In this interview with Daniel Thelesklaf, he discusses his distinguished career fighting financial crime, from having worked in the private sector, at an FIU, in supervision, development assistance, and sanctions enforcement, as well as his new role as Head of Switzerland’s Financial Intelligence Unit, MROS (the Money Laundering Reporting Office, Switzerland).
Daniel Thelesklaf Interview
FCN: Q1 – You led Liechtenstein’s FIU since 2012, until just a few months ago – what were the highlights?
DT: A short time after I took over in 2012, I became the national coordinator for the mutual evaluation process, led by the IMF and Moneyval. This was a very demanding process. We were under significant pressure to demonstrate that our system was working effectively. While this required a lot of resources, the whole exercise, in the end, turned out to be beneficial for us: We learned a lot on substance but also on how to negotiate, how to make your point, and how to convince others. As a result of this evaluation, the FIU powers were significantly enhanced, and we were able to enhance international cooperation to the benefit of Liechtenstein and international partners. Finally, we successfully introduced a new electronic filing and analysis system, “goAML”, last year, which was also very resource intense exercise but which also increased the FIU’s capacities to deal with large volumes of data, and increase overall effectiveness.
FCN: Q2 – Tell us more about the Liechtenstein Initiative, and what Banks in particular can do if they want to get involved?
DT: The initiative led to the creation of the Financial Sector Commission on Modern Slavery and Human Trafficking, which is a public private partnership between the Governments of Liechtenstein, Australia, and the Netherlands, a consortium of Liechtenstein foundations and private sector institutions and the UNU-CPR (United Nations Centre for Policy Research) acting as the Secretariat. The Commission consists of 25 Commissioners, of which I am one, but also includes for example survivors of human trafficking and child slavery.
Human trafficking and modern slavery generate an estimated US$150 billion dollars a year, much of it generated by and benefiting organised crime, but we only see a fraction of this in terms of freezing, seizing and confiscating proceeds from these crimes. With an estimated 40 million modern day slaves, human trafficking is considered one of the fastest growing crimes and one that requires increased attention and a committed response.
Whilst international agencies and governments must play their parts, there is also a role for Financial Institutions, who by and large in my experience want to contribute, but need to have more information and intelligence to guide them into actions that can make a difference. This is where the Liechtenstein Initiative comes in and has, over the last 12 months, analysed how we can get financial institutions to contribute, for example by fine-tuning regulations, by identifying better risk indicators, by enhancing the STR system, by providing survivors with a pathway to access bank products, but also providing guidance to financial institutions, so that they can better identify and avoid dealing with businesses that benefit from modern slavery. Our final report, “Unlocking Potential: A Blueprint for Mobilising Finance against Slavery’ was released on October 12th, 2019, and focuses on 5 goals with practical measures in support. The 5 goals are, 1 – Comply with all anti slavery laws, 2 – Know and show modern slavery and human trafficking risks, 3 use of leverage creatively to mitigate and address modern slavery and human trafficking risks, 4 provide and enable an effective remedy for modern slavery and human trafficking harms and 5 – invest in innovation for prevention.
For more information See Here:
FCN: Q3 – You have been at the forefront of Moneyvals work as a FATF Regional Style Body leading this FRSB (covering 34 member states and territories primarily in Eastern and Central Europe) as its President for many years and have seen significant improvements in this Region as well as continuing challenges. – How do you evaluate progress in the region and what’s still required and why?
DT: My last 7 years in the leadership of Moneyval were indeed very much focused on effectiveness. This approach requires a lot more from countries, and the pressure on all stakeholders, from the private sector to law enforcement, is high. But it is worth the effort: across the board, we definitely see improvements in the region: Significantly higher political commitment, increase in resources, more risk based inspections, higher quality STRs and an enhanced focus of law enforcement to follow the money.
There is still a lot to do though, and even as Moneyval Countries have upped their games, those seeking to exploit weaknesses and vulnerabilities have been able to do so. The financial crime environment is dynamic, and our responses necessarily lag behind those that can be more agile and have a disregard for laws and borders. That we respect laws and borders differentiates us positively, but that said we have to speed up on delivering not only what we have already committed to but to explore how to go further. Very often, unfortunately the improvements we see are the result of an impending country visit or worse on the back of a failed country assessment, which only then incentivises action, for example as a Country is faced with the consequences of a possible grey or blacklisting. I wish that some countries would give AML/CTF a higher priority at an earlier stage – to make good on the commitments they have made and to have a self assessment model that can be relied upon. The negative effects of criminal activity generating huge sums, undermine development and individual prosperity in Countries which can ill afford it most.
FCN: Q4 – You have covered a lot of ground in your career so far and managed across a number of roles – Is this beneficial to see different aspects of the fight against financial crime?
DT: Having worked in the private sector, at an FIU, in supervision, development assistance, and sanctions enforcement, I have learned that we can only combat ML and TF jointly. This is why organised crime is so successful: they combine experience and practice from all sides. We must become better at breaking down silos, not just across Government, but also between the private and the public sectors. Our responsibilities are collective, especially if we believe that it’s our society’s we are working to protect.
FCN: Q5 – You have started a new role as Head of Switzerland’s Financial Intelligence Unit, the Money Laundering Reporting Office, Switzerland (MROS) in the summer – but you had led MROS in its early days too. You have heard of the phrase never go back! – is this a case of unfinished business?
DT: Things have changed dramatically since I left MROS in 2000. Resources have been increased significantly, AML and CTF are definitely a priority, and MROS is seen as a key element in fighting financial crime. It’s like going back to a restaurant where you always liked the food but which now offers a much better service!
To read more about MROS and it’s work see the 2018 Annual Report:
FCN: Q6 – What will be your priorities in your new role and what do you hope to achieve?
DT: We have already developed a strategy that will be the basis for our future work as part of the Swiss Federal Police. It will build on the current strengths of the system, as recognized in the last FATF Mutual Evaluation Report of Switzerland, and address areas where we can further improve. Key elements will include public-private collaboration, enhancing national security through more effective international cooperation, and, better collaboration with Police and prosecutorial bodies in Switzerland and beyond.
FCN: Q7 – What are the biggest changes you have seen and can you predict the changes that are likely to happen in the fight against financial crime?
DT: Organised crime is agile, and exploits weaknesses in our preventative systems, including the shortcomings in cooperation and collaboration. Many ML cases have died in the silo of an individual agency, or as a result of a lack of data sharing. Professional money launderers use technology, in particular have adapted to digitalization, move quickly, and are usually at least one step ahead, while our responses tend to be reactive, and we often invest resources on methods that may have already become redundant. Hence, we need to increase our understanding of the here and now, not just the past and to anticipate future threats. This can’t be done, by one agency alone, and is a collective responsibility. We must though enable an environment to exist where better information sharing can be achieved, idealy both at the tactical and strategic level.
FCN: Q8 – In terms of strategic thinking, what should a leader in Fighting Financial Crime be focussing on?
DT: AML/CFT leaders, are not just leaders of teams with important responsibilities, they are also thought leaders, enablers and collaborators and see their roles more broadly than most. These leaders would do well to invest more time to better understand how criminal threats are being presented and how for example professional money launderers operate, to be more candid about the weaknesses of their own defence systems, and to raise a challenge if these weaknesses persist, to constantly challenge our beliefs and conventional wisdoms, to be more proactive, and to help create a new ecosystem where innovation and change, are embraced so as to positively impact on the effectiveness of our work. Let’s create diverse teams that analyze and investigate ML and TF composed of experts with different backgrounds and approaches. Let’s also try to better use the current legal frameworks, build trust and confidence, and accelerate progress, based on what we can do now, and in time only seek to legislate where absolutely necessary.
FCN: Q9 – If you could wave a magic wand and make one wish come true – what would it be?
DT: That we have in Switzerland, up and running a system which is both more effective and efficient in fighting financial crime, one where we can share relevant information between private and public, nationally and internationally, which fully respects fundamental rights, including data protection requirements, and allows us to rapidly identify and go after the needle in the haystack.
And then I am happy to arrange an appointment with Lord Voldemort!FCN: FCN
Daniel Thelesklaf is the Director of the FIU of Switzerland (MROS), Vice Chair of the Egmont Committee and former Chair of Moneyval. He is a lawyer by profession with nearly 30 years of experience in Anti-Money Laundering and Anti-Corruption. He joined the Federal Office for Police in 1998 to become the first Director of the Swiss FIU after a career in the private sector (banking and insurance). From 2001-2003, he was responsible for the establishment of the Liechtenstein Financial Market Authority. After that, he worked as consultant in various anti-money laundering, anti-terrorist financing and anti-corruption projects and technical assistance missions, mainly in the Caribbean, Eastern and Central Europe and in various CIS countries, for the IMF, the Council of Europe, the UN and the OECD. From 2008-2011, he worked as Executive Director of the Basel Institute on Governance and supervised the activities of the International Centre for Asset Recovery. Since 2012, he was the Director of the Liechtenstein FIU. He is also a lecturer at the University of Lucerne, Switzerland.Daniel Thelesklaf is the Head of Switzerlands Financial Intelligence Unit, (MROS), since the summer 2019. Prior to that Daniel led Liechtenstein’s FIU, since 2012.