Posted by Brian Monroe -
The skinny:
- Stelios Tachtatzis is one of the rare figures in the financial crime and compliance space who has taken a truly expansive and convergent mindset to strengthen compliance and fight financial crime.
- Even after more than a decade in the financial services and technology sectors, Tachtatzis is currently the head of financial crime risk and compliance at blockchain analytics titan Elliptic, as an avid photographer, he realizes that to truly understand what is going on in a scene you have to see the big picture.
- In many ways, Tachtatzis is the prototype of the financial crime professional of the future, easily and fluidly shifting from the experienced-based decision-making of the seasoned investigator to the evidence-driven choices of the data scientist.
By Brian Monroe
bmonroe@acfcs.org
November 23, 2021
Stelios Tachtatzis has always had an artist’s eye when it comes to the world around him – he actually quit his major in economics for a year to study photography. To this day, he takes his camera with him wherever he goes.
But even after more than a decade in the financial services and technology sectors, he is currently the head of financial crime risk and compliance at blockchain analytics titan Elliptic, he realizes that to truly understand what is going on in a scene, you have to see the big picture.
The Londoner is one of the rare figures in the financial crime and compliance space who has taken a truly expansive and convergent mindset to strengthen compliance and fight financial crime.
Tachtatzis has widened the aperture to see when organized criminal groups, fraudsters and ransomware gangs jump from the fiat to the virtual worlds of value in an attempt to skip anonymously through the blockchain.
How?
By going beyond just understanding classic financial crime compliance, counter-fraud and transactions screening, in recent years expanding his knowledge of artificial intelligence, advanced data analytics, cyber-fraud and information security and now, blockchain analytics.
Block and tackling on the Blockchain
Over the last decade, the “pseudo-anonymous” nature of certain crypto coins, like Bitcoin, has been a draw for criminals and bane to law enforcement agencies around the globe.
The culprit: bad guys have increasingly moved portions of the trillions of dollars in tainted funds – whether they be from ransomware attacks, hacks or other cyber-enabled frauds – into seemingly untraceable crypto coins.
But that bane over the last few years has turned into a boon, with international investigative agencies partnering up with blockchain analytics firms to meld advanced technologies and highly-specialized skillsets to follow the money in the real and virtual worlds.
The result: They have successfully peered through a nigh incomprehensible sea of numbers, letters and addresses to connect to the flesh-and-blood puppet masters pulling the strings.
That is why Tachtatzis’ viewpoint is informed by holding court at the intersection of a bevy of in some ways disparate and other ways, interlaced and interwoven disciplines.
What does the world look like through the crystalline lens of his eyes?
An illumined amalgam of data analysis, cryptocurrencies, blockchain analytics, digital assets, decentralized finance, cyber-enabled fraud, cybersecurity and the historic mores of anti-money laundering (AML) and transaction monitoring.
More crypto adoption, requires investigative adaptation
But his quest for knowledge is not a nicety, it is a necessity – with criminals constantly adjusting and adapting to evade law enforcement traps and finding new gaps and vulnerabilities in the dark corners of finance – fiat, digital and everything in between.
The industry, however, is responding.
“It’s almost difficult to remember how we used to do things a decade ago in the financial crime space,” he said.
“The industry has dramatically changed with technologies such as machine learning, artificial intelligence, blockchain, and behavioral analytics being only a few of the primary catalysts.”
In many ways, Tachtatzis is the prototype of the financial crime professional of the future, easily and fluidly shifting from the experienced-based decision-making of the seasoned investigator to the evidence-driven choices of the data scientist.
So it is appropriate that after stints with UBS, Accenture, and McKinsey & Company as a risk management expert — delivering strategic compliance programs for tier one banks, and regulators across the world – he has found his way to Elliptic.
Transparency of blockchain can be used offensively, defensively to rein in risk
Elliptic, one of the world’s top blockchain analytics firms, according to industry rankings, holds recognition as a World Economic Forum Technology Pioneer.
“The platform has successfully evaluated risk on transactions measuring in worth up to some several trillion dollars,” according to 101 Blockchains. “Most importantly, it has helped in uncovering many instances of fraud, terrorist fundraising, financial crimes, and money laundering.”
Elliptic, like it’s peers Chainalysis and CipherTrace, has engaged in high-profile investigations and followed the money related to a historic rise in ransomware attacks during a pandemic-pummeled 2020 and equally viral and vitriolic 2021.
As well, the company has aided in crafting compliance defenses so brick-and-mortar banks can connect with crypto exchange customers and virtual exchanges can better police themselves and change the perception of being law enforcement foils to powerful investigative allies.
The company has even dipped its toe in the water in the burgeoning, but little understood area of non-fungible tokens (NFTs).
NFTs are a relatively new type of cryptoasset which represent an intangible digital item whose owners are recorded on the blockchain.
In recent months, these digital assets, in some cases, have commanded millions of dollars in hard cash – and that is for just one NFT. Some NFTs are digital pieces of art created by up-and-coming artists or even snapshots of virtual worlds by relative unknowns.
In a recent sale, one NFT of a single gray pixel sold for hundreds of thousands of dollars.
As for Elliptic’s brush with NFTs, SmartApp Inc., a Japanese-based non-fungible token (NFT) marketplace, chose its technology to provide a blockchain analytics system to screen crypto wallets to better counter financial crime risks.
The move was the first time that an NFT platform had been implemented an analytics solution in Japan, according to both firms.
That area in particular is one that captures the interest of Tachtatzis, the “rise and rapid adoption of digital assets such as crypto, stablecoins, NFTs etc.,” he said.
Demystifying myths, improving perception of misconceptions
But not all crypto risks are equal.
“There is a general misconception among compliance professionals that those assets are mostly used for illicit activity, but this is not true,” Tachtatzis said.
“At Elliptic, we have been monitoring illicit activity linked to digital assets since 2013 and our data shows that, although in the early days of adoption, about 35% of crypto transactions were linked to such activity; this number has dropped to less than 0.5% today.”
But creating technology from scratch to better divine a digital world in flux – one that often connects to darknet sites working hard to remain in the shadows – can’t happen by keeping the status quo.
That is why he uses one of the worst pieces of advice he has ever received as fuel to do the complete opposite.
What was it?
“Great work. Just keep doing what you are doing,” Tachtatzis said.
Taking that idea a step further, he knows he is part of a larger universe of law enforcement agencies, regulators and compliance officers working to identify and stop the worst of the worst when it comes to organized criminals, human traffickers and even others who would harm children.
That is why Tachtatzis has a singular vision and passion, realizing that, if done right, his work will live on and help others for future generations.
Who inspires him?
“Anyone who is driven by the legacy they will leave behind as professionals, instead of purely advancing their own interests,” he said.
Tachtatzis was kind enough to share some of his diverse and dynamic knowledge and insight in our latest ACFCS Member Spotlight:
Who inspires you?
Anyone who is driven by the legacy they will leave behind as professionals, instead of purely advancing their own interests.
What is something about you that not many people know?
I dropped out of the school of economics within six months, and went on to study photography. A year later I decided to go back and finish my degree, but even to this day I don’t leave my house without carrying a camera with me.
What do you do in your current role?
My main objective is helping our customers to understand the financial crime risks arising from the use of digital assets, and to establish new mitigation controls by leveraging Elliptic’s solutions, data, and services within their existing compliance value chain.
What does your career trajectory in financial crime look like?
The world is changing rapidly, and with systemic events such as Covid-19, we have seen a paradigm shift in the compliance industry in terms of how criminals behave throughout the various stages of money laundering.
It’s an ever-evolving landscape that I wish to continue exploring now, and in the foreseeable future.
What is the best advice you have ever received?
Leaders smile a lot; always say yes to opportunities; and appreciate how lucky you have been in the process of achieving anything.
What is the worst advice you have ever received?
“Great work. Just keep doing what you are doing.”
What would you say are the most important attributes for someone in your position to succeed?
By default, you need to develop a plethora of skills and to build your knowledge across various areas, including the ever-expanding world of crypto, regulation and financial crime (to name a few).
However, that eventually happens with time as you grow in your career. The key attribute I would highlight is finding your just cause and being curious.
First and foremost, understand why being a financial crime professional matters, be proud of being one and for the legacy you will leave behind you. Again, just make sure to always be curious.
The financial crime space is rapidly changing, and your curiosity will keep you ahead of the game.
How has (compliance, investigations, etc.) changed and evolved during your career?
It’s almost difficult to remember how we used to do things a decade ago in the financial crime space.
The industry has dramatically changed with technologies such as machine learning, artificial intelligence, blockchain, and behavioral analytics being only a few of the primary catalysts.
These technologies have entirely changed the way we detect and prevent unusual behaviors and transaction patterns.
However, we are just half-way through the transition, and we are still experimenting with most of those innovative solutions.
There are several challenges the industry will have to solve before we get to a point where financial crime solutions can seamlessly adapt and respond to the ever-changing external landscape.
What do you see as the key challenges related to financial crime in your role or in the sector overall?
There are many challenges the industry is working on such as data quality, model agility and validation, and the volatility of the external socio-economic landscape.
However, the one that I am most interested in, is the rise and rapid adoption of digital assets such as crypto, stablecoins, NFTs etc. There is a general misconception among compliance professionals that those assets are mostly used for illicit activity, but this is not true.
At Elliptic, we have been monitoring illicit activity linked to digital assets since 2013 and our data shows that, although in the early days of adoption, about 35% of crypto transactions were linked to such activity; this number has dropped to less than 0.5% today.
The fact is that organizations like Elliptic, in collaboration with regulators and law enforcement, have transformed the crypto ecosystem into an extremely safe space, and there is a great opportunity for financial institutions like banks to enter.
The main challenge is how they can efficiently and effectively identify and mitigate the inherent risks arising from the use of those digital assets.
This is where my team comes in to support compliance leaders to redesign their financial crime operating models and enable their organization to offer crypto services.
What motivated you to become a financial crime professional?
I was fortunate early enough in my career to work in consulting and gain experience across various risk functions.
During that time, financial crime stood out as an area with a great opportunity to make an impact, not only on the organization I was working for, but also its customers and the wider society which I found extremely fulfilling.
Is there anything that surprised you about your current role?
As a financial crime professional moving from the traditional fiat to the crypto space, I was surprised by the tremendous level of transparency that you can derive from publicly available data on the blockchain.
It is truly mind-blowing the level of efficiency you can achieve when investigating suspicious activity, identifying source of funds, etc.
Why did you join ACFCS or gain the CFCS designation?
ACFCS offers tremendous opportunities to new as well as highly experienced compliance professionals to further advance their career, stay up to speed with any topics related to financial crime, and build a global and robust network of industry experts that is key to your success.
What is the most rewarding part of your job?
Working closely with our customers to help them shape their use cases, and to adopt a risk-based approach to crypto is by far the most rewarding part of my role.
How did you get your first job in the field and what advice would you give other job seekers to help land their first position.
I was looking for a new project while working for a global consultancy firm, and I randomly came across a financial crime related initiative.
I was fortunate to be selected by the project lead, and the rest is history!
My advice to job seekers is: if you are interested in financial crime don’t worry too much about the exact position but just enter the space and continuously explore for new opportunities to further advance your career.
I think it’s worth quoting Shery Sandberg, who once said “If you are offered a seat on a rocket ship, don’t ask what seat. Just get on.”
For professionals with 5-10 years of experience, what advice would you give them to help advance to senior management roles?
If you have gained your experience in the fiat world, I would strongly recommend a transition into the crypto world.
It’s going to be an extremely rewarding experience that will help you understand the intersection of crypto and fiat and subsequently become a well-rounded compliance professional.