Innovative RegTech Firms Work to Prevent Illegal Financial Flows

Press Release: 11 October 2021, Hong Kong

The Illegal Wildlife Trade (IWT) is the fourth largest illegal trade after firearms, drugs, and human slavery, according to the United Nations Office on Drugs and Crime and profits generated from poached animals and timber are estimated to be between US$7 and US$23 billion per year. To launder their illicit gains, wildlife criminals use techniques common to other forms of serious crime to enable them to access the global financial system.
 
In 2020, the World Wildlife Fund for Nature (WWF) forged a global partnership with ACAMS, the largest international anti-money laundering (AML) and financial crime prevention community in the world. This resulted in the launch of a specialized certification program to train individuals to detect, identify and report suspicious or unusual transactions that may be linked to IWT. 
 
As criminals get creative and expand their illicit activities, innovative RegTech solutions offer better capability in identifying risk within the financial sector by enhancing systems to better detect IWT red flags in financial flows. With its main application in the financial sector, RegTech is now expanding into other business areas with a particular appeal for the consumer goods industry.
 
A Red Flag is a regulatory-referenced indicator that highlights potential illegal activity in a bank account. Red Flags are created from the knowledge and understanding of patterns that emerge from the analysis of criminal transactional activity. They are then defined according to regulation and guidance notes and assigned to a specific financial crime typology, such as the Illegal Wildlife Trade. 
 
A leading player in the RegTech industry, AML Analytics is the global leader in the testing, validation and optimization of AML technologies used by financial institutions in the regulated sector for protection against the risks associated with financial crime. These tools are also utilized by the world’s leading regulatory bodies in the supervision of financial institutions. 
 
AML Analytics has developed a ground-breaking Red Flag Test solution designed to carry out an on-the-spot transaction monitoring system health check. With WWF, AML Analytics’ innovative tests will identify vulnerabilities in a transaction monitoring system’s alerting capabilities and will validate Red Flags associated with IWT providing the financial industry a thorough understanding on how to better detect illicit activity. 
 
“We look forward to this innovative partnership with AML Analytics to support the analysis of transaction screening and monitoring technologies used by financial institutions to better analyze, understand and improve the detection logic and the reporting of financial flows associated with the illegal wildlife trade. Profit is the most important driver behind the global illegal wildlife trade,” says Nicole Wong, CEO of WWF Hong Kong. 
 
“By working with AML Analytics and the RegTech industry, financial institutions can access innovative testing and optimization technologies for improved risk screening and monitoring of their AML systems. This will help financial institution around the globe to meet regulatory requirements, minimize exposure to financial crime risk and manage resources but most importantly, it will help prevent illegal wildlife trade”, she added. WWF Hong Kong is host to the WWF Asia Pacific Counter-Illegal Wildlife Trade Hub, a partnership initiative created in 2019 by the Asia Pacific CEOs of WWF offices to spur systemic responses to IWT. 
 
The partnership aims to expand to the wider RegTech community through the RegTech Association of Hong Kong  working to support the Hong Kong Monetary Authority’s two-year RegTech promotion roadmap.
 
The collaboration of NGOs and the private sector through the creation of PPP’s will provide actionable intelligence for financial institutions to incorporate into their risk frameworks to improve their ability to detect red flags associated with illegal wildlife trade transactions and activity. This will ultimately improve their ability to identify, intercept, and prevent international wildlife crime.
 
“As a global provider of innovative AML technologies, AML Analytics are delighted to join forces with the WWF and offer their expertise in helping financial institutions recognise and detect suspicious or unusual transactions that may be associated with the illegal wildlife trade. The disruption of wildlife crime depends on criminals being prevented from accessing the global financial system”. Justin Holder, Group CEO and Founder of AML Analytics.