Crosman (16:05):
Do you have any other advice for banks that realize that they do have customers who are victims of either elder fraud or trafficking or some other form of human crime? What else could they be doing to better protect their customers?
Ian Mitchell (16:25):
Well, I'll give some just general advice that is more probably business centered. Things like these human crimes, they're financially motivated. And for suspicious activity, for example, human trafficking has its own standalone checkbox on a suspicious activity report. But even scams, when they're tied to organized criminal rings and such, they would qualify as a suspicious item. And so the reason to look at some of these in your customer base and look for these types of crimes is to make sure you're compliant. First of all, there is an existing requirement that finance institutions report this type of activity. So there are those compliance reasons. Then the advice I would say is build law enforcement relationships. A lot of times law, law enforcement relationships are one-off, an investigator at a bank has some relationships. I do think that building law enforcement relationships before there's a problem I have seen at multiple financial institutions.
(17:27):
I have spent years being a consultant, helping financial institutions out of very big fraud and messes that they've gotten themselves into and such my teams have helped them. You don't want to create law enforcement relationships when there's a problem. You want to do it proactively. And I've seen it, and this isn't official, but I've seen it also help in regulatory interactions with examiners. Is there a strong relationship existing with several branches of federal, state and local law enforcement? So I do think that's a very important kind of advice. The next one is one that I personally love is we all at financial institutions have hundreds if not thousands of third party provider relationships. And I do think that whatever human crime type resonates, be it scams or human trafficking, asking our service and solution providers, what are they doing to fight whatever human crime type resonates with you and your organization?
(18:21):
And by doing that, I know that these service providers, solution providers will listen and they'll start innovating and start incorporating into their normal book of services that they give all of us. And that's a way to accelerate. And then my last piece of advice is softer, but I've seen it over and over again. When we tap into the purpose that's behind protecting people, and honestly in the world of sextortion where kids are being targeted that are 13 to 16-year-olds online, and then they're moving money and extorted for small amounts of money. When we are involved in protecting human beings, it brings purpose to all of us. And I've seen it bring purpose to very seasoned people that have been in their roles for decades to very new people that are just trying to figure out what their life and career is going to look like.
(19:11):
And then I've seen it reshape sales organizations of solution and service providers, and I think we all search for that sense of meaning and embracing this protecting of people. Embracing this human crime officer remit is a way for all of us to know that we're doing our best in the confines that we operate in on a daily basis. We're doing our best to do that intrinsic good to make a difference in people's lives. There's that old starfish analogy. It matters to the one that we protect or the one we help. And these are financially motivated crimes. I come back to that. That's the reason these criminals are organizing themselves or finding ways to exploit these wonderful services that the financial ecosystem brings to the world to empower needed business. But they're exploiting that. And so for us, as we know, we're building defenses to protect people. It changes the heart of a person and an organization. And I've seen that. I've lived it personally. And that's one of the best parts about The Knoble network is it just is created a group of people that are motivated by that
Penny Crosman (20:14):
Sounds very reasonable, and maybe it's almost a way of attracting people who are talented in this area, that they would like having that title and as you say, wear it as a badge of honor.
Well, Ian Mitchell, thank you so much for joining us today and to all of you, thank you for listening to the American Banker Podcast. I produced this episode with audio production by Adnan Khan. Special thanks this week to Ian Mitchell at The Knoble. Rate us, review us and subscribe to our content at www.americanbanker.com/subscribe. For American Banker, I'm Penny Crosman and thanks for listening.