Keynote presentation by Thomas M. Obermaier, CEO of RDC, to the FinTech FinCrime Exchange (FFE) in London, UK on June 19, 2018

1. Surfing
Uncertainty
To Confront
Terrorism
Financing
Thomas M. Obermaier
FFE KeynoteAddress
June 19, 2018

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Hardest Problem in RegTech/FinTech to Solve
2
Rife with Uncertainty
Impossible to predict
Lack of Financial
Dependency
Indistinguishable
from Ordinary
Activity
HalfThe Story
Local Scale Constantly Morphing

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Organizational Costs
“Planning”
• Maintain Infrastructure
• Day-to-day (salaries, subsistence)
• Communication
• Training
• Travel
• Logistics
• Charitable Support
• Mass Media Distribution
Direct Cost of Attacks
“Use”
• Vehicles
• Surveillance Means
• Maps
• IED Components
• Target Lodging
TraditionalApproach: The “Obvi”
3
TwoTypes ofTerrorism Financing Needs

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TraditionalApproach: The “Obvi”
4
Three Categories ofTerrorism Financing
The Raise Raising capital to cover planning and use phases, as well as broad
organization support, where appropriate.
• Charities
• Illegal criminal activity (fraud, narcotics, theft, robbery,
kidnapping)
• Legitimate business (cash intensive businesses, small retail,
restaurants, locksmith, construction)
• Self (salary, welfare)
TheTransfer Moving It
• FX transactions
• Formal financial sector
• FinTech
• Trade-related
• Cash couriers
• Hawalas (ARS)
Use Seemingly limitless

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Traditional ApproachTo Disruption
5
Raising
Transfer
Use
FATF Funnel
Reliance on
“Special
Designation”
Government
Lists
Traditional CTF Approach
Primary focus
on what we knew
• Global Orgs
• Global
Funding
• Global Scale
Curiously, Use (which in the end is
everything and the most difficult to
find) was given third priority
1. Groupe d’action financiere. Terrorist Financing. 29
February 2008
1

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Paradigm has Shifted
6
Use
Transfer
Raise
Current Reality: Use Is Everything
Primary Local
Ordinary Means
Plain Sight
Exceeding Low Cost
More Self-Funding
Old School ≠ Nu Skool

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What To Do?
7
This is Really Hard
Better as technology and
data science improve
High social impact
Microscopically
Infrequent
Indistinguishable
From Ordinary
Activity
At Best, Know
HalfThe Story
We Are Not An
Intelligence or
Law
Enforcement
Agency

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CTF Challenge
8
Finding a Needle in a Pile of Needles

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Focus On Seen and Unseen
9
Embrace the certainty
Surf the uncertainty

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The Seen
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Embrace the certain
▪ Specific designation
Government Lists
▪ Transfers to/from
Terrorist List
▪ Charitable transfers
▪ Adverse Media on
clients and
transferees

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The Unseen
11
Surf the Uncertainty

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Surfing Uncertainty
12
Teach Machines Cognitive Prediction
How Humans Think
1
1. Clark, Andy. Surfing Uncertainty: Prediction , Action and
The Embodied Mind. Oxford University Press, 2015. ISBN:
9780190217013.
Learn from both
experience and
simulation
Mathematical
prediction based on
experience (actual &
simulation)
Predictive
Action
Embodied Mind

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Building Cognitive Prediction
13
• Algo Building
• “Straw that broke
the camels back”
• Contextual,
Transactional,
Sequential data
sensitive
• Comprehensive
Historical Scope
• Incidence Focused
• Key Common
Markers
• Trend Development
• Both internally sourced transactional data
and externally sourced contextual and
sequential
• One hand tied behind our backs
• Cautionary tale on external sources

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BuildingA Cognitive Predictive Engine:
Focus onThree Levels
14
Transactional
Contextual
Sequential
Transactional
Contextual
Sequential

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Public Domain PredictiveVariables
15
Manchester 2017 ✓ ✓ ✓ ✓
London 2017 ✓ ✓ ✓
Brussels 2016 ✓ ✓ ✓ ✓ ✓ ✓
Nice 2016 ✓ ✓ ✓ ✓ ✓ ✓
Berlin 2016 ✓ ✓ ✓ ✓ ✓ ✓
Paris 2015 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Paris 2015 ✓ ✓ ✓ ✓ ✓ ✓
London 2012 ✓ ✓ ✓ ✓

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PredictiveVariables & Sourcing
16
Location: Residence or work address in Terrorism Vulnerability Area ("TVA")
Transactional
Contextual
Media – Reported
terrorism arrests via
Postal Code (TVA Index),
Public records
Government Reports
Funding
Source:
Payments to/from designed Alias Charities non-salary or divided “Location Payments”
Contextual
Transactional
Designated Alias Charities
Media
Government Reports
Employment:
Employed in a Terrorism Vulnerable Business (“TVB”) – a business TVA or one reported terrorist
used before
Contextual
Transactional
Media
Government Reports
Ownership: Owning a TVB, receiving payments from a TVB
Contextual
Transactional
Media
Government Reports
Criminal
History:
Reported arrests or allegations involving immigration, petty theft, financial crime, kidnapping,
etc. Terrorist Vulnerable History (“TVH”)
Contextual
Media (publicly reported)
Public records (where
available)
Rumored
Associates:
Rumored to be specifically designated terrorist, an associate or a terrorist organization or an
acquaintance or a TVP person
Contextual
Media
Government Reports

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PredictiveVariables & Sourcing
17
Event Mass event – sport, concert, political, etc.
Contextual
Sequential
Event Aggregators
Media
Travel: Two levels: travels to a known terrorist hub (“TH”) or recent travel outside a (“TVA”)
Transactional
Contextual
Sequential
Transactional
Media
Government Reports
Lodging:
Recent lodging through hotel aggregators or on line residence distributors (Airbnb,
Booking.com, Home Away)
Transactional
Contextual
Sequential
Transactional
Media
Government Reports
Transport: Recent car hires – especially multiple in one name or in associates name
Transactional
Contextual
Sequential
Transactional
Media
Government Reports
Means Transport, fertilizer, bleach, vests, jackets, sporting gear, luggage
Transactional
Contextual
Sequential
Transactional Data

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Terrorism Hubs MediaWord Cloud
18
AllTime
May 2018Last 60 Days
2018

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TerroristVulnerable Areas
Followfield (Manchester 2017
Besston (London 2005)
Yorkshire (London 2005)
Selly Oak, Birmingham (London 2005)
Hyde Park, Leeds (London 2005)
Thornhill (London 2005)
Holbeck (2005)
Molenbeck (Paris, 2015, Brussels 2015)
Courcouronnes (Paris 2015)
Lepros,Turkey (Paris 2015)
Plaistow (London 2017)
Dagenham (London 2017)
TerrorismVulnearble Businesses
Restaurants
Locksmiths
Handyman
Construction
Uber
Newsstands
Local Groceries
Deliverers
Using Media to Find Contextual Examples
19

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Location
Funding Source
Employment
Ownership
Priors
RumouredAssociate
Events
Travel
Lodging
Transport
Cognitively PredictiveTerrorist Financing
20
Means
Use Prediction
Sequential
Contextual
TransactionalTransactional