Episode Summary
In this episode of The Industry, Zachary Plotkin and Sanjeev Menon sit down with Sarah Beth Felix for a candid conversation on the future of financial crime work.
Sarah Beth walks through her unconventional path into AML and financial crime, to becoming a leading voice in community banking, fintech, and regulatory remediation.
The discussion digs into what’s truly broken in AML today; not just technology or headcount but hiring the wrong people for investigative roles.
Transcript
Zachary Plotkin 00:05
Hello everybody, and welcome to the industry. What industry you say? The industry the video series where we’re going to discuss the job market, career guidance, market Intel and everything in between. My name is Zach Plotkin, joined by my co host, Sanjeev Menon from Madison Davis, and today we are going to be talking to Sarah Beth Felix, welcome Sarah.
Sarah Beth Felix 00:27
Thank you. Thanks for having me
Zachary Plotkin 00:29
so it’s, it’s very interesting. I’m very happy we’ve been trying to do this, you know, get together for a long time. In that sense, we’ve known Sarah Beth for, I don’t know, I feel like almost a decade now, going back originally, Sarah, you and I met and Sanjeev at a networking event down in Florida. You snuck in tequila from Texas to the event that there was an open bar to and that it was just a great way to build a rapport with anyone, but by starting out that like that,
Sarah Beth Felix 01:03
yeah, I mean, it was really good tequila, so and you can’t, you can’t get it in Florida, and then I ended up meeting y’all, and then I think you ended up finding the tequila, or maybe I shipped it to you.
Zachary Plotkin 01:14
No, you, not only did you ship it to me, I then made a placement with someone in Texas, and I asked her to ship it to me as a thank you, and she shipped it in a box with, like, T shirts and stuff like that, because apparently you’re not allowed to ship that tequila over state lines. So might have just, might have just admitted to that crime, but I’m okay dealing with it, whatever the consequence may be, this
Sanjeev Menon 01:38
tequila, oh my god. It’s
Sarah Beth Felix 01:42
really, really good. It’s filtered through a volcanic rock. It’s organic. It’s fantastic.
Zachary Plotkin 01:46
Anyways, this is really what you get when you start talking about financial crimes and compliance. Right here you get solid tequila talk. So, you know, we wanted you on, just because I think people would really be interested to kind of hear about your career, hear about what you’ve been up, to hear about hyper s and the bank that you’re starting. You know, there’s a lot of different, lot of different areas in which you have covered over the course of your tenure, but let’s jump right into it. I want to talk about kind of you, and why don’t you tell us your story about how you got to where
Sarah Beth Felix 02:21
you are? Yeah. So I graduated right before September 11, and thought I was going to be a stockbroker. My dream was to trade on the floor of the New York Stock Exchange. Got my seven and September 11 happened, and that, just like changed the course of my career. Spent some time in Romania, and, you know, got to see corruption like firsthand. You know, there were only fears post Ceausescu, who was a dictator in Romania. And I don’t know, I think, like looking back, I just kind of see all these things kind of leading me into then, at the time, I started running a payroll check cashing fraud program for the world’s largest check processor at the time. And you know, so I went from, like, wanting to be a stock broker to something completely different, and then I found I was really good at it. And I think it’s because I had what my dad ended up describing me as. I had the mind of a criminal, but really good ethics. So, like, I could predict where these criminals would hit and what it would look like. Of course, this was back when everyone and their mom was writing checks, and people were getting paid by check, right? This 2002 and yeah. So that kind of started me in the financial crime world. And then when I was there, I got a taste of massive check fraud rings, which then they had to launder the funds to, you know, get them into the financial system. And then once I saw that, I was like, This is my jam. There’s nothing else for me. And I have not looked back.
Zachary Plotkin 03:54
So it’s really made you realize how many sketchy people there are in the world,
Speaker 1 03:58
so many and check frauds back. It is bigger than ever,
Sarah Beth Felix 04:05
I know. And that is, that is kind of the odd thing. I mean, you know, we’re talking about 2324 years ago, and it’s still some of the same typologies, some of the old like check washing and counterfeit checks. And they’re going to Staples and buying check stock with the magnetic ink printer, and they’re ripping off stuff that they get from the mail. I’m like, am I having deja vu? And I am, because these are the same typologies we saw in the early 2000s so potentially
Zachary Plotkin 04:32
the same people getting ripped off, just going through the same thing, just a little older, because they’re the only people somehow still getting mail and mail checks.
Sarah Beth Felix 04:41
Yeah, yes, yep. I would, I would, I would say that’s probably accurate. Yeah.
Sanjeev Menon 04:47
I mean, my landscaper, whenever he asks for, you know, me to pay the invoice, he’s like, yeah, just leave the check in the mailbox and I’ll come pick it up. And I’m like, that is never happening. My man, that is no, no way. You. I don’t care how safe my neighborhood is, it’s never happening. You’ll come pick it up and you’ll take it from my hand.
Sarah Beth Felix 05:06
Well, I can’t, like to be honest with you, I can’t even remember the last time I had a check for my personal bank account. I mean, I like, I have clients, bank clients who still pay me in checks, like, through the mail. That’s amazing. I’m like, Well, you know, we have this thing called wires and ACHs.
Zachary Plotkin 05:22
It’s a lot quicker. It’s easy. It’s more like just button clicking.
Sanjeev Menon 05:28
I mean, it takes me, it takes me, like, four years to get through a, you know, a checkbook. It should, it should we don’t, we don’t. We don’t need checks anymore, I mean, but especially with the fact that check fraud is coming back randomly. It’s bad, yeah, elder abuse at this point.
Sarah Beth Felix 05:48
Yes, it is.
Zachary Plotkin 05:51
So after you you left stock broking and you moved into the compliance space. Talk about your journey, which, you know, small banks that you went to, which fintechs that you went to, and kind of talk to us about, kind of what you saw after those types of things. The purpose of me asking is, I wanted to get how you started your consulting company and kind of really just starting to follow dirty money.
Sarah Beth Felix 06:16
Yeah, yes. See, this is not a prop. I my throat actually needs this. So I promise you, that’s these, and it’s my only cup in my office. But yeah, so after that, I did a remediation for a multi billion dollar multi state institution at the Pacific Northwest they were one of the first institutions to have an order for not complying with the 2005 FinCEN FFIEC exam manual, our first version of it, 20 years ago. And so, and
Zachary Plotkin 06:47
was that Right place, right time? Um,
Sarah Beth Felix 06:49
yeah, yeah. I knew the Chief Lending Officer. He was a friend of the family, and so when he knew what I did, it was like, Hey, you can you come up here? I was like, Yeah, sure. And it was, it was a lot of fun, because I like to fix stuff, and that’s something that I probably get genetically, because my dad’s the same way. And, you know, you just like, like, I see something that’s broken and I want to fix it, and that’s what I see in each of the three companies that I’m involved with. We’re all fixing something that should be not broken, right? That should be better than it is and and that’s basically how I started my consulting company. I was running a national practice at the time for another firm, and I had clients that were like, Hey, we really like how you do business. We know it’s a little bit different than the company that you’re at, you know, if you’re ever thinking about starting out on your own, we would support that. And I’m like, 30 something years old. I’m like, like, I’m in this male dominated world. I’m working with all these community banks. There’s not a single woman in the executive, you know, org chart or on the board thinking, all right, well, so I took a flyer, I started it, and that was 14 years ago last month, and since then, you know, I’ve been working with community banks. I think the smallest bank I’ve ever been in is 18 million in assets. But yeah, I mean, my like, my heart is in community banks. I want community banks to win. I don’t want to see continued shrinking of community banks, and I think part of how we get there is making sure that they’re seeing their threats clearly, instead of just saying, Oh, that doesn’t happen in my community because I’m only 18 million in assets. That’s the wrong mindset to have. So, you know, since then, been in a couple community banks? Well, lots of community banks, but and then lots of global fintechs, lots of weird fintechs that were like, not even FinTech well, they are fintechs now, but they were, they were just technology companies that dabbled in the movement of money. This was before we had the term FinTech, right? This is 1314, 15 years ago, before we had that term. And yeah, so, you know, I helped them see their threats clearly. I think that’s probably the biggest thing that makes me different from my last firm, and that’s what I wanted to fix, was how we approach things.
Zachary Plotkin 09:14
And from your perspective, from like a community banking perspective, or a FinTech versus a larger bank, from a career perspective. Do you think people could get more out of it in compliance or financial crimes, like, are the experiences wildly different?
Sarah Beth Felix 09:29
Are the experiences, why wildly different from a community
Zachary Plotkin 09:32
bank to right? No, no. I’m saying from like a JP Morgan to like a small a smaller bank. Do you think, as people who are watching this potentially could be looking for jobs. Potentially could be getting into the space. Do you think they could be get more value working at a smaller bank than, say, a larger bank, from your opinion, as someone who’s been on the inside of
Sarah Beth Felix 09:50
both Yes, and the reason for that is because, when you’re in a smaller bank, and by smaller, I don’t mean the, you know, $20 million banks, I mean, you know, a couple of. Million dollars, which is very small compared to a tier one bank. Yeah, I think people in those positions, they have to be an expert at all areas that flow into the AML world. I’m not saying that they should be an expert at general compliance and an expert at governance and an expert at AML, but when you are an AML only position at a community bank, you really have to understand the breadth and depth that sanctions and AML presents to your bank. Or when you’re at a larger bank, you’re pretty siloed, you know? And that’s because they have a huge team, so they only need you to stay in your lane, and your lane is going to be quality controlling the high risk customer reviews, right? Or quality controlling the EDD, or quality controlling the negative news, or something like that. And in a bank, you really have a lot more freedom. You have a lot more power to say, hey, actually, we’re not going to do this at all. And instead, we’re going to do this. And you don’t really have that freedom. And, yeah, I mean, I like a community banks for that reason. I don’t, I don’t, I don’t work with large banks because it’s like trying to steer a ship. I mean, it’s very, very, very difficult, right? I’d rather be in a little nimble speed boat that I can go, Hey, let me talk to your business intelligence, folks. Let’s stay in this report up. Let’s see if it gets us anything at a larger bank. You know, that’ll take six months.
Zachary Plotkin 11:22
I’m curious, how did you you kind of get into this weird LinkedIn following of posting about all these No, you have a following. People come up and have asked me about your background and that they haven’t met you, but they follow you because of your posts, you know. And the only other person I know that does posts like you, that have a following is you and Jim, Jim Richards, and, you know, how did that kind of start happening?
Sarah Beth Felix 11:46
Um, I don’t know. I think, like, I just always tried to stay me. Like, like, I’ve always been a straight shooter, and it’s not always fun, right? And then I think LinkedIn just kind of gave me the ability to be like, All right, I’m gonna, I’m gonna say some real things, and it’s gonna piss some people off, and it’s gonna strike a chord with some people, and it’s gonna make people feel seen, and it’s gonna make people unfollow me, and, you know, whatever happens, I’m just gonna see, see what the response is. And I think the more and more that we can get past formalities, I think that’s what has plagued our industry for quite a long time, is super formal stuff, and one our job’s already super serious, like we don’t need everything buttoned up to a T in order to talk about it. And that’s where I feel like that’s really what I was trying to go for, was, have you know, at least be one of the people, along with Jim, and I’m sure a few others, that tell it like it is, open up the lines of communication for people to say, oh my gosh, like, you’re totally wrong, or, yes, you’re totally right. And I know what that’s like. What people don’t see is when I make posts that aren’t necessarily how do I say this? That kind of like ruffle some feathers. I get so many messages, so many direct messages from people saying, You’re 100% right. I interviewed at that exchange, and they blah, blah, blah, blah, blah, you know. And I mean, I get at least three to five for every I mean, personal, direct, people that have said you are 100% spot on. And then, of course, you know, I get a few people that are like, Oh, you’re totally wrong. And I’m like, great, show me the receipts. And they can’t so, you know.
Zachary Plotkin 13:37
But I think, no, I was just gonna say LinkedIn is great for that. I mean, realistically, like LinkedIn can be a very, very dry tool. And I think a lot of people who are not active on it do find it to be very dry and that it could be endless scrolling, just like many of the apps that we have that we do, endless scrolling, and finding someone where they actually speak and they want to debate or they want to get into an engaging conversation is actually so helpful. I mean, in any way you could find yourself to do it and get interaction is great for me. I still rely on movie quotes and and TV shows, and it’s a different form, different form of interaction, because they try and bring some some excitement to a dry tool. But I wanted that.
Sanjeev Menon 14:18
But the dialog is the most important thing, correct, right? Whether they agree with you or they don’t, it doesn’t matter the conversation. Starting the conversation or facilitating it is the most important thing. Yep, agreed. If they can’t prove their point, then whatever. It’s just their opinion. But who knows, they might change your mind, or they might change someone else’s mind, or whatever the whole point is to create dialog.
Sarah Beth Felix 14:40
Yep, yeah, and that’s what we need. I mean, we like we all know that the AML industry as a whole is plagued with ineffectiveness and inefficiencies, and while you know, snarky LinkedIn posts that tell the truth aren’t the thing that’s going to cure either of those, I feel like it’s a good. You know, required first step to at least have the conversation, to have, you know, a free, free exchange of ideas. So with LinkedIn, one of the best things that we can do is exchange our ideas, because there have been plenty of things where I’ve been proven wrong, and that’s a good thing, because then I learn and other people are the same way, but if I never bring those up, and then I’m proven wrong, or I’m proven right, then we all just kind of sit there and own little, you know, you know, echo chamber, and we’re like, oh, I’m totally right, and then we never hear anyone that you know can challenge us. And I think that that makes us stale. I like being fresh and new and learning things, even at, you know, almost 50, and
Zachary Plotkin 15:41
so when you were a BSA officer, I mean, I have to imagine you were looking for someone to speak up when you were, when you were earlier in your career, where you could find this information. I mean, other than just like going to big networking events and just complaining to people, not that you were doing that, but it’s just fascinating to me, kind of how, if people do have some small following, or any type of following, how they got it and what they talk about, and you know how it kind of stemmed from either they weren’t getting it themselves, or a voice just needs to be heard. And I think you you’ve kind of mastered that without trying, yeah.
Sarah Beth Felix 16:15
Well, thank you. Like, I feel like when I remember being an AML officer, I wanted somebody who was operational, who was in the weeds, who knew how to how to make things be applicable. And because I feel like we do a lot of ethereal like, oh, you need to have a risk assessment. No. Einstein, thank you. We know we need to have a risk assessment, right? And I remember going to all these conferences going really, I flew all the way here to hear somebody tell me I needed a risk assessment. Thank you. I couldn’t have just read that. This is a first sentence of that chapter. So that’s where, like, I really wanted, you know, I wanted my personality to shine through, but I really want to give something of value, because I feel like community banks and credit unions, they get nickeled and dimed, because I’ve been on that side, and they get nickel and dimed for any type of advice. It’s like, okay, great. This advisory came out, well, what do I do? And then the consultants go, Oh, it’ll be 1010, grand for me to tell you. And I’m like, no, just give them a first few few steps. And that’s where, like, I wanted to be that, because I didn’t have that.
Zachary Plotkin 17:19
And that’s where the consulting practice came in. That’s where all these other things came in. And it’s kind of fascinating to me. So from a from a consulting perspective, you’re working with a lot of community banks, you know, from the regulatory kind of environment that we’re in, what do you think is kind of keeping a lot of these organizations up at
Speaker 1 17:41
night? Well,
Sarah Beth Felix 17:46
I feel like, you know, we went from three pretty solid years of kind of waiting for that regulatory exam shoe to drop, right? We’re just kind of waiting because there’s such a difference between how the NCUA examines versus how the OCC examines. And I feel like a lot of my community bank clients were just kind of like, oh my gosh, this is it, this is the exam. I’m going to get raked over the coals. And then now we’re in a different time where there’s not a focus on our area, but now the stress seems to be, well, what if, right? What if I do business with a cartel? Because now there’s a criminal component to that, and now it’s like, well, how do I know that? Do I just have to wait for OFAC to give a list update in order to figure out? So I think there’s some, there’s some stressors of, how do I keep up with the huge shift that has occurred. And how do I keep my board engaged and my executive management engaged so they don’t start poaching people, poaching technology from my group? Because whatever happens right now, I’m going to be held accountable for in three years,
Zachary Plotkin 18:57
and right now, right now, with, you know, the regulatory environment, also everything going on with AI. Everyone’s been given these, all these initiatives to basically decrease head count and figure out solutions with AI. Have you been seeing that as well?
Sarah Beth Felix 19:13
Yep, and it’s unfortunate, you know, I think Bank Board and executive management don’t look at AI and say, Oh, let, let’s test this. Let’s see if we can constrain it, define it, test it in one particular process or area within the financial crime function. They go, Oh, I can pay for software and eliminate three people. Done. So they’re looking at it from like, an efficiency standpoint and from a reduction in headcount. And that’s, that’s what they’re like, lenses, but, yeah, I think boards and executive management see the benefit of AI as purely efficiency and head count reduction, and I think that is a massive red flag, that is that that should not be at the forefront of their mind. It should be. Let’s see how AI can help us make better decisions and help us get more. Suspicious activity. But instead, it’s like, let’s see how AI can help us take away three people from that area, or justify right? Of course, they don’t ever say that, but all the, all the fluff they use when you, when you, when you read between the lines on that, the fluff is, I want to, I want a reduction in head count. It’s not like I want to find human trafficking, you know, right? Who doesn’t
Zachary Plotkin 20:21
love the term right sizing,
Sanjeev Menon 20:25
cost reduction, all right? Because, sorry, one of the things that and going back to, you know, we’re not going back to, but going to our salary guide, which we just published, I don’t know if you read the content before the actual, you know, salary data, you know, we discuss AI and the employers that are most competitive in this market where you get engage AI, because it’s a beautiful tool, if you use it, right, but the best, the best way to retain the human, the human talent, which you’re going to need, and also make sure that Those people have all the tools that they need to get their job done. Is you keep competitive salaries, but you also Up skill in the job, instead of expecting people to do it on their own time, you make it a part of the work culture, right? Because people are so scared of how is it affect their job, because they don’t know what tools to come to, you know their employers using and where, sometimes, right, they don’t know how to use those tools that they do know where they’re being implemented and used. And the the companies that keep their talent and empower people are the ones that don’t use AI as a human replacement, the exact opposite. They use it as a another tool of empowerment, right? And where we learned that firsthand, and we made that public in the Salary Guide, and me and Zach just went to a client that is doing that exact thing. There are TVs everywhere, where they were, they were promoting this thing called AI apprenticeship, which you get, which anyone could sign up for so they could learn about the tools that the bank was using, and just, you know,
Zachary Plotkin 22:08
AI in general, natural upskilling, yeah, and it was not, not a large bank. It was a small community size bank. But if, no, I like that, if you know, unfortunately, like, there are some organizations that are going to right size, which means that the people that you need to have probably need to be have the right mindset, which I wanted to transition to talk about hyper s. So can you tell us about what hyper s is?
Sarah Beth Felix 22:35
Yeah, so hyper s research was short for hyper suspicious. It was born out of a huge need we saw in the market about five years ago, another financial crime person along with two industrial psychologists, the four of us decided to have a conversation about, what are the things I keep seeing in remediation. What’s the biggest issue? It’s not technology. It’s not number of people. I mean, yes, all of those are things, but even when we right size those, even when we do have enough people and we do have the right technology, we still see issues. What’s the underlying problem? And what we found through several years of research was that people aren’t they might have enough people, but the people in those spots may not be what we call hyper suspicious. And by that, the perfect example, the one I always talk about is if you look at that Deutsche Bank order from the state of New York several years ago, they had people in the financial crime function that dispositioned alerts about Jeffrey Epstein as he was just being a nice guy. He was just helping out these women from Eastern Europe. And that, to me, is the opposite of what a hyper suspicious person should be doing. And a hyper suspicious person in a bank should not be customer facing ever. They should absolutely be in the, you know, secret realm of our world, and the way that they should be looking at anything that comes across their desk, whether it’s an alert for the same customer that they keep seeing day after day, or it’s a brand new customer, it should be starting at that ledge of suspicion where they think the absolute worst about that customer, right? Again, not, a customer facing. You have to, you have to start at that ledge of suspicion and then work yourself off that ledge of suspicion with open source intelligence and research and analytics and critical thinking and all of these things. But if you start way off that ledge of suspicion and you try to work yourself up to that ledge, it’s never going to happen. And we know that from like a physical test of that too, right? People, if you put them right on the ledge, they will back off, but if you tell them, I need you to go out there and stand on that tippy top of the ledge, they’ll be like, No thanks, you know, and it’s the same thing in a financial crimes investigation. So that that was really what drove this, and what we found throughout all of our. Testing was that there were measurable traits in how somebody is wired that give us the best indication that person is going to be successful in the financial crimes investigation function. And this is something that is good for private sector, but also public sector. We had tested people that we would never hire in a million years, because if Jeff Epstein was standing right in front of right in front of them, they would figure out a way to justify that he was a nice guy, right? So we tested those people. We tested people that are super hyper suspicious about everything, and then we tested a whole bunch of law law enforcement agents, internationally, domestically, everything, and we were able to come up with 16 different traits that we can actually measure through a party called Hogan, they are like the gold standard for clinical psychologists. Yeah. So it’s actually been really, it’s been pretty cool, because the banks that have come to us that we’ve done work for under hyper s research, the few of the ones that haven’t listened to us. And when we’re like, Ah, you probably shouldn’t hire this person because of XYZ. You know, you might want to look at somebody that has a little bit more of this in this area. They’ve all come back and said, You’re right. We should listen
Zachary Plotkin 26:13
to you. You guys have that itch to say, I told you so.
Sanjeev Menon 26:16
Our executive coach, our executive coach at Madison Davis, gave me my my Hogan test earlier in the summer. It was enlightening, and I felt exposed and, like, vulnerable. I was like, but it did prove that I was actually very good at this job. But there were, there are other things where I was like, Wow, am I? Is that really? Is that really me? Yeah, yeah. It’s a really, it’s a really good tool.
Sarah Beth Felix 26:43
It is. And Hogan isn’t like the other ones that only tell you the bright side about you. Hogan gives you the bright side and the dark side, yes, which is the real stuff, right? We all like we all want to know the areas that we can improve. But there’s also some indicators of the dark side of your personality that actually played really well into the financial crimes investigation function. So Hogan looks at like 60 something traits we’ve we’ve boiled that down to 16 that are of utmost importance in finding a highly effective financial crimes investigator.
Sanjeev Menon 27:16
Are you allowed to share those 16 traits, or is that is that proprietary? Is that something you want you’re not secret sauce? Got it cool.
Zachary Plotkin 27:24
Understood it’s really fascinating, though. And you know, since you told me about it, I do think it’s groundbreaking. I do think more organizations should leverage it, just because, again, we’re in an industry where we deal with a lot of people. There’s always going to there’s tons of quantity, but finding quality is always the challenge. Yes, and this is something that, you know, it’s something you could check a box almost and from a quality perspective,
Sarah Beth Felix 27:50
yeah, yeah. And it goes, you know, it really tests the application of knowledge. Almost everything we hire on or we give a certification for is knowledge, but how do we know whether or not somebody is actually good in applying what they know? And that’s part of where that hard, that hard wiring, comes into play, and that’s why Hogan is really, for me, the gold standard for what we’re using it for, because people will try to game the system and say, Oh yeah, I know why they’re asking this question, that they’re going to answer differently, but Hogan, because it’s used by clinical psychologists, they they are, they are able to counteract that gaming in the system that happens in other personality tests. But this one really tells us, this person cannot play well, one of the terms that we like to use, this isn’t the term in Hogan, is playing games, and there’s an important part about that where somebody is able to in in a micro second, play a game in their head with the activity that they’re seeing. And that’s part of that mind of a criminal thing, right? But the other thing that we’re finding that’s also that that’s also useful is not just the hyper suspicious mentality, because we don’t want people that just hang out on that ledge of suspicious activity and think that everything is suspicious, because there are those people, and they will become a bottleneck for certain types of investigations. So we want people that also have compensatory personality traits, right, that are curious and analytical and a whole bunch of other things. So we don’t want somebody who just thinks everything is suspicious is gonna escalate every single alert because then their manager is gonna not like them. So there’s other things along with being hyper suspicious, but that’s the that’s the term that we came up with, right? Is a hyper suspicious mind.
Zachary Plotkin 29:38
Just be cautious about everything and everyone always,
Sarah Beth Felix 29:42
yeah, but, but then you have to do something with it, right? So, like, so the perfect story for this was, this is when I had to build a team of 18. This was in 2005 and they told me that I I could only hire two people from outside. And I’m looking at the. Institution, and I’m like, I have to 16 people internally. So what I started doing was a very rudimentary version of what we do now under hyper s, but I would take suspicious activity, put it in Excel spreadsheet, and I’d write a little blurb about the activity. I’d put the transactions, I’d hand it to the person, and I timed them, and I wanted them to tell me what they saw that was off. Hey, can you tell me what you see here? And if they were like, I out next. Yeah, right. But then I had somebody who was an art major that came in, art major, okay, they came in and they were like, oh yeah, this is off. I think that’s weird as hell. And they were like, they they went through this whole thing, they were totally off on what they thought was happening behind the scenes. But that didn’t matter, right? I can train that, that part of it, but the thing I couldn’t train was that initial gut reaction to something being off, right?
Sanjeev Menon 30:53
That person had the right intuition. Even though they do they do nothing. They just understood that they had that, that it factor like that. Yeah, sketch ball.
Zachary Plotkin 31:04
So in a weird way, you can say people are born to be compliance officers. Yes, yes. 100% put that on a quote card.
Sarah Beth Felix 31:16
That’ll that’ll be our next swag after follow dirty money. Oh, back around and find out we’ll do compliance officers AML. Compliance officers are born, not raised.
Sanjeev Menon 31:27
No, they’re all art majors, that’s what they are.
Zachary Plotkin 31:34
So So I know we’re coming up on time. But lastly, I wanted to ask you about your most recent venture, the bank, and you’ve with hyper s, with your own company, and now you’re starting a bank. You know the banks? Yeah, it seems like the bank’s been around for for a couple years now, and it’s slowly but surely growing. But I guess you founded the bank with,
Sarah Beth Felix 32:01
yeah, yeah. With Damon, yeah. So we that actually was born out of a thing I wanted to fix, which was the de risking crisis that was happening in island nations that I thought was very unfair. In 2015 1617, it’s still going on, but not at the rate that we saw it back then. So 2018 I met Damon. He was deploying his technology, which now we’ve leveraged into the bank, at a bank. And we met when I was with the bank, and I started telling him what the biggest issues were for foreign financial institutions, and I don’t understand why they’re getting cut off. And so we went down this path of starting a foreign financial institution, bank like we wanted to be an upstream correspondent bank for foreign financial institutions that was hyper compliant, that set the standard, because this is the only thing we do right, very narrow focus. It’s not like a tier one bank where they’ve got tons of different revenue channels, right? This was our only revenue channel. We were going to do it in a hyper compliant manner, and we got a few years down that road, and the Fed reserved and like that, we were going to bank for in financial institutions. I think they probably take a different view of it now, given the current administration, but we can’t go back in time. So then we had to switch gears, and Damon figured out how to use our technology, our existing technology, to help domestic financial institutions. So that’s where we shifted. And then once we shifted there in 2020, we we saw that our technology was actually much needed in the domestic banking space. Most community banks and credit unions, when they send an FX wire or a USD wire overseas, they are losing out on revenue opportunities. And our technology, our proprietary technology, we have two pieces that have patents help community banks and credit unions get non interest income, which, who doesn’t want that? Now we can’t clear payments because we’re still in formation. So while our technology has been around for a long time, we are in the final stages of our regulatory capital round that we have to raise in order to open the bank in the state of Vermont. But we’ve loved working with the Vermont Department of financial regulation. Those guys have been awesome. They’re big cheerleaders of us. They love that we’re bringing innovation to community banks and credit unions, and they love that we’re bringing jobs to the state, and we’re doing it in a hyper compliant manner. I mean, there’s no other bank in the US that has two AML experts on the board, me and Dennis lormell. I mean, not a single other bank has, I mean, now, well, at least from what I’ve seen, there’s two banks that have an AML expert on the board that I’ve been able to find in the US. But we have, but we we were the first one, even though we’re still information, and now we have two experts on the board. So, you know, we’re trying to that rising tide lifts all boats. That’s what we want. We want community banks to get better. So not only does our technology add non interest income, but then they get access to our really good technology that we’re using to find dirty money.
Sanjeev Menon 35:00
Yeah, by the way, Zach, I think our motto has to now be rising tides, lift all boats. Because I feel like we’ve said that on every single episode of the industry at this point. It could be, and it’s true. It’s like, it’s my favorite thing working slogan, seriously. I mean, that’s, it’s, let’s make everyone better, right? I mean,
Zachary Plotkin 35:23
Sarah, you have found problems, and you’ve actually been one of the few people out there that have provided solutions in a very public way, with hyper s, with your current bank, with kind of the consulting piece, you naturally give advice. But you know, I’m very happy that we were able to have you on if anybody wants to follow Sara Beth, go to her LinkedIn page. Subscribe to her newsletter. If you want to ask questions about hyper s, go do that. If you want to go bank with her, go do that.
Sanjeev Menon 35:54
But sorry about Hey. Do you mind? Do you mind if I ask one encore question, considering this is, you know, a career guidance, you know, series with everything that we spoke about, AI, what you’re doing with the bank, working with smaller institutions, fighting the good fight. And you could answer this in any way you’d like. Do you have any advice for everyone watching on how to prepare for the next year, three years, five years, all the AML and compliance officers and analysts that are watching this for any advice on how to take it to the next level. Do you have any, any advice? Yeah.
Sarah Beth Felix 36:33
I mean, I think, I think probably one of the biggest challenges is going to be balancing the usefulness of AI in this role. I feel like some of the young folks that are coming up, they’re too dependent on AI, they’ve turned off that critical thinking part of their brain, and they go, Oh, I ran into a problem. Let me hop over to chat GPT and have them tell me something. And I feel like for the young people that are coming out of college, you know, maybe a first couple years as an AML analyst, and you’re getting super used to AI, I would encourage you to limit it, make your brain do the hard work, because in 1015, years, that lived experience of you figuring it out will never be an AI. Doesn’t matter how sophisticated AI is. AI is a machine. It’s not lived experiences. And that’s where I think that’s the biggest piece of advice. Like, if I were to go back and tell people, you know, in their 20s, do not over rely on AI, even for the basic stuff, like, hey, what’s the you know, what do you think this person means when they say this or something like that? You know, because I see it a lot, like in my house, my daughter has five minutes on anything AI related, that’s it, and then it’s blocked. And it’s because I want that part of her brain to struggle and to figure it out on her own. So I think that’s probably my biggest piece of advice, is, don’t get too comfortable with AI. Find out how to use it effectively, but don’t over rely on it, especially for menial tasks.
Sanjeev Menon 38:02
I actually really like that advice. It’s nuanced, right? It’s like, hey, learn the tool, but don’t rely on it. Don’t rely on I like that a lot. Yeah, I like that a lot, too. Thank you very much. That was nice and potent. Good at it. Talk about a good post. Talk about a good LinkedIn post. Current suite right there. No thank you. Sarah Beth, that’s been great.
Sarah Beth Felix 38:24
Thanks, guys. It was great seeing y’all again. Maybe next time I’ll bring other tequila. Yeah, that’s the point.