so I’ve spent half of my career
disenfranchising people millions and
millions of people including people like
my parents from accessing the modern
economy and my parents came to this
country I’m the son of immigrants they
came to this country in search of
Economic Opportunity and my elder
brother and I saw firsthand how vital
and important financial access was to
them to start and grow their businesses
to send us to the best schools
importantly to send money home to their
friends and family who really needed it
and part of that was they instilling
into us a very very strong sense of
financial education and not only to
ensure that we avoided exploitation but
also that we were put on a solid footing
with strong financial behaviors
responsible financial behaviors but what
my parents didn’t understand or realize
at the time was I was gonna make it very
hard for them for for them to accomplish
their own financial goals and it wasn’t
because I would out spend my budget or
misuse a credit card or be so generally
undisciplined that they need to send me
to military school they did send me to
military school now it was well into my
career starting a family gainfully
employed where I was given some
opportunity to do some meaningful work
but true drifts enfranchisement would
start them after the tragic events of
9/11 I was given the opportunity to join
the US Treasury Department join our
counterterrorism fight only to use
economics and finance to combat illicit
threats see we realized that the
financial and commercial system that
which we all thrive on that is necessary
for everyday lives is equally important
to criminals right to build and support
a terrorist organization to launder the
funds of drug trafficker a weapons
proliferate er to hide the assets of a
corrupt dictator but their dependence on
that system also meant we could find
ways to fort them by attacking and
shutting down the networks and
financial infrastructure that they they
need to sustain themselves and we had a
lot of really early good traction a lot
of successes we identified and
sanctioned individuals and companies
that were facilitating terrorism
globally we were freezing hundreds of
millions of dollars associated with
these networks we all of while
strengthening global anti money
laundering and compliance frameworks to
make it harder riskier costlier for bad
guys to do their work but we were also
creating a system and a set of
circumstances that would make it
incredibly difficult for
well-intentioned legitimate everyday
everyday transactions to transpire see
as a result of rising global compliance
and regulatory needs and in requirements
hundreds of millions of people were
being negatively impacted and it was
having a disproportionate impact on
certain types of customers in particular
poor countries low moderate income
individuals certain types of entities
like charities money service businesses
correspondent banks all thought to be
more vulnerable to terrorist financing
exploitation or certain kinds of
transactions global remittances
international money transfers because
they too were potentially vulnerable to
exploitation by illicit actors we were
spending so much time looking for these
bad guys that we were forgetting about
the national security implications of
financial exclusion see as a result of
growing financial compliance burdens
many banks began the process of
de-risking in other words denying or
cutting off access to a number of very
legitimate well-intentioned individuals
in the financial system and this is
having gross consequences on an
international level and this is
happening for two reasons one because
compliance and risk management is
expensive right as a result of increased
compliance it’s not only from the US but
globally we have seen the number of risk
and compliance measures in the
regulatory environment scale
dramatically this is what it looks like
just from 2000 to 2016
coupled with the fact that our growing
financial regulatory blueprint this is
how we manage the financial system an
increase of enforcement actions we’re
just the global banks alone received
over three hundred and twenty billion
dollars in fines through last year for
negligence or lack of financial
compliance controls this is on top of
risk and compliance departments that are
over twenty percent of the operating
budget of most banks so this is a very
very very risky endeavor but a very
expensive endeavor but de-risking is
having a massive massive negative
consequence for the globe he realized
that in the United States alone twenty
more than twenty five percent are either
unbanked or underbanked globally that’s
two and a half to three and a half
billion people as hundreds of millions
of international money transfers get
frozen you’re talking a vital line for
assistance to poor countries at four
hundred and forty billion dollars yearly
of global remittance flows that’s three
times foreign aid many poor countries
rely on this for vital financial
assistance my own parents and many of
their friends started going to their
Indian grocers to send money home
unreliable maybe but certainly efficient
for them when other channels get knocked
off institutions were getting blocked
out correspondent banks were starting to
lose access to their Western and US
counterparts even charity’s friends of
mine that were working Ebola relief in
Africa or vital humanitarian natural
disaster relief in South of Southeast
Asia and the Caribbean most recently
weeks and weeks of payment delays in
many charities just unable to establish
a bank account because of increased
scrutiny and what happens is when
economically otherwise economic actors
are denied formal services they go to
alternatives payday lenders check
cashers loan sharks these guys are
performing a vital service but often are
costly and serve to exacerbate poor
financial decisions which underscores an
even bigger epidemic that we’re facing
which is the destruction of her
financial health right do you realize
that in this country
almost 50% of Americans cannot cope with
an unexpected expense of $400 or more
almost two-thirds of Americans struggle
financially with just basic budgeting
and expense management financial health
is just as important as physical health
but the fact is to a traditional bank if
you’re low income you’re high-risk if
you have volatile income you’re
high-risk if you’re new to the financial
system
you’re high-risk if you’re sending money
to and from an international
jurisdiction of frontier market
especially one consider an IRA high-risk
you are high-risk we’re spending all
this time looking at at the the
financial implications and asking
implications of money laundering
terrorist financing that we’re actually
failing to understand the nash security
implications of financial exclusion now
everyone understands the term a
needle-in-a-haystack we focus so much on
finding the illicit needles that we’re
forgetting about the importance of the
hay itself not only in terms of the
disruption to well-intentioned
well-meaning legitimate transfers but
also the richest of data in information
that those legitimate transfers
represent there are solutions first off
we can’t see regulation only as a burden
it can also be a value-added asset right
all anti-money laundering compliance
programs come down to one question do
you know your customer what their
financial intents are what their
financial needs are what their source of
funds are what their expectations are
these are the exact same questions to
serve proactively serve clients in need
and yet the very information that global
compliance departments collect on you
and know your customer customer due
diligence often sits unleveraged in
those compliance departments unused the
very analytics processes we use to
analyze illicit financial crime can be
used to understand credit profiles and
legitimate need where we actually
address actual risk not perceived risk
we need stronger and smarter risk
management not simply more compliance
management number two we need to take a
whole system’s approach and look at
positive we
Ward’s not just punitive measures to
provide for financial inclusion and that
whole systems approach me and everyone
has a role here regulators need to
encourage positive financial innovation
with measured risk while the US
regulators are somewhat risk-averse UK
has set up a financial industry sandbox
bringing banks and innovators together
to explore new technologies some of
those technologies and mobile
communications and digital ID can break
down the barriers for access and perform
vital customer due diligence at the same
time technologies like the blockchain
can build surveillance and trust in the
system while protecting privacy and
autonomy at the same time policy makers
need to look at community based
financial engagement as a driver to that
access not simply look to cut them small
business lending Community Development
financial institutions are often the
best position to understand local needs
and assess local risk and financial
institutions need to look at community
based groups and social services
low-income housing workforce development
as financial access points because those
groups are often the ones that have the
highest trust in communities especially
when trust in banks is at an all-time
low an understanding is also low
and finally educators schools need to
build financial education into the
curricula do you understand that five
out of 50 states in this country
actually require one course for a
graduating senior right and their
studies upon studies that show that
there’s a direct link between the level
of education and the sustainability of
positive financial responsibility but we
send our folks out into the community
financially illiterate as a friend of
mine said knowledge without access may
be harmless but access without knowledge
is destructive just look at the recent
mortgage crisis and you might be asked
me after all this destruction what am i
doing I’m doing my penance and my
penance is an effort we called fin
cluesive capital we’re trying to put
some of these strategies to play
bringing new technologies and analytics
in the blockchain and combining them
with traditional financial services to
break down barriers bring down costs
and to bring down friction but enhance
security and transparency at the same
time we’re linking community-based
action groups with traditional financial
services through technology to drive
better inclusion more cost-effectively
and we’re trying to enhance risk
management systems to do more on the
service side not just the compliance
side the net result should be greater
financial access and inclusion more
resilient households and communities and
a stronger more secure financial system
prepping for this event I was reminded
that President Kennedy was faced with
amazingly unique geopolitical challenges
and in his wisdom he understood that
grassroots development was vital to our
national security it was under his
leadership that the Peace Corps was born
if we understand that our day to day
lives require financial access and
engagement and education then we have to
see that engagement as a fundamental
human right which means that a denial of
it should not be judged or conditioned
on the perception of one’s risk or
affiliation today the lines of division
are growing and the exacerbated by the
fact that people are struggling to meet
their everyday financial needs and yet
we continue to have this debate of
trading away Community Development Goals
Community Development tools in order to
protect our national security but I
implore you to look at financial
inclusion is not simply a noteworthy
social development goal but a vital tool
to our national international security
and that’s an idea I think is worth
spreading thank you
[Applause]
disenfranchising people millions and
millions of people including people like
my parents from accessing the modern
economy and my parents came to this
country I’m the son of immigrants they
came to this country in search of
Economic Opportunity and my elder
brother and I saw firsthand how vital
and important financial access was to
them to start and grow their businesses
to send us to the best schools
importantly to send money home to their
friends and family who really needed it
and part of that was they instilling
into us a very very strong sense of
financial education and not only to
ensure that we avoided exploitation but
also that we were put on a solid footing
with strong financial behaviors
responsible financial behaviors but what
my parents didn’t understand or realize
at the time was I was gonna make it very
hard for them for for them to accomplish
their own financial goals and it wasn’t
because I would out spend my budget or
misuse a credit card or be so generally
undisciplined that they need to send me
to military school they did send me to
military school now it was well into my
career starting a family gainfully
employed where I was given some
opportunity to do some meaningful work
but true drifts enfranchisement would
start them after the tragic events of
9/11 I was given the opportunity to join
the US Treasury Department join our
counterterrorism fight only to use
economics and finance to combat illicit
threats see we realized that the
financial and commercial system that
which we all thrive on that is necessary
for everyday lives is equally important
to criminals right to build and support
a terrorist organization to launder the
funds of drug trafficker a weapons
proliferate er to hide the assets of a
corrupt dictator but their dependence on
that system also meant we could find
ways to fort them by attacking and
shutting down the networks and
financial infrastructure that they they
need to sustain themselves and we had a
lot of really early good traction a lot
of successes we identified and
sanctioned individuals and companies
that were facilitating terrorism
globally we were freezing hundreds of
millions of dollars associated with
these networks we all of while
strengthening global anti money
laundering and compliance frameworks to
make it harder riskier costlier for bad
guys to do their work but we were also
creating a system and a set of
circumstances that would make it
incredibly difficult for
well-intentioned legitimate everyday
everyday transactions to transpire see
as a result of rising global compliance
and regulatory needs and in requirements
hundreds of millions of people were
being negatively impacted and it was
having a disproportionate impact on
certain types of customers in particular
poor countries low moderate income
individuals certain types of entities
like charities money service businesses
correspondent banks all thought to be
more vulnerable to terrorist financing
exploitation or certain kinds of
transactions global remittances
international money transfers because
they too were potentially vulnerable to
exploitation by illicit actors we were
spending so much time looking for these
bad guys that we were forgetting about
the national security implications of
financial exclusion see as a result of
growing financial compliance burdens
many banks began the process of
de-risking in other words denying or
cutting off access to a number of very
legitimate well-intentioned individuals
in the financial system and this is
having gross consequences on an
international level and this is
happening for two reasons one because
compliance and risk management is
expensive right as a result of increased
compliance it’s not only from the US but
globally we have seen the number of risk
and compliance measures in the
regulatory environment scale
dramatically this is what it looks like
just from 2000 to 2016
coupled with the fact that our growing
financial regulatory blueprint this is
how we manage the financial system an
increase of enforcement actions we’re
just the global banks alone received
over three hundred and twenty billion
dollars in fines through last year for
negligence or lack of financial
compliance controls this is on top of
risk and compliance departments that are
over twenty percent of the operating
budget of most banks so this is a very
very very risky endeavor but a very
expensive endeavor but de-risking is
having a massive massive negative
consequence for the globe he realized
that in the United States alone twenty
more than twenty five percent are either
unbanked or underbanked globally that’s
two and a half to three and a half
billion people as hundreds of millions
of international money transfers get
frozen you’re talking a vital line for
assistance to poor countries at four
hundred and forty billion dollars yearly
of global remittance flows that’s three
times foreign aid many poor countries
rely on this for vital financial
assistance my own parents and many of
their friends started going to their
Indian grocers to send money home
unreliable maybe but certainly efficient
for them when other channels get knocked
off institutions were getting blocked
out correspondent banks were starting to
lose access to their Western and US
counterparts even charity’s friends of
mine that were working Ebola relief in
Africa or vital humanitarian natural
disaster relief in South of Southeast
Asia and the Caribbean most recently
weeks and weeks of payment delays in
many charities just unable to establish
a bank account because of increased
scrutiny and what happens is when
economically otherwise economic actors
are denied formal services they go to
alternatives payday lenders check
cashers loan sharks these guys are
performing a vital service but often are
costly and serve to exacerbate poor
financial decisions which underscores an
even bigger epidemic that we’re facing
which is the destruction of her
financial health right do you realize
that in this country
almost 50% of Americans cannot cope with
an unexpected expense of $400 or more
almost two-thirds of Americans struggle
financially with just basic budgeting
and expense management financial health
is just as important as physical health
but the fact is to a traditional bank if
you’re low income you’re high-risk if
you have volatile income you’re
high-risk if you’re new to the financial
system
you’re high-risk if you’re sending money
to and from an international
jurisdiction of frontier market
especially one consider an IRA high-risk
you are high-risk we’re spending all
this time looking at at the the
financial implications and asking
implications of money laundering
terrorist financing that we’re actually
failing to understand the nash security
implications of financial exclusion now
everyone understands the term a
needle-in-a-haystack we focus so much on
finding the illicit needles that we’re
forgetting about the importance of the
hay itself not only in terms of the
disruption to well-intentioned
well-meaning legitimate transfers but
also the richest of data in information
that those legitimate transfers
represent there are solutions first off
we can’t see regulation only as a burden
it can also be a value-added asset right
all anti-money laundering compliance
programs come down to one question do
you know your customer what their
financial intents are what their
financial needs are what their source of
funds are what their expectations are
these are the exact same questions to
serve proactively serve clients in need
and yet the very information that global
compliance departments collect on you
and know your customer customer due
diligence often sits unleveraged in
those compliance departments unused the
very analytics processes we use to
analyze illicit financial crime can be
used to understand credit profiles and
legitimate need where we actually
address actual risk not perceived risk
we need stronger and smarter risk
management not simply more compliance
management number two we need to take a
whole system’s approach and look at
positive we
Ward’s not just punitive measures to
provide for financial inclusion and that
whole systems approach me and everyone
has a role here regulators need to
encourage positive financial innovation
with measured risk while the US
regulators are somewhat risk-averse UK
has set up a financial industry sandbox
bringing banks and innovators together
to explore new technologies some of
those technologies and mobile
communications and digital ID can break
down the barriers for access and perform
vital customer due diligence at the same
time technologies like the blockchain
can build surveillance and trust in the
system while protecting privacy and
autonomy at the same time policy makers
need to look at community based
financial engagement as a driver to that
access not simply look to cut them small
business lending Community Development
financial institutions are often the
best position to understand local needs
and assess local risk and financial
institutions need to look at community
based groups and social services
low-income housing workforce development
as financial access points because those
groups are often the ones that have the
highest trust in communities especially
when trust in banks is at an all-time
low an understanding is also low
and finally educators schools need to
build financial education into the
curricula do you understand that five
out of 50 states in this country
actually require one course for a
graduating senior right and their
studies upon studies that show that
there’s a direct link between the level
of education and the sustainability of
positive financial responsibility but we
send our folks out into the community
financially illiterate as a friend of
mine said knowledge without access may
be harmless but access without knowledge
is destructive just look at the recent
mortgage crisis and you might be asked
me after all this destruction what am i
doing I’m doing my penance and my
penance is an effort we called fin
cluesive capital we’re trying to put
some of these strategies to play
bringing new technologies and analytics
in the blockchain and combining them
with traditional financial services to
break down barriers bring down costs
and to bring down friction but enhance
security and transparency at the same
time we’re linking community-based
action groups with traditional financial
services through technology to drive
better inclusion more cost-effectively
and we’re trying to enhance risk
management systems to do more on the
service side not just the compliance
side the net result should be greater
financial access and inclusion more
resilient households and communities and
a stronger more secure financial system
prepping for this event I was reminded
that President Kennedy was faced with
amazingly unique geopolitical challenges
and in his wisdom he understood that
grassroots development was vital to our
national security it was under his
leadership that the Peace Corps was born
if we understand that our day to day
lives require financial access and
engagement and education then we have to
see that engagement as a fundamental
human right which means that a denial of
it should not be judged or conditioned
on the perception of one’s risk or
affiliation today the lines of division
are growing and the exacerbated by the
fact that people are struggling to meet
their everyday financial needs and yet
we continue to have this debate of
trading away Community Development Goals
Community Development tools in order to
protect our national security but I
implore you to look at financial
inclusion is not simply a noteworthy
social development goal but a vital tool
to our national international security
and that’s an idea I think is worth
spreading thank you
[Applause]
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