Jennifer Shasky Calvery is the global head of Financial Crime at HSBC and is an experienced global executive with a demonstrated history of achievement in the legal profession, as a regulator and as a compliance professional in financial services, advocating as well as delivering greater transparency and integrity. She has deployed both strategic vision and execution while navigating sensitive geopolitical issues, managing crises and influencing policy. Calvery likes using data-derived insight and partnerships across organizations and focusing on excellence as well as innovation to inspire change for the better. Prior to joining HSBC, Calvery worked as director of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), where she held a CEO-equivalent role at the helm of the U.S. government’s lead regulatory agency for anti-money laundering/counter-terrorist financing (AML/CTF).
ACAMS Today (AT): Having worked for the public and now the private sector, what is necessary for a more effective partnership between the government and financial institutions (FIs)?
Jennifer Shasky Calvery (JSC): At the end of the day, we’re in a people business. You need to build trust between the public and private sectors. This trust is developed through spending time with each other and discussing what is going well, what is not going well and the challenges we both face. The next step is working through those challenges by starting small and then building on success. Every time I have seen the public and private sectors start small—sometimes from a place of distrust—they usually get to a place of greater trust and are willing to try riskier things together. This all comes from spending that time together and being open-minded. You need people from both the public and private sectors who are willing to come to the table. If you have willingness from both sides, then things rapidly move forward.
AT: To expand on the partnership question, how important are partnerships within the public sector?
JSC: Partnerships within the public sector are incredibly important. Different organizations in the government have different roles to play in trying to keep the financial system safe, and if they are not working together, they are not going to be optimized. Also, if they are working against each other, the outcomes could be worse. Again, it is all about building trust. One of the things about people who serve in the government is that most of them are driven to make an impact for good. This is one of the reasons they serve in the public sector. I suggest aligning around their common purpose of making an impact for good and then extracting what each government organization brings to the table. Then showing everyone how working together will make an impact, both individually and collectively. This usually motivates people.
The next step is providing an environment where everyone feels safe to share what they normally would not share with others. This will lead to more trust within the government agencies.
AT: Given the evolving nature of geopolitics, how can FIs be more effective in sharing information across borders?
JSC: First and foremost, it is important that every institution starts from a place of compliance. FIs should comply with local laws and regulations when it comes to information sharing and data privacy. Laws and regulations are different in each country, and it is important to understand the policy objectives behind the various laws. When a country puts these laws and regulations in place, they are trying to balance data, individual privacy and other policy goals similar in nature versus the security of the community when sharing information with law enforcement. Each country has its own history and politics and drivers on where they decide to come out on that continuum, and that changes over time.
You need to be aware that what is done in one country may not be done in another country. Also, what is done today might not be done tomorrow. So, if you are in financial crime compliance, you need to become an expert in data privacy as well and know what those laws are because there can often be a trade-off between privacy and security. If you are on the financial crime compliance side, you are trying to focus on the security policy goal. You want to share as much data as you possibly can, and you can only do this if you know the laws. If you are too conservative beyond what the law requires, then you might not be optimizing the security policy goal. I would tell any financial crime prevention officer today that they need to comply with all laws and regulations in each country, including those relating to data privacy, but dare to share as much as they can while keeping their customers safe.
AT: Can you share one of the goals you would like to achieve during your tenure at HSBC?
JSC: HSBC has accomplished quite a bit and I have been lucky to be here during this time frame. We had an enforcement action against us, and we took the decision to use this as an opportunity to learn and strive to become the best at managing financial crime risk in the market. We have been on a journey that started with a long way to go, to now credibly being called out as industry-leading in this space.
Another accomplishment for HSBC is that we are leaders in developing next-generation technology for detecting financial crime and learning how to deploy it effectively.
As I look ahead, my focus will be on inspiring and helping prepare the next generation of compliance officers. The world is changing quickly, and so are the financial crime threats. This has become an important focus for me.
Finally, I would say being a part of driving effective outcomes across the whole ecosystem—not just within banks and other private sector players, but also within the public sector. We should be asking ourselves: How can we work together across the entire ecosystem to make sure we are maintaining the integrity of the financial system and safeguarding our customers and the communities we serve? I think there is a lot more to do in driving effective outcomes. I would like to be a part of helping define that.
AT: How has HSBC leveraged artificial intelligence (AI) technology to help in its fight against financial crime?
JSC: We have leveraged many aspects of AI, but I want to focus on the AML transaction monitoring space; we have used AI and other advanced analytic technology to redesign end-to-end how we monitor customer transactions and other behaviors for signs of financial crime. This was not about taking the techniques that all of us in the industry have been using for many years and using AI to discount false positives, which is one use case for AI. Instead, we asked ourselves how we can look at all the information we have at our disposal about our customers and their counterparties to score them on their risk levels and whether or not they are engaging in financial crime through their activity. We needed a lot of processing power for this, which required us to be on the cloud. We leveraged AI and machine learning to help us to bring together all the analytic techniques to produce a score. And we use the score to determine if we need to investigate further. At this point, a person enters the scenario and looks at all the information. What we have discovered is the ability to identify more of the financial crime that has appeared in our bank. We can identify it faster and with fewer false positives, which is important because we have decreased the number of times we contact innocent customers to ask them intrusive questions. We are finding more financial crime at a faster rate; we are reducing unnecessary friction for our good customers, and it has been a pleasure to be part of this project.
AT: To take the AI technology question a step further, what are your thoughts on generative AI and using quantum computing to help in financial crime investigations?
JSC: It is going to become the war of machines. On the financial crime risk management side, we are going to be using quantum computing and generative AI. We are using all these tools to keep our customers safe and to protect the bank and the communities we serve. However, on the other side, criminals are also leveraging this technology, especially in the fraud space, when you think of the possibilities such as deepfakes. It is all moving incredibly fast. You can say we are in a type of arms race against criminals.
AT: As an innovator, what do you see as the next big investment for banks as they strive to prevent financial crime?
JSC: The next big investment is going to be people. We often focus on the technology side, but at the end of the day, when a machine produces data, a person is the one who needs to take that data and make a judgment call on what to do with the data. That judgment is not easy. The world is complicated and the decisions that need to be made are extremely complex. As a result, you need to have good people who have experience and who have integrity. Finding these types of people is an investment in your program.
AT: As a follow-up to your comment in the previous question, what key characteristics stand out when you are looking to hire the right person for your team?
As I look ahead, my focus will be on inspiring and helping prepare the next generation of compliance officers
JSC: I look at a combination of soft skills and technical skills. Technical skills are important because financial crime risk management is a complex area. As I mentioned before, you are not going to pick up the skills overnight. You need some type of formal training, whether it is through ACAMS or otherwise, as well as experience in the industry. The other characteristics that are important in the hiring process are if the potential employee has curiosity, a good mindset and resilience. These qualities are important because financial crime risk management is a dynamic field that is constantly changing. For example, what you learned in technical skills yesterday might be less relevant tomorrow and now you need to learn the next thing. A candidate must have an open mind, be intellectually curious and willing to change, continuously grow and be humble. All these skills are important when looking for a good financial crime risk manager and a compliance officer.
AT: In the past, HSBC has been connected to a worldwide money laundering scheme. What has HSBC done to weather the storm and restore its reputation?
JSC: There is no easy answer, but we needed to put in the hard yards, and this was across the first, second and third lines of defense. First, we needed to obtain the commitment of all and decide where we wanted to go in terms of becoming the best in the industry. This was done through learning and putting into place the right processes, systems, technology and people across a large institution that covers many jurisdictions. To put it into perspective, HSBC has more than 40 million customers. Execution of the plan was not easy; it required resilience, tone and commitment from the top of the house and taking it one step at a time. In addition, having the patience to see it through to the end and then having the drive to sustain it. You are always one moment away from an accident that could damage your reputation again. A good reputation is hard to get but easy to lose. It requires you to constantly strive to be the best, to learn and to be humble.
AT: Could you recommend a first step to take for an anti-financial crime (AFC) professional who may be tasked with a similar situation in restoring their FI’s reputation?
JSC: The first step is putting together a core of good and experienced people who know this area well. This type of experience cannot be learned by watching a YouTube video; it comes from going through the experience of having to restore an FI’s reputation. The core team of people with experience will help in guiding the strategy you create.
The second step is finding people who know your organization inside and out in terms of the day-to-day job, its various lines of business and products and how they work, and who know how to pull all the levers to make the organization move toward your end goal. These individuals with significant corporate history and knowledge, associated with subject-matter experts, who have experience and know what it takes to have an effective program, can then work together to define a target end state with intermediate milestones. That end state is the goal you want to achieve, with critical success measures and checkpoints along the way.
The last piece is having the rigor to stay organized, stick to the plan, push the plan and see it all the way through. Don’t cut corners and ensure your plan gets tested by independent parties.
AT: During your professional trajectory, what inspired you to keep going forward in this industry?
JSC: Two things inspire me to stay in the industry: People and impact. There are two sides to people’s inspiration. First, it is the people who inspired me to go into the AFC industry. My grandfather was my first inspiration. He was the chief of police and also went to the Federal Bureau of Investigation (FBI) academy when J. Edgar Hoover was the director of the FBI. My grandfather always loved the FBI. In my family, only my grandfather and I chose public service, and everyone else chose business. The second set of people who I looked up to, admired and inspired me were the people I worked with along the way who were the generation ahead of me. I wanted to be as impactful as they were and also to make a difference in the world.
The other people part that drives me is that I connect with the idea of protecting the community, the banking system and our customers.
Lastly, I want to make the greatest impact for good in the world during my professional career.
AT: What advice would you give to the new generation of professionals who want to join the fight against financial crime?
JSC: First, if you are thinking about it, you should definitely join the fight. It is an interesting and exciting industry to be a part of. Also, it is not boring. You are always trying to stay one step ahead of criminals, so the work is dynamic. To be able to do the work, you need to be resilient and comfortable with change and ambiguity. You also need to be able to learn from your mistakes and keep on trying. However, I have found that as long as you keep your guiding star focused on doing the right thing, you can make a good impact and a difference in the world.
AT: What do you like to do when you are off the clock?
JSC: I am in love with my dogs. I have two goldendoodles. They are my joy and I like to be in the moment with my dogs. My husband and I both enjoy spending time with our dogs. It is nice to know that no matter what has happened in the day at work, when I walk in the door, my dogs are excited to see me.
Interviewed by Karla Monterrosa-Yancey, CAMS, editor-in-chief, ACAMS Today, firstname.lastname@example.org