How is Crypto Being Regulated Around the World? - Denisse Rudich| ATC #506

This episode explores global cryptocurrency regulation, focusing on international financial crime prevention initiatives and the evolving landscape of financial technology and risk management.

1. Global Financial Regulations: The episode highlights the evolution of cryptocurrency regulations, especially in the EU, and the global shift towards more structured financial oversight.
2. Innovative Financial Solutions: Denisse discusses the creation of Elementary B and its role in aiding CFOs with financial risk management, underscoring the significance of innovative technologies in modern financial practices.
3. Challenges in Regulation and Innovation: The balance between stringent regulations and fostering innovation is a recurring theme, with discussions on how regulatory frameworks impact financial sector advancements.
4. International Perspectives: The role of international summits and discussions, such as those at the G7 and G20, in shaping global financial policies and regulations is emphasized.
5. Personal Experience in Finance and Tech: Denisse shares her personal journey and the practical aspects of founding and running a fintech company, offering insights into the intersection of finance, technology, and entrepreneurship.

1. Introduction to Denisse Rudich

Denisse Rudich shares her background in international financial crime prevention and her experience working with global financial institutions.

• Denisse Rudich: "I'm a champion of international financial crime prevention initiatives."

2. Evolution of Cryptocurrency Regulations

The discussion focuses on how financial regulations, especially concerning cryptocurrencies, have evolved over the years.

• Denisse Rudich: "There's been a shift towards more openness to innovative technologies."

3. Building Financial Tech Solutions

The conversation turns to the founding of Elementary B and the development of financial risk management platforms for SMEs.

• Denisse Rudich: "We're building a platform to democratize business-critical intelligence for the SME market."

4. Global Financial Governance

Denisse talks about her involvement in the G7 and G20, sharing insights into global financial governance and regulatory discussions.

• Denisse Rudich: "I provide independent analysis and information at G7 and G20 summits."

5. The Future of Finance and Technology

The episode concludes with perspectives on the future of financial technology and the role of regulations in shaping this landscape.

• Denisse Rudich: "It's crucial to balance innovation with regulatory frameworks to ensure financial stability."

1. Stay Informed on Regulatory Changes: Keep up-to-date with global financial regulations, especially in the cryptocurrency space.
2. Leverage Technology for Compliance: Utilize innovative technologies to enhance financial crime compliance and risk management.
3. Engage in International Financial Discourse: Participate in or follow discussions at international forums like the G7 and G20 to understand global financial trends.
4. Evaluate the Impact of Regulations on Innovation: Consider how financial regulations affect the ability to innovate and adapt business models accordingly.
5. Build Partnerships in the Financial Sector: Collaborate with others in the industry to navigate the complexities of financial regulations and technology development.

Join Stephen Sargeant for an insightful episode of the Around The Coin Podcast featuring special guest, Denisse Rudich. Denisse is the Founder and CEO of Rudich Advisory and COO of ElementaryB. She shares details of her career journey, her insights into technological changes in the financial sector, and her latest innovative projects. Denisse also discusses topics like the impact of sanctions on financial profit, working in a business with a family member, cryptocurrency regulations in the EU, open banking in Canada, and the role of influencers in politics.

People

• Denisse Rudich

Companies

• Elementary B

Guest Name(s):

• Denisse Rudich

Content Warnings:

None

Stephen Sargent

This is Stephen Sargent around the Coin podcast. We just finished recording an episode with Denise Rudic. She's an advisory. She's on research programs for the G seven and G 20. And she's also co founded Elementary B, which is honestly like a war room for CFO's understanding the political geopolitical risks, sanctions risk, and how it affects the bottom line.

We talk everything about web three. We get deep into what's happening with Mika and the cryptocurrency regulations in the EU, why we don't really have open banking in Canada, and we talk about everything that they're discussing at the g seven and G 20, and why she's building this unique tech stack and how important it is for other entrepreneurs to build around other entrepreneurs. This is a good one. You're going to learn so much and have that international flavor. This is a person that's sitting down amongst presidents and prime ministers from around the world sharing her thoughts and she came here to do it for us.

Thank you so much around the coin audience. I'm seeing you guys blow up on LinkedIn and Twitter sharing all your amazing dm's with me about how much you love the podcast and we appreciate you. We're building this bigger and better than we ever have and I can't wait for you to listen to this episode.

This is your host, Stephen Sargent. Around the Coin podcast, the episode you've all been waiting for. This had to be rescheduled, but we're finally got Denise Rudic. She's the director of Rudich advisory and also the co founder of elementary Bee. Denise, tell the crowd a little bit about yourself.

I'm so interested to tell hear about your story, but tell us a little bit about you and then we're going to dive right into the conversation. Fantastic. So I'm a champion, I guess, of international financial crime prevention initiatives. I have worked on many, many different initiatives around the world with the private sector, the public sector. I'm a self described recovering banker, so I did my time in the city of London.

Denisse Rudich

I'm also a mom and a sister and a daughter and parent to a dog and just really enjoy working in the field of innovation, global governance and financial crime prevention. I love it. What have you seen in the last ten years? Because you've been in the traditional landscape, you're now started up your own fintech risk advisory as well. What have you seen in the last ten years, either from the technology standpoint or just from the elevation of crypto and solutions that are helping financial crime compliance.

So you've definitely seen, or I have definitely seen a little bit more or a lot more appetite for adopting innovative technologies at the same time. Before there used to be kind of a, from a regulatory technology perspective, there was always a kind of like, you give us a proof of concept, we won't pay for it. You let us know, we'll let you know if it works or it doesn't work. And so there's definitely been a bit of a change in approach with regards to, you know, you come to us. So more of a partnership model that's kind of emerging also around, whereas again, the last ten years, crypto was always a hard no in many institutions and many organizations because of the perceived high risk of money laundering and potentially terrorist financing, with the emergence of blockchain technology or blockchain monitoring technologies, and kind of definitely a move to have stronger regulation in place.

I'm not going to say harmonization of regulation, because that's not really happening yet. It's just made banks a little bit more comfortable to at least think about having the discussions and offering bank accounts and potentially partnering up with or issuing their own crypto assets as well. And also the recent ruling around ETF's. I think it's fantastic. Slightly better appetite for this.

Stephen Sargent

You started at elementary Bee with your sister, a tech stack. First of all, before I get into what that is, what is it like working with your sister? I just did a project with my sister, a speaker reel that was like a minute and a half long, and I probably do not want her as a client ever again. What's it like working with your sister? Working with family in general?

Do you have to have a lot of communication, you know, like, it's sisters, and then you don't want to talk about money and dissolving the business, but this is all the conversations that you would have to have if you co founded it with a stranger. So tell me about that process, because I think that's interesting. Sometimes I revert to, like, my 16 year old self, and we are aware that there is a risk of that happening, that you can't really do that in a professional environment. Very early on, when. When we talked about setting up the company, I'm well aware of, she's my older sister.

Denisse Rudich

She's also the CEO. Right. So I know that she's the boss, but we put in place kind of frameworks to make sure that I do not report into her. So I have a reporting line into, or a dotted line into a gentleman called Bob. And I don't quite remember his role at the loan, but he's on the board.

I'm not on the board as well. So we've kind of put in place different structures to make sure that we are able to actually manage this in a way that's conducive and for the to benefit of the business. I've seen a lot of businesses fail. So the conversations around dissolution, you know what's going to happen if the company doesn't work out or if the company does work out. But once somebody wants in or out, you have to have those conversations as a co founder with anybody from the beginning.

Have the tough conversations, think of the worst case scenarios, come up with solutions while you're still talking. And then you have that extra tension, as, you know, family members. But at the end of the of day. Day, you the just want everybody to succeed, and you want things to. So there's also that kind of, you know, pressure of making sure that you.

Not pressure, but just wanting for things to work out and going that extra mile for that. You don't want to end up like family Christmases. Since you have your lawyer next lawyer. What you can say is different sides of the world. Parents, like, nobody can talk to each other.

Stephen Sargent

They have to, like, write it down. Like, it has to be a disposition. But tell me what you're building. And usually when people are building tech stacks, especially when you're coming from industry, you saw something that was not working constantly with every project that you were doing, I'm assuming, and you're like, why don't we just fix it? Because nobody else seems to be doing it.

Walk us through the thought process in building this company and what you're actually doing, and maybe talk about some features that you're kind of releasing this year or upcoming. So we were actually originally going to build a bank, but the funding that you need to build a bank is a lot of money. And again, we started right before COVID hit. So we've had. So we've had to pivot, you know, not just from.

Denisse Rudich

From a funding perspective, but we also found a massive gap in the SME market, whereby not only do they have, like, the right access to financial risk, intel, financial risk intelligence information, or even information easily accessible information to things like regulatory changes or the ability to determine when a sanction is going to hit and what's actually the impact on their cash flow. So what we're building, we're building a platform called Sherlock. It's a financial risk management platform, and we're looking to democratize business critical intelligence for the SME market. So we target chief financial officers and basically elementary B and Sherlock create or provide some war room for them to be able to make strategic decisions around to help them manage their liquidity. So money coming in?

Money coming out, because a lot of companies that are in the SME markets turn out as entrepreneurs like me, or end up being kind of family owned businesses, and they just don't have the time or the expertise, once they've kind of gotten to that level to be able to manage all of these different issues. That's the first time I ever heard someone talk about sanctions from, like, a financial problem. Profit, cash allocation, or capital allocation. Usually it's like protection against risk and regulatory bodies, and block filing with OFAC and blockchain investigations. I've never heard of someone say, hey, if you can't do business with this country that's on the verge of being sanctioned, this is going to cost your company x amount of dollars.

Stephen Sargent

What's going to be our strategy? That's high level thinking. Who came up with Sherlock? Who came up with Sherlock? Was that, what, like, both of you sat there like, I love it.

You came, you know, Sherlock Holmes? Or was it like, one person said it? You have to give that. You have to go to external consultancies to get the name, because you just wouldn't agree on the same name. I mean, we have an amazing team of founders, so there's actually, it was.

Denisse Rudich

It was about twelve of us founders, all bankers, all people working in the financial services industry. We have Gary Dolman, who used to be at Montauk, found Monto and was Starling bank. I don't think he was at Starling bank. We have Bob Lewis, who's worked at some of the top banks. Sir.

Sir, Bob, who's worked in intelligence previously, but he's also worked for some of the top tier banks. Like, we have some incredible, incredible people on our team, which has been just an absolute joy and an honor to be able to work with. So it wasn't just Karen and I sitting in her backyard over a fire, thinking, yes, this is what we're going to build, which is really, really exciting. But I would like to tell you about something else that maybe I'm a little something else that I'm working on that might be a bit more AML specific. Anti money laundering, counterterrorism financing specific, if you will let me.

Stephen Sargent

Yeah, of course. Yeah. I thought you were going to jump right into it. Jump right into it. Okay, great, thanks.

Denisse Rudich

So, I'm working, you know, because I don't have enough to do. I have a co founder out in Switzerland and we've got an amazing team, actually scattered, not completely around the world, but scattered around England and Europe. And we're looking to generate transparency and greater understanding around how financial products can actually be used to launder money. So we're looking at creating an open source platform to help train investigative journalists and law enforcement agencies, civil society organizations and banks in emerging markets. And again, it's really all about helping people understand the fund flows, helping understand the risk indicators of a product, not who is using a product and what's the risk of the person using a product, but also what are some of the controls that can be developed to actually mitigate or minimize the risk?

And then from the fund flow perspective with the journalists, I do this all the time, kind of not using technology, but my hand and a piece of paper and I draw little boxes and arrows going all over the place, and have found that some of the journalists end up actually following a different path and identifying additional assets once they understand how the products actually work. That's so interesting because a chems, the association for AML Professionals, you know, worldwide, based in the US, they just did a scholarship program with the ICIJ for that reason, because they're trying to learn more about the flow of funds and what professionals know, regulators know, and us as AML professionals is exactly what you said. Right? They get into places that we never even think about. They're able to identify more and make more connections, as we saw with the pandemic papers and other, you know, paradise papers and other huge reveals.

Stephen Sargent

So it's really interesting that you're, you know, helping bring those people together to kind of consolidate the efforts in an open source platform, which is always hard to do. Right? You're, you're building tech stacks, the open source platform. How hard is it to work with the technology because it evolves so quickly? How hard is it to build something that's still growing as you're building it?

Denisse Rudich

So this is where you find amazing people. So we went through, I think it's called tech dating. Tech founder dating. So you find somebody who's passionate about what it is that they do and also really, really good about what it is that they do. So my co founder in Switzerland, that guy named Marco, and he's at what is the equivalent of the Swiss Institute, of the swiss version of MIT.

He's a specialist in kind of machine learning and just is a professor and just kind of just loves working on this stuff. We have a data scientist who just recently graduated from Oxford, who she was like, I'd like to build a large language model and see how this applies to policy and governance. And then we have somebody else who's former investigative journalist, former regulator, who's also helping, you know, who herself has been on the receiving end of challenges with investigating complex financial products with, you know, the Myanmar junta and places like that, who's working on this. So finding people whose passion is to stay on top of this information, as a non technical person myself, is really, really important. Now, you named a couple regions there, a couple of professionals.

Stephen Sargent

I think a lot of what people see you on LinkedIn and other places is your work with the G seven, G 20. You're talking to dignitaries all over the world about regulatory, or why don't you tell us what you're talking to them about how you get into these conversations, talking to presidents and prime ministers from all over the world, and kind of what your function is in those conversations and how you're kind of elaborating on some of the regulatory compliance needs that these countries, not even companies at these countries might need to be aware of. So I am director of the G seven and the G 20 research groups here in London, and we were having our little conversation beforehand. I started with the research groups about 24, 25 years ago when I was a student at the University of Toronto. And basically it's a network of students who measure compliance against G seven and G 20 initiatives, but also practitioners.

Denisse Rudich

So former Sherpas, former ministers of countries who have held G seven and G 20 meetings, academics, businessmen and women as well, who are summit watchers. So I get the opportunity and I have the luck and the joy of being able to attend G seven and G 20 summits and as an observer and provide independent analysis and information to the media, but also do work with sometimes, you know, I do have the opportunity of working with some of the governments that are either attending or that are hosting and just share what I may recommend that maybe they should focus on or potential policy areas that they could definitely advance on. So I'm an observer and a watcher, and then every once in a while, a little bit of the invisible hand and with, you know, with the various heads of state, you do have kind of some insane access when you're at this event. And sometimes, yeah, it really is a matter of saying I'm a huge fan. But also, you know, in this particular policy area, I, you know, I had the opportunity of speaking with President Macron about illegal wildlife trafficking and environmental crime.

I've spoken with Prime Minister Trudeau about the Wagner group, which is now kind of taken up by the, being taken up by the Ministry of Defense and brought more closely into Russia. So I do, and then I have spoken about diamonds with president of the Council of Europe and the challenges around the diamond industry and things like that. So I do have the opportunity of taking my kind of day to day work sometimes and having these kind of sidebar conversations, which is lucky and exciting and do what you can with the. Opportunities that arise now for someone that and me being included, that's either. And about g seven and g 20.

Stephen Sargent

Like, I imagine that there's someone that's like a g 21 country, like someone that's outside of that group of 20. Is it some way that you can get into the g 20 if you're not part of the countries or if someone like Russia, I don't know if Russia was part of the g seven or the g 20 where they're like, hey, you're not going to be included anymore because of what you did. We're going to bring another country into this conversation. It sounds silly probably to you, but I think a lot of people listening, like, I don't understand the framework. Is this something that you can strive to be for, or is this like, set out in stone, can't be changed?

Denisse Rudich

So Russia was actually part of the g eight. So it started with the g five, then it became the g seven, then it became the g eight, and then it became the g seven again after Crimea. So there is a chance for countries that meet kind of specific criteria or they get invited time and time again to be part of the groupings that are able to join. So with the g 20, the other thing that does tend to happen at every summit is that they invite different countries to attend as either guests or potential observers. So there are different ways that countries that traditionally wouldn't really get involved in the g seven or g 20 process do get involved.

You also have the BriCs. Britain. No, not Britain. Oh, my gosh. Not Britain.

Brazil. Politics, Russia, India, China and South Africa, who have actually just accepted a host of new. But again, as potentially a counter, counter counterblock to the G seven and the G 20. But the G 21 tends to be a bit more kind of broader. Well, because it has 20 members.

Stephen Sargent

Understandable. But you're also a technical expert, obviously, building a tech stack with your sister. You're a technical expert for the Council of Europe. What are your original thoughts about what's happening with the market in crypto asset Micah coming out of coming out of the EU, comprehensive regulatory plan for cryptocurrencies, virtual assets. What are your thoughts about Micah?

Is there something that they missed? Is there something that you wish they could have included? What are your overall thoughts? Are you excited? That's kind of leading the way in the industry.

Denisse Rudich

So I am excited that it has come out into the industry. And I think Micah was a response to, I mean, the response to what they saw as potential threat of money laundering through crypto assets in Europe, but also response to FTX and Luna and what happened. And what's really interesting about mica or Mica Mika, I call it mica, mica. I keep butchering it. Not that hard, is that it also addresses things like consumer protection.

It brings into play the miffed Tusso, the market and financial instruments directive. So talking about kind of capital adequacy frameworks, you need to have senior management responsibility and kind of fit and proper regimes to have risk management, not anti money laundering risk management, but just kind of operational, basic risk management frameworks in place. So I think that's really, really important because it kind of allows for the creation of protection for people like you and me and our parents and our sisters and our brothers and our cousins and our aunts and whoever else wants to put money into the space, more protection, which is, you know, essential, in my opinion. Now, some of the requirements by Micah are a little bit more stringent than even the financial action task force had put out there, especially around thresholds around, you know, crypto transfers and the reporting requirements. Do you think this might stifle innovation in the EU?

Stephen Sargent

Because it still seems a lot of countries are moving from places like the United States and setting up their headquarters in France, and they might actually like the strict regulations because they're very, they're, they're not as vague as places like the states where you don't even know if you can build something and you're going to be penalized three or four years later. So do you think this stifles innovation or it actually excels innovation? Because everyone knows what the guardrails are? Okay. So I think, oh, what a question.

Denisse Rudich

Stifle or excel innovation? I think it provides for wider market access. If you go into Europe, if you go into Europe, you get a license in one country, then you can passport into any country. You might have to have a local representative in country, but you don't have to go through the same kind of hurdles and jumps and barriers that you would kind of doing it into every single country. I think organizations like having the certainty of not having to follow if they're operating in 70 different countries around the world, or have a touch point into 70 different countries around the world, at least having one cookie cutter recipe that they can then replicate across different jurisdictions, instead of having to recreate from a regulatory perspective, definitely, like recreate the cookie or the recipe from scratch every single time.

In terms of innovation, I think. I don't know. I think you're always going to have innovators. But whether the products are going to be able to be offered by the exchanges that are being regulated or the counterparties are being regulated by Mica, that's the challenge. Or whether they just start kind of broadening the net to catch some of those new regulatory or those new innovative projects.

Stephen Sargent

As you're seeing in the EU, there's a big push around, like, close to being banks. Like banks, but you can't call them banks, but they pretty much, other than deposits, provide the same services a traditional bank was. So you see open banking really opening up Europe, the United Kingdom, and other places for these kind of transactions. But we're seeing Canada, and you're, you know, used to be canadian, you're a fellow, uh, Canuck. You're seeing, it's like completely stall out in Canada, even though they have a broad and more comprehensive crypto regulation.

Open finance seems to be like one of those subjects that, you know, the majority of those, you know, lobbying for the canadian financial ecosystem do not want to include. What are your thoughts about open banking and how can we apply some of the lessons that you're seeing out there in the UK to the canadian market? Open banking is absolutely fascinating because it's one of those things that as a person in, you know, in that, in living in England, you just use, without realizing that you're using it, that you're doing it. All of a sudden, it's really easy to make a payment online. It's really easy to send money from one place to another.

Denisse Rudich

Money suddenly shows up in your account instantly. So it's kind of like a little bit like magic, and you're like, oh, okay, that's great. But it wasn't until I had a chance to write a paper on kind of the money laundering requirements for payment information service providers and account information service providers, and the challenges in kind of applying integrity laundering regulations that I started understanding a little bit more about it. So there's over 60 countries that have introduced instant payment frameworks and rails. There's different models, there's centralized frameworks, there's decentralized frameworks it's all kind of linked to APIs.

And in the UK, over 60% of the population use open banking. But again, most people aren't even aware that this is actually happening. Right. So in Canada, I don't actually understand the challenges with introducing open banking from a technical perspective. Again, I'm not really sure how technically difficult it is.

Again, to me, it seems like it's API's plugging in at the back. I may be completely wrong. It's partnership development and things like that. But the biggest challenge here was determining whether, you know, whether payment initiation service providers, so people who kind of triggered a payment versus account information service providers, which just share kind of data needed to be regulated for AML. I don't know if that helped or whether that answered your question, Stephen, but it does.

Stephen Sargent

I think one of the biggest hurdles is you're dealing with a monopoly of, like, five or six major banks in Canada where they have a stronghold, versus, like, United States where they have hundreds of small charter banks. Or, you know, it's a lot easier to kind of like, say, hey, you already have so many in Canada. Like, even for me, you talked about payments. Like, I have a couple clients in the United Kingdom. I can't get a deposit in great british pounds directly to my account.

My account doesn't offer GBP denominated accounts, so I have. They have to send it through wise, or they have to go through and, you know, convert it to the US to send it to me. And that just shows you how difficult in this day and age to get a simple payment from a client, how still tricky that is in Canada and the need for this open banking. Do you see any big concerns? I think there must be concerns.

Denisse Rudich

I mean, it's also hard getting foreign payments into the UK. Like, there's still a lot of friction in the international payment system. You know, I mean, I have. I think I have to use wise or some sort of other provider as opposed to my bank, because it's less expensive, it's faster. And.

And so this is kind of the. Where the importance of e money institutions and kind of those types of companies are, are essential or global finance to continue working. But I'm still astounded that in this age, I can't just link onto my bank account and make a foreign payment without there being like, a lot of friction. And I think this is where open banking is great, right? Like, it's frictionless.

It just kind of happens. It's like I said, it's like magic. And it's like, really the pitch for a kind of cryptocurrency, because we're talking about, you know, London, the United Kingdom and Canada. We're not talking about, like, countries like Nigeria and Kenya where you have. You don't even have access to capital.

Stephen Sargent

You can't run into there and get us dollars. It might take a month. You might not even get it at all. So we're talking evolved financial ecosystems where you still have problems sending funds overseas from your computer. Right.

Like, you could do a wire transfer, but there's 9% chance he's going to get lost. They have to call the other person. They send it back. As you said, there's so much friction in sending funds and the expense of it. It doesn't really make sense.

What are the conversations you're hearing in the G seven and G 20 when it comes, when you talk about, like, maybe stable coins, easier access to payment cryptocurrency? And I probably assume that the conversation of AI has come up maybe in the last few meetings. What are, like, some of the rumblings that you can discuss that are definitely on the minds of the world's biggest leaders? Right. I actually had to check my notes for this one.

Denisse Rudich

I don't know what happens to my Internet there. Right. So at the moment, so definitely cryptocurrencies have been discussed specifically at the G seven or, well, G 20 levels. I think it was in Argentina was the first time it was discussed, and they need to regulate. What happened at Delhi this past year was that there was definitely the recommendation for all countries who are G seven or G 20 members, but also kind of on a global basis to regulate, to provide and maintain effective oversight of crypto assets and stablecoins, and also to avoid regulatory arbitrage.

So that was huge, because, again, you're calling for global regulation of crypto assets and also the introduction of stablecoins. There was also a call for the need to manage money laundering risk, proliferation financing risk, and terrorist financing risk, which, again, is something that's kind of come up more recently and late to crypto. And how actually the problem is, I think, still remains to be fully seen and documented. Travel rule was huge. So the need to actually have travel rule implementation, the level of travel rule implementation on a global basis is not as much as he would have hoped by now.

And again, the travel rule is all about including the originator, the information around the sender of a crypto asset and who's actually receiving it. And there's a lot of challenges that I wasn't completely aware of until, again, doing a bit of a deep dive into the travel rule. So G leaders also called for need to identify risks associated with DeFi. Again, we saw the US issued their DeFi risk assessment last year with regards to central bank digital currencies. We've seen, I think it was at 130 countries that are looking at adopting a central bank digital currency.

So it's. I mean, it's just going to happen, right? And so there was a need to identify, you know, it wasn't really about money laundering, but look at macro financial implications. Please don't ask me to describe what that is at this moment. My brain just cannot do it.

And on AI, I think everybody's a little bit scared, excited and scared about AI, right? So there's a need to kind of, you know, there was a call to leverage AI for public good, but also to have kind of ongoing international discussions and cooperation about AI governance and how to protect the world from AI. Because I think there's been conversations about having kind of societal level catastrophic incidents because of AI. And, you know, so that's scary. That needs to be addressed.

Stephen Sargent

And we see right now, like, there's people having further conversation. Taylor Swift gets put in some AI illicit, you know, content, and all of a sudden they're like, hey, we have to take a serious look at this. And the swifties, you know, everyone reacted. I think the Taylor Swift controls everything right now, right? She's top of conversation for AI regulation, and she might win the Super bowl herself.

Like, they might just put her on the field, because that's the only way anyone's watching the Super bowl now. Nobody cares that Asha is doing the halftime show. They are doing, like, live pay by play of Taylor Swift doing the wave in the stands like she's got it going on. I have to give her credit, man. She is.

Denisse Rudich

I think she's even been credited with helping reverse the decision in Guatemala for the latest presidential elections. I think it was the swifties or there was a candidate who was elected, he won. He tweeted something out around Taylor Swift or sent out a TikTok video around Taylor Swift, ended up winning. They tried to reverse it, but again, somehow connected to Taylor Swift. He is still now, you know, going to be, or was labeled as the winner of being president of Guatemala.

So it was just, she's everywhere. What are your thoughts on that? We're around the same age, I think, of millennial. I don't know if we're millennials or we're not baby boomers. So we definitely are somewhere in the millennial stage where I think when me and you both are growing up, like, our converter for the tv was plugged into the actual tv.

Stephen Sargent

Like, you had 13 buttons and it was plugged in to. Now you see that, like, somebody that just goes around asking some of the questions is driving like, $400,000 cars because they have all the attention. What do you think about influence? Because I think this is a conversation governments are taking note of, too. There's a lot of, you know, even the US candidate, like, if you're not out there on Twitter making noise and having content in social media, that is definitely part of the strategy now, more so than maybe your public policies on abortions and other things, what are your thoughts about the way this is influencing now?

We were seeing government elections. What are your thoughts on influencers and just the way social media has evolved over the last 30 years? It terrifies me that Elon Musk or Donald Trump or Taylor Swift or somebody who has millions of followers can send out a small tweet. Is it still a tweet on. I think so.

Denisse Rudich

I don't know what's called right now.

And influence, the loss of billions of dollars on the market and then also the impact on the shareholders. And it just baffles me that that can happen with an instance, right? That there can be rental banks, that there can be, that a crypto platform can suddenly go from hero to zero per se, right, because of one message by one person on a platform that suddenly goes viral. I also, I mean, I have a school aged child. I was watching the new version of mean girl and just the proliferation of media and how one message, you know, the threat of misinformation and disinformation and actually how we have seen that influence elections and influence policymakers and decisions.

I'm currently working on a project where we're actually considering potentially using some influencers who, you know, embedded and whatnot, to be able to, you know, to promote citizen engagement and participation in using a technological solution for good. So I think there's definitely a role. The fact that, I mean, Steven, you're an influencer, so thousands of people follow you. A little small army there on LinkedIn. You do have a little LinkedIn army, and, you know, and people pay attention to what you say.

And I think it's, you know, but you're also incredibly, I don't know if you're, if careful is the right word, intentional with your content. I think. And I think that's also one of the things about, you know, there are influencer out there just doing stuff for self promotion. But then there are influencers who are out there to help people and to share information and to do good. And I think that's where, where I do think that there's a really good role for influencers.

Stephen Sargent

That's where all the keyboard warriors were about to come at you. You're like, careful. That kid is not careful about anything, he says. But now I have to kind of bring this back to elementary b. How do you now go into the war room, talk about sanctions, when Donald says, hey, you know, we got bigger bombs, like, when you see a tweet like that go out to a country like North Korea, how do you kind of manage that internally?

Or when, you know, someone tweets about another country or, you know, Justin Trudeau says something about India, these are all major impacts. How do you kind of manage that in the war room? Do you weigh that information because you cannot completely ignore it anymore? Yeah, no, I think, and this is also part of horizon planning. Right.

Denisse Rudich

And I think it's also about being so risk management, horizon planning, and then having the right processes in place as a corporation to not just react. Right. But actually assess the impact of what is being said and then being able to make a decision about how to act. So there's a tweet that goes out. Is that actually going to have an impact on your bottom line?

I mean, I'm just thinking of Ronaldo and Pepsi and water. Was it Coca Cola or Pepsi? He chose to drink water, and that led to a drop in billions of dollars in terms of the value of the company. And so again, it's about, is it a short term thing? Is it a long term issue?

And then what are the, you know, what are the communications that needs to go out around that? But also cybersecurity controls are really important. Right. Because if something goes out negatively. So again, I know that we're going beyond the question that you said that you asked, but having strong cybersecurity controls, penetration testing and just proactive plans and incident planning and response planning is essential for being able to actually manage your business.

Stephen Sargent

These are real concerns. I love that you went there because, you know, Coca Cola can survive or Pepsi can survive 4 billion loss, or Snapchat might be able to survive. Kylie tweeting, does anyone still use Snapchat? But a lot of companies you're dealing with, they probably couldn't survive something like that. So they have to put those controls in place and they have to have those conversations because one tweet will end their company and their investors kind of walk away and there's serious impact to the CFO and their bottom line.

We talked a little bit about the impact. We saw the impact with Starbucks, with Israel against Hamas. You were on tv or on a news channel talking about that. We see that there might be a ceasefire, but this has been going on for over 100 days now. And it seems that, you know, the, the death toll has been large.

Are we going to look back two or three, five years from now and say we could have handled this differently? What are your thoughts about the way we're handling it now and if we're going to have regrets looking back, this. Is where I'm going to take the fifth. So I think, as I've mentioned before, I'm not, I'm not technically, I don't feel like I have the technical expertise to be able to precisely comment. There's so many, this is such a complex conflict affecting not just Israelis and the Palestinians, but also the wider communities around the world.

Denisse Rudich

And I think this is where I just, I wish there wasn't a war, but I don't, I don't have, you know, I don't think anybody has a silver answer for how to address this conflict. Do these concerns come up in conversations when you're working with SME's? Obviously, it's a realization of what's going on around the world. And it's not just this one. There's things happening in Congo.

Stephen Sargent

We're seeing, you've probably seen this for generations, where it's just a little bit more exploited now because of the media. But I think in Congo, they've lost 2 million people over the last ten years that maybe nobody's talking about as much, but around batteries going into your cell phones, how do you encapsulate all this information to make a decision as to how you're going to put in the right processes for a small company. Right. Or even an emerging tech company. How do they factor in all these things happening around the world in real time?

Denisse Rudich

So, and I think that's also part of the reason why we've, we're creating the platform that we're creating a lot of, again, so it's not always that easy to make a link between human rights abuses. I mean, there are people that are able to do this a little bit more easily, especially that work in these fields. But human rights abuses, NMI or the fact, let me use the example of the Central African Republic. They introduced a new project called the Sanko Project, which they first, they made bitcoin, the second official currency in the country, then that was the Supreme Court of Justice revoked that. They decided to step back away from that.

Then they created a new project, introducing a new coin, not cone. But what's really concerning to me is around the tokenization of natural resources. So they're creating a framework whereby, and actually a lot of the natural resources that are being used or that need to be used to transition to a greener economy are actually found in the Congo. So the fact that there are individuals who are creating a framework where they can tokenize and own these assets on the ground and in the metaverse and own land in the Central African Republic, to me is incredibly concerning how that affects how you then convert that information into price stability for a commodity, for the price of a commodity, and then access into the international market, and then access into the supply chain of a corporation. And then the impact on liquidity and the bottom line is something that we're again continuing to work on at the moment.

But at least we can provide some of the intelligence and some of the changes and some of the potential risks that there's an algorithm that can make its little decision and say, this may or may not affect your bottom line. And something that we're going to be, that we're working on as well, is building a marketplace to allow SME's to access banking products that are traditionally only accessible for the large global conglomerates. Like invoice factoring, trade financing solutions, letters of credit. As a small business, really hard, like you're just not profitable enough essentially, to have that kind of necessarily that relationship. And there's very, very few banks that offer those kinds of services hedging like grand scale fx trading, derivatives and things like that.

So we're hoping to also build that into our marketplace to help them. So not only tell them you might have a liquidity problem, but these are some solutions that you might want to check out. I could see this as a really profitable business, even like benchmarking, right? These are just, you know, indexes that people look at, stats that people are looking at and they like to look at historically, right? Even if you benchmark it today, historically, people are going to look back and say, okay, during the worst time, during this pandemic, this is what happened, we have another pandemic.

Stephen Sargent

So we might be able to expect certain similarities here based on these categories, et cetera. Sounds like a great business. People love data and companies pay a lot of money for that data and benchmarking. One of the interesting things that you're also a fellow at Rusty, which is the center for Financial Crime and Security Studies. I love Rusty.

They put out some amazing content. They have all the best fellows, including yourself, doing, you know, things around the world. Tell me a little bit about what are some interesting pieces of research you've either worked on or that have come from Rusty? Like, oh, I'm really proud of some of the stuff that they've released here. So, like you, I'm a.

Denisse Rudich

I'm a huge fan of everything that they do. And, I mean, there are so many different. They tend to work, you know, in financial crime, across the ecosystem, and also all the different spaces. So I'm a huge fan of things that Alison Owen writes. She's their crypto expert.

Kayla is in man, used to be at Rusi and also did a lot of work on North Korea, which was absolutely fascinating. David Kyliel, who's now at elliptic, is also a fellow at Rusi. He just came out with a book. I can't, off the top of my head, remember its name, but cryptolanderers, I don't know. I believe.

Stephen Sargent

I believe blue and orange, so it's hard for me to remember. Yeah. No, but he's, you know, like a true kind of financial crime crypto expert. Like one of the first people who was writing about this. Like ten years, not ten years ago, maybe about seven years ago or something.

Maybe like, it's 2024. It's like ten years is like, everyone used to think bitcoin's only ten years old, but now it's like, you know, almost 15. So ten years sounds a little bit more. You and I were talking about Aidan Larkin beforehand. Write any of his content if you're on LinkedIn.

Denisse Rudich

He's also a fellow. Follow him. Isabella Chase is a TRM labs. Her content is fantastic. Samantha Sheen, Malcolm Wright.

I mean, I'm sorry, fellows from Rusi, that I have not mentioned. Naomi Taimbe, Matthew Redhead, all of his work on terrorist financing. I mean, there are so many of fellows, and. And everybody's kind of an them expert in their own right. I'm gonna, you know, if you.

If you want to read anything that I write, please go ahead as well. I work hard at it. And then there's also a podcast. They have the suspicious transaction report podcast, and their events are fantastic as well. So I think I've stopped plugging Rousey now.

Stephen Sargent

It's okay. We're gonna do a voiceover to, like, mention all the fellows that you didn't mention so they didn't feel left out.

Like, we're doing the tezzin in the classroom.

Denisse Rudich

There are, so, you mentioned so. Much about web three. You talked about metaverse. You talked about defi, decentralization. When I say the term web three, like, what's the first thing that comes to your mind?

Stephen Sargent

Like, when I say web three, what's the first thing, that kind of thing. Do you think about, do you think about decentralization? You just go to like, oh, that NFT that I bought in 2021 when the hype was around. What's the first thing that comes to your mind? A lot of electricity usage.

Denisse Rudich

Yeah, I think that's, and I hope they don't turn the power off. That's my, my kind of thing. And also, I always think about the reporting of crimes on web three and Interquol's reporting center. And how do you manage that in a decentralized world? What jurisdictional, like, what country, what laws apply which country to a particular law or to a particular incident or particular crime that's happening in the metaverse?

Stephen Sargent

Lastly, before I let you go, we've seen a lot of, we've seen protests. The protests are more frequent. You know, doesn't matter what the, you know, what they're fighting about or what they're protesting, it's a lot more rampant than we saw, you know, growing up. And I think the trust in government has kind of been eroded, especially over the pandemic. What are your thoughts?

Like, if you had to speak to, if you had to do a 1 minute speech to g seven, and I think, you know, that was what Davos was about, is like rebuilding trust. What are your thoughts about how we can rebuild trust if you had to do a 1 minute speech to everyone in front of the G seven and. The G 20, I think citizen engagement, an engagement of youth and marginalized communities, which make up a large percentage of voters, is really, really important. And tackling disinformation and misinformation and keeping the Internet as safe as can be because it continues to be a place where people can put whatever it is that they want on there. And I think there's definitely, you know, you're seeing more and more kind of tech companies coming forward and making pledges to remove terrorist content and CSAM images.

Denisse Rudich

I don't really want to say out loud what CSAM stands for, but it's pretty awful. Or kind of working with, you know, you are seeing organizations working with law enforcement to tackle kind of hate and misinformation online. And I think if we can do more around that, but also, you know, tackle corruption, you know, there's definitely, I think when you're talking about erosion of trust here in the UK, the UK has gone down on Transparency International's corruption Perceptions index. And some of that has to do because of what happened during COVID and allegations of corruption around that when the political elite kind of take for themselves, but there are no roads, hospitals are awful, children can't get educated or have poor, poor access to education. You know, things like, I mean, there's obviously a lot more kind of impact of corruption.

That's when you start seeing the threats to democratize, you know, poor governance and crumbling institutions. So I think focus on those things. I think citizen engagement is important. Even during, like, the kind of Black Lives Matter movement, people are bringing on speakers and they're like, they have all, you know, charcuterie boards for everyone and everything. It's like the one thing I always used to ask them, like, have you talked to a black person at your organization or anyone you feel is impacted by this at your organization?

Stephen Sargent

And the looks were kind of like this wide eyed organ, like, this wide eyed look, like you just spent millions on events and sending to this organization and this charity. And that's great. But, like, have you talked to your own people? Have you talked to your own people? Regardless of whether it's Black Lives Matter, it's been three years since you've seen anyone in person, like, as a CEO, instead of attending every event and being featured on every podcast, have you just picked up the phone and call people and say, hey, how's it going?

How are you doing? Anything I can do? I think we've lost that engagement. We're more just kind of shouting to everyone. We're more concerned about our personal brand versus, like, the people that are working within our organizations.

And the same, to your point, goes to the government. Like, I've never received a call from the government other than to say, have you received a vaccination? That's the only time I receive a legitimate call from a government authority in Canada. And I'm like, oh, the government doesn't text me when they owe me a tax return, but they want to make sure that I'm getting a booster shot. I found that a little bit interesting.

And I think, to your point, engagement needs to be a priority. And specifically, when you're training AI, use data from multiple sources that are representative of multiple communities. And I think that's the one thing that just needs to be driven home again and again and again and again because we are having. A lot of algorithms are being created with data that's in particular to one class and type of people. And I think you and I have talked about this.

Denisse Rudich

A lot of people don't know that I'm actually Latino. I am Mexican. So I may not exactly look it, but to me this is also really important. The need to address bias, and you. Need to bring it up in conversation just like this, because a lot of people would say, oh no, I didn't know, and then having a conversation around that.

Stephen Sargent

Lastly, before we let you go, we have 1 minute. Give us a thrill of the show. Tell us all about where people can find you. Anything that elementary b or your advisory company is releasing this year. You have 1 minute.

Give us the thrill of the show. So I tend to post on LinkedIn. All of my other social media is supposed to be private. I try to keep it private because of, again, the field that I work in and the exposure that I tend to have. Elementary B can be found at www.elementaryblock.com.

Denisse Rudich

Rudic advisory is www dot Rudich Rudich dot co dot Uk. And if anybody is interested in working with us to create transparency around complex financial products or crypto asset products, we are looking for co creators and partners with, you know, the knowledge that we are a startup@darumari.com. So that's www.derumari.com. I love it. Thank you so much.

Stephen Sargent

Denise, I know you have to go. We really appreciate it and we look forward to having you back on the show and just see what you're working on. It looks like you have your hand in a lot of things, so we're super excited. And I just, I mean, Stephen, you know I love talking to you, so anytime, please. Thank you.

Awesome. Thank you so much. Thank you.

Denisse Rudich

Thank you.