Wunderschild-An AI Driven Platform for Financial Crime Intelligence

Schwarzthal Tech has developed an AI- Driven platform (Wunderschild) for Financial crime intelligence. The main aim is to democratize the fight against the Financial crime that is taking place at large now a days. They are also aiming to create a big global community to join the campaign for having a safer world free economic crime.
Wunderschild Technologies revolutionizes compliance and investigation technique. It provides intelligent solutions based on Network Assessment, Data Linkage, Machine Learning, AI. Wunderschild employs advanced multilingual name Matching algorithms and entity resolution methods to search and detect hidden connections between entities. The AI-Driven engine is drilling continuously to find new connections and hidden links between parties. Following are the excerpts from interview with Regtechtimes-

You are the leaders in Regulatory Technologies – How do you define the term Regtech?

Originally, Regulatory Technology (RegTech) encompassed tech-driven applications and services aiming to help industries to comply with their relevant regulations. Over the last five years, the RegTech sector evolved from offering plain checkbox databases for prudential requirement towards more sophisticated and proactive compliance solutions.

How big is your team and who are the critical players in your journey to build the successful Regtech company?

Schwarzthal Tech has a 12-strong team blending experienced financial sector professionals and young tech enthusiasts. Startup bootcamp, a leading European accelerator was a major player contributing to our development. Looking forward we aim to democratize the fight against financial crime and to create a big global community that will join our campaign towards a safer world free of economic crime.

Brief overview about your product/service offering?

Schwarzthal Tech is building an AI-driven platform (Wunderschild) providing the next generation in financial crime intelligence, that leaps ahead of KYC (Know Your Client) and introduces a dynamic, multi-dimensional and forward-looking KYN (Know Your Network ™ ). Cutting edge algorithms enable users to assess hidden connections with suspicious or criminal networks, to perform in-depth assessments, to better qualify and score risks better.

Our turnkey solution uses advanced algorithms that gather global multilingual data including companies’ ownerships,  disqualifications, insolvencies, adverse media and sanction lists and allows you to visualise, assess and analyse the network and the underlying risk of a counterparty.

Leveraging a network-driven vision using graph-based technology, Wunderschild serves both investigators and compliance professionals in their quest for deep-dive analytics tools. Investigators are able to assess the hidden connections within criminal networks and explore their dynamics in the foreseeable future. Compliance officers are using the platform to analyse quantify the exposure to financial crime risk of their clients. Wunderschild employs advanced multilingual name matching algorithms and entity resolution methods to search and detect hidden connections between entities. The AI-driven engine is drilling continuously to find new connections and hidden links between parties.

What inspired you to build the above product?

During my time with a leading commodities brokerage firm, I witnessed organised crime infiltrating and abusing the carbon emissions market, one of the fast-growing emerging energy markets throughout the 2000s. Fraudsters of different nationalities and various background exploited the weaknesses of the banking and financial system, resulting in what was known as the crime of the century or the carbon connection. In the aftermath, tens of billions of dollars were being misappropriated by transnational organised financial crime.

Both banks and law enforcement seemed helpless and unable to take the right actions. Later, when I got insights about what tools and processes, banks were using to tackle financial crime, it was clear that they are not even close to understanding the underlying risk. Financial institutions and most big companies have a box-ticking approach when dealing with matters related to financial crime. This passive approach is a fertile ground for criminal and abusers to take advantage of the system’s weaknesses.

Based on this experience I published several books revealing how criminals use innovation to better defraud, spotting the vulnerabilities of the financial markets and taxation systems.

Hence, in 2019 with my cofounders, we decided to leverage this experience and our understanding of the way financial crime work and to use the right technology to help companies to tackle efficiently financial crime.

What was the most challenging/critical aspect of your journey as the CEO of  Schwarzthal Technologies?

The pandemic outbreak was the main challenge in my journey as CEO of a young RegTech startup/ The lockdown came only one month after we launched the beta version of our platform. Finding the way forward in this new world has strengthened our team and the relationships with our customers.

How did you overcome initial mindset challenges of the regulators/supervisors?

Regulators and supervisors are facing unprecedented challenges. While most countries are trying to keep away criminals by addressing such threats with tougher regulations, some other countries are exposed to the risks of being highjacked by groups specialized in financial crime. Economy and crime are both globalized. Therefore a material threat in one country will eventually affect other regions of the world.

In such matters, regulators and supervisors should move to proactive approaches and not rely entirely on financial institutions to tackle threats like global money laundering or uber-terrorism.

Where do you see yourself in the next three years?

In the next three years, we plan to add a new type of data including information bout ships, vehicles, cargos and real estate properties; Our platform will also propose sound tools for asset tracking.

Which countries do you feel you can expand to with your offerings?

Our product is relevant mostly in those countries for which we have relevant data. While Europe, ex-Soviet republics and the United Kingdom were our initial target, we currently aim to expand in Asia. We recently incorporated in our product data about Indian companies and this is the best test-pilot for starting our Asian journey.

Have you built any consulting model for the consultants from different countries?

One of our key priorities is to establishing strong relationships with local consultancies with capabilities to constitute bespoke value proposition teams and ambassadors for our product

Your thoughts on use of technologies like AI, Blockchain, RPA, Machine Learning in Regulatory Domain.

Artificial Intelligence, Blockchain and Machine learning are overused terms. The vast majority of solution providers in the RegTech space are overstating their capacities of developing AI and ML solutions.

Only a very few big tech firms have the ability and the resources to develop, test and implement bespoke AI and ML-driven solutions. Most tech firms are leveraging existing infrastructure and libraries developed by providers like Amazon Web Services.

While such turnkey AI solutions have undisputed advantages they are not calibrated to deal with financial crime risk. Therefore, even banks using very advanced tools have big issues when onboarding new customer or assessing their existing ones.  Most banks are spending between 5-10% of their revenue on compliance, but they end up with low performance and high-cost solution. There is definitely a place for AI and ML-driven solution, but the industry is in a very early stage in this regards. The revolution in the RegTech space will speed up when tech giants like Google or Amazon will step in and have their word in this matter.