🎧🍌 The $4 Trillion Business of Financial Crime with Natasha Vernier, Co-founder and CEO of Cable
How financial crime makes up 4% of global GDP, why we only catch 0.2% of it, why banks aren't incentivized to stop it, joining Monzo as the 17th employee, and how to get VCs to pre-empt your Series A
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Natasha Vernier is the Co-founder and CEO of Cable, the all-in-one effectiveness testing platform for financial services. Prior to Cable, Natasha joined UK neobank Monzo when it had less than 100 customers.
She built and led their financial crime team for five years, and is one of the most knowledgeable individuals in the world on financial crime, which amounts to over $4 trillion per year, or 4% of global GDP.
Natasha started Cable in 2020 with her co-founder Katie Savitz, and has since raised over $16 million supported by investors like LocalGlobe, CRV, Stage 2, and Jump Capital.
In this episode, we discuss:
How crime is a $4 trillion market
Why we only catch 0.2% of financial crime
The reason banks are incentivized to stop fraud, but not crime
Why it's so hard to stop financial crimes
The $20 billion in crime committed on crypto rails in 2022
The fastest growing types of fraud
Joining Monzo as one of the first employees and staying through a $4 billion valuation
What it’s like to be fully invested in a startup when you’re not a founder
Building Cable to enable regulatory and financial crime teams
Signing the first customer and raising a Pre-Seed round without a product
Why compliance officers want to buy complicated products
How Natasha diversified her cap table, raising a Seed round from CRV and a group of angels with broad skill sets, ethnicity, race, and sexuality
How she got two funds to pre-empt her Series A
Why founding a startup means getting punched in the face every day, and her biggest mistake was not enjoying the little things early on
The two founders she most looks up to
The one interview question she asks every candidate at Cable
🙏 Thanks to Zac and Xavier at Supermix for help with production and distribution.
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Find transcripts of all prior episodes here.
Turner: Natasha, how's it going? Thanks for joining me today.
Natasha: Yeah, good. Thanks for having me, Turner. Good to be here.
Turner: I'm really excited to chat because your company is operating in the space of financial crime. Can you explain what that is and why it's important?
Natasha: Yeah, to clarify, we're in the anti-financial crime space. We're not trying to perform the financial crime ourselves, although it sounds better that way. My job title and my previous job was Head of Financial Crime, which I think is the coolest job title ever, but also slightly wrong, because I was not trying to perform financial crime.
Turner: You're not committing it.
Natasha: Correct. I promise. We're trying to help companies become more effective at stopping financial crime. So we mostly sell to banks. Financial crime is the movement of money, trying to utilize money that has been gained illegally. So if you carry out a crime, you're almost always doing that to try to have some kind of financial gain.
You steal something, you're trying to get some money from somebody else, you're trying to sell drugs. They're all doing that to make money. And so financial crime is really, “How do we then take that money that I maybe made illegally and actually use it? How do I embed it into the financial system? How do I buy my house with it? How do I buy that boat?” All of that stuff is financial crime. So it's the getting of the money illegally. It's the moving of it, and it's trying to use it.
Turner: And I think you've said you think it's the biggest problem in the world that no one's talking about.
Natasha: I just don't think anyone really knows about it, right? Before I started working at Monzo and was asked to deal with the fraud that we were seeing, I just didn't understand really what it entails and how big a problem it was. And I remember saying to my family, “Oh, I'm doing this new thing. It's cool. Financial crime.” They were like, “Oh, fun. What does that mean? Do you find a criminal, what, like once a week, or once a month?” I was like, “It's happening all the time and nobody knows.”
Turner: The number, if you go to the Cable.Tech website – $4 trillion dollars a year in crime? That sounds like a fake number.
Natasha: It's crazy. The UN estimates that 4% of global GDP is being laundered every single year. It's so much money. It's one of the biggest economies in the world.
Turner: How do you define crime? What goes into that $4 trillion dollar number?
Natasha: It's a lot of things, which does make it difficult to then pin down, but it's everything from drug-trafficking to environmental crime, ransomware, corruption. It's the little scams that you see on social media, all the way up to the huge organized crime rings, selling drugs across borders, and the big headline stories, so it's all of those things.
Turner: And I think you've said that basically the majority of this crime is happening for financial gain.
Natasha: Most crimes are committed to make money. And so I was coming up with this, I called it the financial crime equation. I was looking at the Office of National Statistics in the UK. They list out what crimes are carried out every year. And it lists out fraud, all these different types of crime.
If you actually look at, “What is the purpose of somebody stealing something? What is the purpose of a robbery or a theft?” They're all to make money. They're all to get something that they can then sell to have a financial gain.
And when I ran through that list that the ONS put up, over 80 percent of those crimes, ultimately the purpose of them, was to make money. And so if more than 80 percent of all crime, just crime generally, not financial crime, is being carried out for financial gain, to be able to use that gain actually in the financial system, to buy your coffee or to buy a house, you have to perform financial crime.
This is the biggest problem that no one talks about. All of this crime is happening, it's all for financial gain. And financial crime is the thing that you have to do to then be able to use all that money.
Turner: And I think I've heard you say before, if you're committing some form of theft, or local police are trying to track someone down or stop certain crime from happening, it's all tied to the financial system. So I've heard you propose, “We should stop the ability to do it on the financial end, and that will actually stop the original source of the crime.”
Natasha: Yeah, that's how we think about it. That's a bit of a hypothesis that we have. So, in all those movies or TV shows, it's always like, “Follow the money.” That's true, right? You have to follow the money and, be that digital or fiat currency, whatever it is, somebody is carrying out a crime to make a financial gain.
They then have to move that money, get it into the financial system. If you follow all of those crumbs that have been left, and you make it harder for somebody to actually utilize the money that they have stolen or the gain that they've made, then they're not going to carry out the crime as much, right?
If you're not making as much from the thing that you're doing, you just won't do it as much. You'll find other ways to make money. So if we can actually make it harder for criminals to use the gains that they make from their crimes, if we become more effective at stopping financial crime, then less crime will happen.
Turner: The UN estimates we only catch like 0.2 percent of all this stuff. Why can't we catch it?
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