Edo Bakker: "It's Not Just About Compliance, It's About Preventing Criminals from Using Your Business for Money Laundering"
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Edo Bakker is a recognized expert in Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF), with a solid professional background in consulting and auditing. After a decade at firms like KPMG and PwC, where he specialized in internal control and risk management, Edo has developed extensive experience conducting external AML audits for top-tier financial institutions including Banco Santander, BBVA, Citibank, and Goldman Sachs, among others. His expertise also covers advising non-financial obliged entities, including the real estate sector, law firms, and online gambling operators.
"What really drew me to this specialty is its practical aspect. You're not just fulfilling a legal obligation, but you're helping prevent criminals from using their illicit profits, stopping them from having free rein to commit crimes while law-abiding citizens meet their obligations," says Edo, highlighting the social value of his professional work. Regarding the future of the sector, he warns that "we're reaching a turning point where anti-money laundering prevention is becoming significantly stricter. The tightening in the banking sector is creating a cascading effect that will force all obliged entities to raise their compliance standards."
Question: How did you come to specialize in anti-money laundering and counter-terrorist financing?
Answer: The path to my specialization was fairly fortuitous. I began my professional career at KPMG and later at PwC, dedicating 10 years to risk management, internal control, and internal audit projects across various sectors: maritime, industrial, pharmaceutical, petrochemical... practically everything except finance.
My transition to anti-money laundering happened gradually, as I was assigned more projects related to this field. This change also involved my transfer to the financial sector within consulting firms, where I began conducting external AML audits for major institutions such as Banco Santander, BBVA, Bankinter, Cajamar, and Caixabank. I also worked with American banks established in Spain, including Citibank, Goldman Sachs, and JP Morgan.
Beyond the purely financial sector, I extended my work to insurance companies and non-financial obliged entities: real estate companies, law firms, and online gambling operators, among others.
What really attracted me to this specialty is its practical aspect. While traditional risk management focuses on defining financial controls with companies, money laundering prevention has a tangible impact: you're not just fulfilling a legal obligation, but you're helping prevent criminals from using their illicit profits. Essentially, you're helping ensure they don't have free rein to commit crimes and then enjoy houses, cars, and a high standard of living while the rest of us citizens fulfill our tax obligations.
Q: What are the key aspects that should never be missing from any solid and effective prevention plan?
A: There are two fundamental elements. The first is the obliged entity's risk analysis, which provides a real snapshot of their situation. This analysis must be meticulously prepared with quantitative and qualitative data, statistics, and other indicators that allow for an adequate assessment of particular risks. Applying a generic template doesn't work; it's not a "one-size-fits-all" approach.
The second essential element is the prevention manual. This cannot be limited to listing the formal obligations established by law. It must be an adapted and grounded document, with practical guidelines, specific contacts, and concrete examples of risky operations. The goal is for employees, who constitute the first line of defense, to know how to identify suspicious situations, what documentation to request, and how to proceed.
Additionally, it's crucial to provide effective training for employees. This training should convey that money laundering prevention goes beyond complying with a legal obligation; you're preventing criminals from using your company for laundering and protecting it from serious reputational risk. A scandal of this type in the press, where your company is linked to drug traffickers or other criminals (even without prior knowledge), can severely damage your relationships with customers, suppliers, and employees.
Q: Do you consider it important to foster a compliance culture within companies?
A: Without a doubt. The challenge is that companies currently face multiple regulatory obligations: occupational risk prevention, data protection, and many others that involve policies and continuous training.
The key is that AML training must differentiate itself by being practical and focusing on real and reputational risks. It cannot be perceived as "just another training," similar to data protection or occupational risk prevention.
The approach should ensure that employees internalize the importance of money laundering and genuinely believe in the relevance of its prevention. It's essential to build awareness that goes beyond mere formal compliance.
Q: How important are KYC processes as the first line of defense in a prevention program?
A: Customer identification and knowledge (KYC) processes are absolutely crucial. When you onboard a new customer, you need to identify them and properly understand their economic activity.
The reason is simple: if you don't know whether a customer is employed, a student, or what their professional and economic profile is, it will be impossible to determine if their subsequent operations are consistent with that profile. A robust initial KYC, complemented by continuous monitoring and periodic updates, is fundamental to reducing risks.
The quality of information collected during KYC conditions the effectiveness of the entire subsequent prevention and detection system.
Q: Which sectors are currently most vulnerable to money laundering?
A: Money laundering dynamics are constantly evolving. When controls increase in one sector, such as finance, launderers simply migrate to others that are less regulated or monitored, like online gambling, cryptocurrencies, or the real estate sector.
This is precisely why the catalog of obliged entities has progressively expanded over the last 30 years, as new money laundering cases were detected in different sectors.
Currently, the financial sector remains the highest risk, mainly due to the volume of transactions it handles and the ease with which an account can be opened, international transfers made, and then disappear. However, other sectors such as real estate also present significant risk, especially due to the high amounts involved in their transactions.
Any sector, without adequate controls, can be used for money laundering.
Q: How is artificial intelligence transforming the prevention sector?
A: Artificial intelligence presents an interesting duality. On one hand, criminals are using it to fabricate false documentation, create synthetic identities, and even falsify bank certificates of account ownership or deepfakes.
But at the same time, entities, especially banks, are incorporating AI into their alert systems to detect suspicious operations. Previously, systems were mainly based on static alerts (for example, triggering an alert with any operation over $100,000), but this was limited.
With artificial intelligence, we can establish models that simultaneously consider 20 or more weighted risk factors. For example, a $30,000 transfer made by a student, destined for another country, from an account opened less than a month ago, along with other additional factors, can generate an alert, even though the amount alone would not be significant.
This ability to analyze multiple variables simultaneously is revolutionizing the effectiveness of monitoring systems.
Q: With the constant evolution of regulations, do you believe appropriate steps are being taken to reduce the risk of money laundering, or is there still a long way to go?
A: Indeed, regulations evolve, but companies' adaptation doesn't always follow the same pace. There's a significant gap in implementation: while some obliged entities don't even comply with basic obligations, others maintain the same procedures as when the law was first published, without updating them.
Money laundering prevention requires continuous improvement. Each year we should be evolving and refining our methods, because at the international level, we're finding that despite the considerable resources invested, the results aren't as expected.
Both entities that already have advanced systems and those at an intermediate level must continue improving, and those that do nothing must start as soon as possible. It's a continuous process of adaptation, and additionally, I'm aware that other obliged entities, such as banks, notaries, etc., are also increasingly demanding compliance with regulations in daily economic transactions.
Q: What changes would you propose to make prevention processes more effective?
A: There are several fundamental aspects that would significantly improve effectiveness:
First, risk analysis should stop being a mere formality and become a document that faithfully reflects the work done and the current risk situation.
Second, it's crucial to incorporate new technologies such as video identification and artificial intelligence into processes.
Third, companies must connect internal information about their customers with external sources. For example, if a customer appears in the Panama Papers, this doesn't automatically mean they're a money launderer, but it constitutes an additional risk factor that should be considered.
Fourth, in Spain there's a supervision problem. Often, until a serious sanction is imposed, many companies don't take their obligations seriously. This also creates a comparative grievance: some entities dedicate significant resources to prevention while others barely do anything and obtain greater benefits as a result.
Finally, public-private collaboration has historically been limited in Spain, although it's been improving since last year. We need more knowledge exchange between obliged entities and SEPBLAC. After all, criminals collaborate effectively among themselves; we, the good guys, who are theoretically more numerous, should join forces with greater determination.
Q: If you had to highlight just one essential skill to successfully perform the role of money laundering prevention officer, what would it be and why?
A: The most important skill is knowing how to ask for help. Money laundering prevention is not a battle you can fight alone, neither within nor outside your organization.
Internally, it's essential to request the necessary resources, both human and technological. And externally, in specific situations, to turn to experts with specialized knowledge.
For example, a company that normally doesn't accept cryptocurrency payments might receive a bank transfer originating from a crypto investment. In these cases, if you're not familiar with this world, it's perfectly valid to seek external advice about what information to request from the client to justify these operations or how they can prove ownership of a digital wallet.
Ultimately, nobody knows everything. We all have strengths and weaknesses, so teamwork is essential to compensate for our individual limitations.
Q: How do you see the evolution of anti-money laundering and counter-terrorist financing in the coming years?
A: Although historically we've seen cycles of greater and lesser attention to this matter, I believe the new capital regulation will bring significant changes.
I'm observing an interesting trend, especially in the banking sector: while previously many reviews were conducted after the fact, now controls are preventive and much stricter. I've heard cases of people whose parents were sending them money from abroad (for example, from the Netherlands to Spain) for not particularly high amounts, but where the bank requested justification for the origin of the funds, going so far as to return the money to the country of origin in the absence of documentation.
This tightening in the banking sector is creating a cascade effect. For example, if a real estate company doesn't properly apply prevention controls and the bank blocks the funds from a transaction, the real estate company is forced to demonstrate that it has complied with its legal obligations.
We're reaching a turning point where money laundering prevention is becoming significantly more serious and strict. And this trend will continue to intensify in the coming years.
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