Episode Summary
In this episode of The Industry, Zachary Plotkin and Sanjeev Menon sit down with Gabriel “Gabe” Hidalgo (Guidepost Solutions) for a conversation on fintech, regulation, and what strong financial crimes compliance actually looks like in practice.
Gabe walks through his path across legal and AML leadership, including roles that put him on both sides of the table, and explains why he’s often brought in as the “fix-it” person when programs need to move from polished policies to workflows that truly work under scrutiny.
Transcript
Zachary Plotkin 00:05
Hello everybody, and welcome again to the industry. What industry you say? The industry, the video series where we discuss the job market, give career guidance, market Intel and everything in between. My name is Zach Plotkin, joined by my co Sanjiv Menon from Madison Davis, and today we’re going to be speaking with Gabe Hidalgo from guide post solutions. Gabe, welcome. Hi. Glad to be on Glad to have you. I feel like there’s been a long time coming. Gabe, is somebody that Sanjiv I have known for, I don’t know how many years now, but it’s something, something where we’ve we’ve bonded, not only related to work, but things outside of work as well. So Gabe, welcome. Why don’t you introduce yourself to the people? Sure.
Gabriel Hidalgo 00:49
So my name is Gabe Hidalgo. I have over 25 years of legal and compliance experience. I’m a licensed attorney in New York, not practicing. My specialty is really AML Compliance and all things in that financial crimes compliance space. Let’s see. What else can I say? Born and raised in New York, parents from South America, from Ecuador, so I’m bilingual. I can speak English and Spanish, so Bienvenidos. You know, my passion is really taking technology and fusing it together with with compliance and trying to find a better way to do things. I, I think, throughout my career, the thing that I’ve excelled at the most is trying to find new and novel ways to apply compliance using different types of technology or different types of approaches. I’ve, I’ve, I guess I’ve come to be, to be the that guy, kind of like the SWAT team, once nobody can figure it out, like, call Gabe. Let’s see if we can figure
Sanjeev Menon 01:51
it out together. It’s not a bad guy to be, yeah, yeah. It’s paid off. I mean, I mean, unless it’s, like, at three o’clock in the morning,
Gabriel Hidalgo 01:57
yeah, no, that’s not fun.
Zachary Plotkin 01:59
But that’s probably when that viking helmet behind you comes out.
Gabriel Hidalgo 02:03
Yes, the viking helmet, actually, that’s from from one of my FinTech positions. It was something that, like we, we would all wear, or everyone had their own thing. The viking helmet is, like the warrior kind of like, dive in and do the best that you can and figure it out, all
Sanjeev Menon 02:19
hands on deck, kind of all hands on deck. Yeah, we’re going to get through it. So actually, to answer the first question, probably 15 years, right? We’ve known each other,
Gabriel Hidalgo 02:28
I want to say 2009
Sanjeev Menon 02:30
2010 Yeah? So it’s going on 1516 Yeah, it’s going into the second decade. Yes, yeah, good. Two decades, man, yeah. It’s been good and a lot of fun. It’s been a lot of fun. One of the first things that we want to dive into, which is a common question and theme for the industry video series, is the move from the public sector to the private sector. You were at the Fed, and then you move into the private sector. Can you tell us about that story?
Gabriel Hidalgo 02:56
Sure. So actually, even before the Fed, I had been in the private sector. My transition from the law to compliance occurred in 2004 I became the director of legal and compliance for MSB, a money transmitter who operated in South America, as well as in the United States. And because of my bilingual background and my ability to be able to take legal concepts and legal regulations and basically translate them for everyone to understand from a regulatory perspective. That was my first foray. So I worked there, and then I also worked at Deloitte and then Capital One, before I worked at the Fed, so I had already been versed in the private sector. My work at the Fed was fantastic. The people are great, you know, we have, they had a huge mandate, which is basically, you know, to provide oversight for at least my, my role and the people that I worked with, role was really to provide oversight over the compliance programs for the largest portfolio at the Fed the Well, at that time, we used to call them the SIFI, systemically important financial institutions. So imagine the 10 largest banks in the world that we were overseeing. It was a great run. I still have a lot of friends at the Fed. It was, you know, I would recommend that to everyone. It’s a great place to work. The Transition actually occurred when HSBC was looking for someone who can kind of bridge the gap between the legal side of the enforcement action that they had had the monitorship and the compliance side, and to be able to kind of bridge that together, and to act as a liaison between HSBC and the monitor I think given my background at the Fed as well as my prior work in the private sector, I was a good candidate, because, you know, when we sat down, they asked me to kind of translate for them how I would communicate remediation and those types of things to the monitor, as well as to stakeholders within legal and compliance at HSBC. So we went through several rounds. That, and ultimately, they gave me the position within the legal group where not only did I work with the monitor team that was assigned to HSBC, but I also worked with legal and compliance to take all the feedback from the monitor and to implement that to make the compliance
Zachary Plotkin 05:17
program better and get How long were you with the Fed? Almost four years and then going right into a monitor ship. Did it? Was it kind of shocking, walking into what you walked into?
Gabriel Hidalgo 05:30
I don’t think so. I think I was better prepared, probably than a lot of candidates, only because I have conducted examinations so I knew exactly, like, what the regulators were looking for. I understood, kind of like, what their expectations were. I can kind of understand when I read a compliance procedure or policy or a workflow, whether or not you can implement it, and it’s realistic and reasonable. Sometimes, you know, you get presented with documents that look great, but you can tell right away that they were created, probably by a law firm, and they were specific for like, either an application or they were just an update or upgrade that needed to be done, but trying to implement what’s in that policy or procedure, that’s where it gets difficult, and I think that that’s where my strengths lie, is that I can take those things and create workflows and programs and processes that actually work, and so it wasn’t hard for me. I think the thing that I always needed to correct myself is I was no longer on the opposite side of the table. I was now my stakeholders. My direct stakeholders was the bank and not the
Zachary Plotkin 06:33
public or the regulators. That was the question I was more wanting to get. The answer is, was the bank prepared to do what was necessary other than just hire you?
Gabriel Hidalgo 06:42
Yes, in addition to my hiring, they had hired other people that had expertise in remediating programs. To their credit, they had a huge program on the remediation and they were very open to the feedback from both the monitor as well as the new people that had joined to help them get through the remediation process.
Sanjeev Menon 07:00
So I’m going to ask the question a little differently, why did you go from the private side to the Fed in the first place?
Gabriel Hidalgo 07:07
Well, two things. One, I thought, for me, the challenge of helping something like this, that situation was huge. I’ve never want to turn away a challenge like that. I felt like it was my time to kind of try to figure out what that next step in my career was, and given the opportunity to step back into like a legal role was intriguing for me. I had not been in a legal role since before 2004 so I thought that that was a good opportunity for me to kind of dip my toe back in there while still maintaining that compliance focus. And I’d also thought that the position to be kind of like the liaison between the monitor and the bank was intriguing as well. So I thought all of those things together added up to an opportunity I couldn’t pass up, although, you know, I love my work at the Fed and everything else. I thought that that this was the right time, the right opportunity for
Sanjeev Menon 08:00
me, and then after you dealt with that remediation, what did you do after that?
Gabriel Hidalgo 08:05
So then, as we were working through the remediation, I got a call from one of you, I’m not going to mention, who about a position at a new cryptocurrency exchange that was seeking to be one of the first, well actually the first, to receive a financial charter in any state within the United States. And that was it. They were looking for someone who can basically not only help to fix and to upscale what they already had in place, the beginnings of a compliance program, but also be able to translate for NY DFS, the actual program to make DFS understand that, you know, we’re mitigating everything, all the risks involved within this product. It’s new, it’s scary. It’s a lot of technology that’s built into this. You know, the blockchain, for a lot of people, was a new concept at that point. I had known about it since 2010 so for me, it wasn’t a hard concept, but I needed to kind of boil it down and bring it to a level to help regulators understand this is how we build the compliance program. Here are the checks. This is how we’re we mitigate the risks involved with these types of transfers with this type of product and service to make them feel comfortable and ultimately succeed in acquiring that trust charter from DFS, which we were in in May of 2015 we were the first ones in the whole country to be awarded that and then secondly, was Gemini that I think they they got theirs, like a month and a half after we got ours.
Sanjeev Menon 09:36
Did you purposely want to go into the crypto space? Was it happy accident?
Gabriel Hidalgo 09:41
I love technology. I had been, you know, as an enthusiast looking at cryptocurrency, Bitcoin, Ethereum, Litecoin, some of the earlier projects. For a long time, since 2010 at the Fed actually presented on E money, all the. Alternative ways to convey value. Some people kind of scoffed at it and said, you know, this is what like little kids do in their parents basements. But for me, it was more about the underlying technology, the use of blockchain technology, how you can convey assets, what what it looks like, or what it could look like at a larger scale. So when this opportunity came about to actually work as the Chief Compliance Officer for a new cryptocurrency exchange that’s looking to be compliant within the United States. You know, I couldn’t pass that up. And we were able to build the compliance program. We were able to get the acceptance and approval from DFS, and in May of 2015 we were able to get that trust Charter, the first one that’s been that had been granted in the United States, and in that trust charter was the approval baked in for under the bit license as well. So we were very fortunate. It took a lot of people, but we we got through that. It was amazing.
Zachary Plotkin 10:54
Were there days where you were like, I don’t know. I don’t know if this is going to happen.
Gabriel Hidalgo 10:59
No, I will say this, the people that I worked with at that time were amazing, and we all picked each other up. And there were times where, you know, we were working on stuff and putting together workflows and drafts, and we, you know, we had gotten response, received responses from DFS, and we pushed through it. And I think the power of belief and the power of team helped us, because there were a lot of people, and it wasn’t just, you know, compliance, but we had great people in legal. We had great people in marketing, operations, the tech people were great. All of us together. It just we were all rowing in the same direction. And I think that that’s really what separates like a successful venture versus a not so successful venture. And you know, when you row in the same direction, when you ask for help and they are willing to provide it to you at a drop of a hat, I think that’s what equals success.
Sanjeev Menon 11:48
And you’ve been in the FinTech space ever since, right, in some capacity?
Gabriel Hidalgo 11:53
Yeah, I mean, FinTech can be defined broadly. So yes, I’ve been, I’ve been in the crypto, virtual assets, slash FinTech space, probably since 2015 although I done a lot of research prior to that at the Fed, you know, there was a lot of discussions in regards to these new types of entities that were trying to provide what had been provided traditionally by, you know, what we now call legacy financial institutions. But they were trying to do it faster, more efficiently and through a technology platform. So for us, we had been learning about it. But in reality, the big push happened probably mid decade, in 2014 2015
Sanjeev Menon 12:31
Yeah, so you’ve worked with management consulting firms. You’ve been at a FinTech partnership bank. Yes. Have you been at a FinTech directly
Gabriel Hidalgo 12:38
as a client? I’ve helped banks. I mean, I’ve helped banks and fintechs kind of meet together so they understand each other. As the Chief Compliance Officer of a bank, I did a lot of onboarding reviews for potential FinTech clients. And what that entails is raised basically, give me your compliance program, show me your kind of your workflows. Tell me how you remediate these risks, go back to them understand, like, basically, how they’re remediating them, what products they’re using, or is it internally developed, that sort of thing. Because let’s be real, when a lot of these FinTech startups begin the process, compliance is the last thing they think about. And I’ve seen that time and time again every single deck that I’ve seen or that I’ve had the opportunity to review when they are out there, you know, trying to raise seed funds or trying to raise, you know, Series A, B, C, whatever compliance tends to be either one slide or it’s a paragraph in the operational section. It isn’t until they start to actually implement a lot of what they’re trying to do that they realize that, Oh, my God, we need a monitoring program. We need to collect customer due diligence. How are we going to do that? How are we going to train our people? How are we going to sanction screen, like, all these different things that add up to, like, an effective compliance program, typically, is an afterthought, and so I’ve seen it from a banking perspective as the Chief Compliance Officer, where I have to review these things, and I ask a ton of questions, and they have to come back to me with this is how we’re going to do it to on the management consulting side, where FinTech clients come to us and they provide us with their policies and procedures, and we start to take it apart and figure out What they have in place that’s workable and where they need the enhancements they need our help to kind of get everything to where it needs to be. But that’s really been the FinTech experience has really been between onboarding clients, as well as helping clients get onboarded to banks, or to provide a clear path for them with regulators or banking partners, because the lifeblood of a FinTech right now is their banking partners. If you can’t get those banking relationships, you know you’re not going to be able to launch.
Zachary Plotkin 14:48
Did you ever think your career would bring it to where it is? Or did you have this like grand idea when you started?
Gabriel Hidalgo 14:56
No, no, I honestly pivoted in 2004 More from legal work to compliance work. For me, I found the BSA and everything attached to it fascinating. And I thought for me, it was something that would keep me intrigued, which I think is a big thing. I think if you are doing work and it’s just monotony, you’re not going to last it’s not going to be something you’re going to be good at. You’re not going to enjoy it. You’re going to just basically clock in, clock out. And for me, one of the important things is I need a challenge mentally like I need to to look at things, be able to analyze them, be break them down, and to provide solutions. And so to be quite honest, my career has pivoted in such ways that have been fantastic. But I couldn’t tell you that in 2004 I saw myself as being a regulator or in the FinTech space, because back then, fintechs were like not even a thought. You know, everybody was still in the legacy financial realm. The closest thing to FinTech at that time was e money and certain things that were happening offshore, which we won’t get into, but we’re not good. And so I think the thing that I’ve been able to navigate is really understanding where the market was and then pivoting to that market in the best way that I can help that’s really been my I think, my strength,
Sanjeev Menon 16:15
my superpower. Can you elaborate on those pivots? Yeah. I mean, from
Gabriel Hidalgo 16:18
a timeline perspective, in 2004 I pivoted from legal to working for the MSB, and then I think the next substantial pivot, going from Morgan Stanley to the Fed, that was really for me, an opportunity to learn from the inside out what regulators would like, what they expect. And within that time period that my regulatory time period, I also was able to participate in the FFIEC, where I was training other examiners from the SEC the states and other federal locations on the art and the science of conducting BSA AML and sanctions examinations. So I was able to help other regulators out as well. I think for me, the next pivot was recognizing when I had a really good opportunity to head back into the private sector with HSBC, to a very unique opportunity that would allow me to kind of dip my feet back into the legal space, but also help out compliance and also interface with the monitor that was my first dealing with, like, a large scale remediation other than that. I mean, the other pivots that I’ve had are pivoting into crypto, which for me, has been fantastic. I love crypto. It’s been something that I’ve been passionate about. I love technology. So the inner, you know, the intersection of technology and compliance, for me, has been great. I mean, just to give you guys an idea of like, how much I love technology. You know, I’ve been building my own computers since I was, like, probably 10 years old. Back in the day when you can actually build, like an IBM compatible I would go to this place in Flushing where they sold parts, and you can kind of putting these things together. I look at like my compliance work as that you kind of look at a compliance program and figure out what components need enhancements, and then you pick the parts out that you want, then you build that robust compliance program for your clients. And so that’s, that’s been my thing. And then pivot wise, you know, and then I pivoted to management consulting, which is basically allowed me to see a lot of different platforms programs, whether it’s in traditional, you know, your traditional legacy financial institutions, like big banks and like startups and fintechs, where they have a great idea, it’s a great product, but they need help with the compliance program. So it’s taking those traditional compliance concepts and applying it in a novel way so that you can mitigate the risk brought on or introduced by these new products. I think that’s really where it’s been super intriguing these last few years, as well, as you know now, with the genius act, you’re going to have traditional banks that are looking to get into the stable coin space. And that’s also going to be fascinating, because you were going to look to adapt, probably traditional platforms that they have to this new product area, which should be interesting.
Sanjeev Menon 19:18
Gabe, I would love to hear when you made those pivots, especially, you know, from the Fed outside the Fed, or from tradfi and legacy to FinTech, how deliberate was it? How much of it was luck, how much of it can you sum up and share with the audience? In regards to, hey, if you want to get into FinTech from a regulator or tradfi, how do you? How did you do it?
Gabriel Hidalgo 19:46
Right? So I will say there was luck involved sometimes. And when I say luck, I think it’s before you even start this, you have a have to have a mindset of like, what is. That you really are interested in, right? You have to understand, like, what is it that intrigues you? Because I think if you’re just looking to jump into something new because it looks like the latest thing, but you don’t know anything about it. You haven’t done research about it. You don’t understand the concepts that belie kind of the products and services. It’s not going to be successful. You’re not going to do well, like they all see it right away. You want to understand a lot of the concepts of the underlying products and services or the purposes of what they’re trying to do, and it just won’t be so I know there’s probably a lot of people out there who are like, oh, I want to get into fintech. I want to get into crypto, but they don’t understand what those things mean. I think from my perspective, like, for example, when I pivoted from, you know, like a traditional type of institution to a crypto exchange, I already understood what the product and service was. You know, what does a cryptocurrency exchange do? I understood the purpose of why they were trying to do it. I understood, kind of, like the the operational rails of how it works. So, you know, we can talk about, like blockchain and what happens, and, you know, what’s a wallet, and all those other things that I think you need to understand if you really want to get into it. I had done a ton of research on my own as an enthusiast, even prior to even thinking about something like that. And to be frank, the opportunity presented itself. I had a recruiter that called me and said, Gabe, we’ve known each other a long time. I know you love tech, you and I have talked about crypto. How would you would you consider leading the compliance practice for a fledgling exchange based here in New York? I said, Well, it really there are a few things that were considerations. One, it’s very risky, right? You’re going from a established industry, where you’re, you know, pretty comfortable in what you’re doing, you know exactly everything you’re doing, to a unknown where they you know, they’ve been in business maybe a few years, but they’re relatively unknown. If you mentioned the name, a lot of people wouldn’t even know what they were about. They were in the process of growth, in the process of fundraising, and they were in the process of getting licensed, regulated in New York, which is by far, I think, whether it’s New York or California, probably the two hardest states to get licensed in, right? So all of those things together, you have to have that calculus like, Will I can I do this? Am I ready at this point in my career to do this? You have to understand what’s at stake, you have to understand the concepts. And if you’re going to go do it, you have to go all in on the interview. And you know, for the interview, I went through several rounds with different people, you know, between the CEO, the Chief Operating Officer, people within the product team, people within the tech team, they all wanted to know that I understood the concepts that underlie what they’re trying to do. And it wasn’t just a compliance conversation. It was a conversation about what this product was, what is it for, who the audience is, and who the stakeholders will ultimately be. All of that research took place before I went into the interviews. So I understood, you know, at a very fundamental level, what it is that I was getting myself into. And I think the best advice I can give people out there is, if you are interested with, you know, within FinTech, and there’s different types of FinTech companies, do your research, whether you know, if you want to work for stripe, you want to work for block, you want to work for Cash App, which is part of block, if you want to work for Coinbase, if you want to work for Kraken, any of the large, established companies or even the smaller, like, you know, startups do as much research as you can to understand what it is that they offer, what it is that they’re there, that they would be looking for in a compliance person to help them mitigate those risks. Understand you know what their history has been, because now a lot of them do have history. So you can find that out. Be as prepared as you can. Preparation will get you the job. Being unprepared will will get you, will not get you the job. So I already knew where I fit, where I where I should be, what my role would be, and how I would interface with all these different stakeholders. So when the interview process came along, I think I was able to answer their questions, and I was, I think I came across as pretty well prepared, and that’s basically, I think, how I landed the role. Now the role itself came up pure luck, this person reached out to me. I had similar to you Sanjeev and Zach. I knew I’d known this person for at that point, I probably already known this person for like, seven or eight years, and they we had had conversations where they had called me at different times. They were like, Hey, dude, you’re an AML guru. Like, tell. Me, like, is this opportunity something that would be in your wheelhouse or not? And typically it wasn’t, because I was great. I was like, happy where I was, and it wasn’t intriguing enough for me to make that change. But this opportunity was intriguing, and I think that’s what you need to need, that thing beyond the paycheck that gets you up in the morning and said, Man, I’m ready to tackle that thing. That’s what this was. And so I think, for for me, like for example, here at guide post, I wake up and I’ve, I have a mission. I’m ready to go, you know, like my clients, they’re going to get the best version of me, and if I don’t know the answer, guess what? I’m going to research that answer. I’m going to come back with them with something great. I’m because they’re expecting that of you. And you know, when you have as much years of experience as I do, and a lot of the people on my team do, they expect the best of you, and we’re willing to give the best to them. So I think that’s the motivation. I think you can’t go into it willy nilly. It can’t be the flavor of the month type of thing, like, if you’re really interested in doing these things, you got to do the research. You got to find ways to get yourself involved in discussion groups. And you know, the great thing now, with the internet, there’s, you know, groups where you can join and they talk about these things, whether it’s LinkedIn or discord or all these different places, Reddit, you can find discussions on all these different things, and you can educate yourself. You may not work there yet, but you can play the part and understand what it is that would be required of you if you work there. So that when the opportunity comes, it presents itself and you want to apply, and they interview you, you’ll speak from a place of intelligence and knowledge, as opposed to, like, trying to figure out what they’re trying to tell you or ask you. I think that’s the important part.
Sanjeev Menon 26:45
I love that advice. And, you know, going back to where you are right now, Guy posts, I think it’s like, this is a good segue, right? Because the other reason why we wanted you on the industry is because you’ve dealt with a lot of enforcement actions, right? So you made a number of transitions private to the fed back to private. But FinTech oriented, your tech forward. Sorry to say it, but I said it anyway. But the other thing that you’ve done consistently is help organizations get out of enforcement actions, right? I think it’s going on three at this point. We’re not gonna need, we’re not gonna name the organizations, yeah, disclaimer, but it’s three, right? Goes back to him being the guy. Yeah, he’s the guy, honestly.
Gabriel Hidalgo 27:33
So for two of them, I can talk about them. So, HSBC, I was part of the legal team, you know, we, we were able to help with the remediation there, and to interface and to get the feedback from the monitor so that we can improve what they were seeing from the compliance program. When I was at k2 I was part of the team that helped oversee the sanctions Federal Reserve situation that society general had. And that was a great experience, you know, flying to Paris and meeting everyone and seeing, like, globally, how they set up their sanctions compliance program, and being part of that team, and having like, you know, like a SWAT team of SMEs that land, and like, we’re looking at everything. And, you know, that was interesting, because some of the a lot of the documentation was in English. Some of it was in French, and we were able to get translated documents. And let’s just say to sock Jen’s, you know, great organization. The minute that, you know, the remediation was occurring and we were there on site, they were very, you know, friendly with us. We were able to get the information that we needed. They were open to our recommendations, and they were able to remediate what they needed to you know, we were I think part of having a successful monitorship experience is really the team that you put together. And I can tell you at key to the team that we had that oversaw that monitorship, that sanctions monitorship was fantastic. We were each given specific work streams, and we were the SMEs in that work stream. You could ask anyone about what was happening at sock Gen within that work stream, and each one of our SMEs would be able to tell you how they did things, where the gaps were, and what our recommendations were. That’s you can’t do that if you’re not like deeply, deeply in the details, in the weeds on a daily basis, pouring through all the documents, having these interviews. You know, the best thing for that type of situation is for the institution to make themselves available and basically be open kimono. Show us basically what it is that you’re that you’re trying to remediate, whether you understand are the gaps, and then we can provide you with the most helpful feedback and be able to get them to a place where they can remediate what needs to be remediated. And I think my success in those things is really attributed more to the team, my team at guidepost, like I said, the team we put together for what we’re working on currently. I. Is fantastic. Everyone who leads the work stream is an SME. We all understand what we’re looking at. We understand what needs to be done, and, you know, we communicate effectively, I believe, back to the stakeholders, what needs to be done. So I can’t really talk about that current work, but on the prior work, that’s what led to the success on both of those other monitor ships. Now, from a regulator standpoint, working at the Fed helped me to basically understand, you know, what it is, from a regulatory viewpoint that the expectations are like, if we give you MRAs and MRI A’s, if we give you that feedback, what is it that we’re looking from you it should not be something where it’s just a band aid, and it’s a one year fix just to get through that MRA or MRI and say it’s completed. There’s a sustainability aspect of it that institutions need to understand. It’s not enough for you to put a band aid on this thing and have it be good for a year. It has to be a sustainable process so you’re not falling back into whatever the issue was the following year after you’ve implemented whatever the fix was. And I think that’s one of the biggest from a regulatory standpoint. One of the biggest things that they convey is like, we don’t want it to just be fixed now. We want a sustainable fix. And that’s where having a good compliance program, and good officers compliance people, they will carry out not just the fix for this year, but they will make sure that it’s sustainable, and that’s where you you know, I’ve come across a lot of people who are really good at compliance, and that’s the thing that they get. It’s that it’s not a temporary fix, it’s not a band aid. We want to create the best compliance program, and I get it a lot of institutions like compliance is a cost center. We’re not profit generators. But I always tell them, yeah, it’s not a profit generator. But when you get fined, when you have you know, stoppages to being able to bring in new work or new introduce new pricing services, that’s a cost that goes to directly to your bottom line. So in effect, it’s stopping potential profit. So if you invest proactively in a good compliance program, you avoid that, and you can continue developing and innovating new products and services without having the regulators come in tell you that you can’t do that because your compliance program is so bad. So in effect, it’s better to be proactive than it is to wait until you get hit with the regulatory fine and then start to fix because you’ve delayed that whole process.
Sanjeev Menon 32:20
I had a follow up question, and you just answered it. No, I love it, right? That’s exactly, how do you prevent an enforcement action, right? You don’t consider compliance a cost center. You consider it the cost preventionist center, in a way. And I think,
Gabriel Hidalgo 32:37
yeah, and I think, you know, there’s been a lot of conversations about artificial intelligence and its role within operations and within compliance, I don’t think that artificial intelligence will ever replace human judgment. We’ve already seen it, I think, in the early parts of AI where it hallucinates the data that it’s trained on. It’s not the best data. It’s always going to need that human judgment someone to oversee whatever the output from AI is. There are certain aspects of a compliance program that probably, right now, can start to have aI components to it, like, for example, the level one transaction monitoring work. You can probably start applying some AI to it, although you still need to have the appropriate environment and guardrails to make sure that the output that you’re getting is what you expected the you know to be receiving. There has to be those checks. It can’t just be a black box. But I don’t foresee a day where an entire compliance team gets replaced simply by AI like you won’t see that there needs to be a human component. Human judgment still needs to be called into, you know, into the program there. I do see it being a helpful tool. I do see it helping to aggregate a lot of data in a short amount of time. But you always have to test the outputs, because, as we’ve already seen, you know, there’s been several very well publicized things when people rely on AI to write their reports, to do their research and to basically construct a finished product, unless you’re reviewing every single aspect of what gets produced, you there’s a potential that you’re creating things that are not Real and that was hallucinated by AI. So there are, I think, opportunities for AI to help within the compliance program. There will be jobs that will never, probably come back to human hands, because AI can take care of it. But to say that AI is going to eliminate a compliance program, I think, is, I think it’s foolhardy. I want
Sanjeev Menon 34:38
to end there. That’s perfect. It’s hogwash. Hogwash. It might. It also might create new jobs that we don’t. Oh, it will, yeah,
Gabriel Hidalgo 34:46
there’s going to be roles for AI compliance people, people who specifically are trained on the generation of prompts on the AI validity from, you know, output, who are going to test it. On the ethics of using AI, on how you use AI on a daily basis. All of those things require, again, human judgment. People are going to set up guardrails, but that is going to be like a whole new area of work for people to develop. And I think that’s part of like, what keeps you intrigued is, like, every single day there’s a new development. There’s someone out there who’s trying to create something that’s a solution to what we’ve seen as a long standing problem. And I think AI is one of those things, along with machine learning and some other technology assisted solutions, I think that’s what makes it good, and that’s, I think, what keeps a lot of us kind of coming back to this, because it’s intriguing and you want to learn more, and you you will teach yourself these things so that you can be part of that solution.
Sanjeev Menon 35:41
We’re coming at the end of the segment, and you ended it perfectly, talking about AI. We spoke about the transition from the private to the public sector, being in the FinTech space, dealing with enforcement actions. Thank you for your time.
Gabriel Hidalgo 35:54
Man, no, anytime I I’ve enjoyed the other podcast that with a lot of a lot of people that have been fantastic, and to be invited and to be included in that group of people, I’m honored. So thank you for that,
Sanjeev Menon 36:09
and we’re honored to have you, man. Thank you.