This year’s Consensus 2019 was dubbed the “survivor” conference, which eludes to how only the ones delivering real value remain in the blockchain industry after the overpopulation of 2018. I quietly had lunch on Day 2 and met a Henry Balani who took a break from crypto and started talking to me about international money transfer innovation (gasp) before blockchain. Found out he is actually an adjunct professor at Case Wetern and two other universities, which aligns with the ad-hoc class I was suddenly experiencing. Similar to my role of bridging the blockchain and traditional world, Henry fills a similar need with his traditional banking and academic background. Aptly he’s decided to join us in the RemTECH Awards as part of the judging panel, which such cross-industry connections is really at the core of what this awards is about. Please enjoy our fourth RemTECH Chats.


Olivia Chow: You’ve worked for some of the top names in AML compliance and teach at top graduate-level universities on the subject. All the while, your consulting is around blockchain. How do you see the worlds overlapping?


Henry Balani: Blockchain technology provides multiple use cases that can address AML compliance issues, especially related to identity management and cross border payments and transparency.  In the world of AML compliance, a key issue is to ‘know your customer’ and blockchain technology shows a lot of promise in this area to help drive down costs and improve accuracy.  An example where this can be accomplished is through money remittances where a direct transaction between the sender and the recipient of a money transfer can be accomplished.  The traditional alternative is through multiple parties/banks.  Costs can be more significant if the funds have to flow through multiple banks and exchange rate conversions losing anywhere between 5% to 20% of the value of the transfer. When I teach, students are very interested in understanding what the real world applications and impacts are using blockchain technology.  Definitely a lot of interaction, with my students also being fintech entrepreneurs who can help drive the development of new solutions.


OC: So let’s get a bit more specific, when it comes to compliance and the international money transfer industry, what blockchain projects do you think are going in the right direction and why?


HB: Without naming names, the firms that are using blockchain technology to help move remittances across borders are headed in the right direction.  The infrastructure that can be replaced is for the payments messaging and value transfer. There is increased need for cross border payments as the number of migrant workers increases globally.  Blockchain technology now provides an alternative to traditional cross border banking that drives down costs, increases transparency, convenience and speed.  It’s inevitable that blockchain fintech companies focused on moving remittances quickly and efficiently will see success.  They will also need to be able to reach out to their customer base and develop a trusted brand that is an alternative to the banks. [OC4] The market now demands this.


OC: Your advisory is about being “blockchain ready” with education. What are you noticing in the types of questions you are getting and what people are asking?


HB: I am getting a lot of questions on how to scale blockchain based solutions.  By this I mean both from a business operational as well as from a technology perspective.  As of now, the business operational aspect is more critical as the startups need to work with established financial services players to build up a strategic relationship.  The ecosystem continues to build and I help these start-ups in fintech connect with the right established players. Technology scalability issues are also important, but it only matters if there are high volumes of transactions that need to be instantly settled, of which there are a few (but do not represent all) use cases.  These issues will be addressed over time, but for now the questions are about establishing a commercial ‘beach head’ in this space.


OC: I also saw that your website highlights that blockchain technology can drive new business models and revenue. Can you give us an example?


HB: Sure.  Continuing with my example of cross border remittances, the opportunity now with blockchain technology is to get low value payments directly to the unbanked in remote parts of the world .  Fintech firms that create apps on mobile phones where customers can easily transfer some of value to each other, using crypto-currency or tokens that are based on blockchain technology that very low transactional costs.  These firms will collect data on how their customers transfer value to use in other targeted marketing revenue streams.  New markets and new financing incentives through tokenization can also be created.  For example, farmers in a developing country can be incentivized to grow certain types of crops that align with the Agriculture Ministries strategic vision.  These tokens would have additional value as a result of growing the targeted crops.  Farmers could also set established prices for their crops directly using tokens as an alternative to the current commodities markets that set prices through intermediaries.  Very exciting!


OC: You’ve written about the latest updates to AML directives put out by the EU, and the impact of the Paris and Brussel terrorist attacks. If you were writing 6MLD, what would you advise to provide effective AML and not stifle innovation while also protecting the privacy of individuals? (No pressure.)

HB: The EU has focused on the role of crypto in the 6th Money Laundering Directive (6MLD).  I am an advocate for transparency in government regulations and the EU is looking to provide this clarity.  For the 6MLD specifically, exchanges will now be required to screen their customers, similar to banks when they are being onboarded.  Banks will also be required to screen the exchanges as well.  This additional due diligence creates stability and comfort to customers that use these exchanges and banks.  They only ones that lose out are the ‘bad’ people that commit fraudulent activities.  The rest of us will benefit from the adoption of new blockchain and crypto technology.