This episode was recorded at the Money 20/20 event in 2019. On this episode, PaymentsJournal’s editor-in-chief, Ryan McEndarfer, sat down with Dave Excell, founder of Featurespace.

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PaymentsJournal:

Dave, thank you so much for joining me on today’s episode.
To start off, can you give us a little background on Featurespace and how you
help prevent fraud for your financial institution clients?

Dave Excell:

Great. Well, thank you for having me on the show today. I
started Featurespace while I was studying at the University of Cambridge over
in the UK, and was really fascinated in the application of statistics to
understand behavior in the context of how people interact and behave in
different circumstances. We’ve used those same ideas, thoughts and research in
how we help our financial institutions prevent fraud. That’s mainly around
building up a unique, distinctive profile, which helps us understand what good
customer behavior looks like. We use those profiles to look at anomalous
activities, or changes in behavior, that are suspicious then we then use in
algorithms to detect and prevent fraud in real time. Then, importantly, we are
able to take feedback into the system so that it continues to learn and evolve
new data sources or information being fed back into the platform to make sure that
the performance of the system is optimized.

PaymentsJournal:

Excellent, thank you for that overview there. So, I’d like
to kind of get into the topic of money laundering here. Money laundering is
often thought of as a separate form of another type of fraud. Why do you think
money laundering in particular gets that different “bucket” from the
public’s viewpoint, if you will?

Excell:

One of the things that we frequently talk about is whether it is fraud is and there’s often money laundering afterwards. Often when we think about those two concepts, fraud is the activity of essentially stealing something or taking money from someone else, like an instance of credit card fraud where maybe a fraudster has acquired stolen card details from the dark web, then using those details to purchase something. They can then sell the item that they’ve purchased for cash, so they end up with a pile of dirty money that they then need to transfer into a good source of funds. This is where money laundering comes in. So, we often see money laundering in the act of taking those proceeds of crime and trying to convert them into a sort of legitimate curren...