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(Tintra submission)
General Introduction
Business activities and rationale for establishing in the QFC
Executive Summary
Tintra Group (the “Group”) is solving the major need in cross border finance through its fast-growth regulatory and financial technology company. With a focus on artificial intelligence that optimizes payment processes, bank accounts and KYC/AML using end-to-end AI technology that mitigates human intervention in KYC and AML. Tintra serves customers worldwide.
Our model is built with FATF and BASEL II front of mind and a full paper on the impact of FATF is available that illustrates our vision on this.
In this document the Group is setting out its rationale for a license to operate from the Qatar Financial Centre (the “QFC”). A wholly owned entity of Tintra plc is to be established in Doha for that purpose (“Tintra Qatar”), through which all our activities regulated by the QFCRA will operate and our Doha team will be recruited and employed.
Our intention is that a full team will be employed and sit in Doha with oversight from the Group. Tintra plc’s AI-first banking infrastructure is designed not only to meet but exceed current anti-money laundering (AML) and know your customer (KYC) protocols, greatly reducing the risk of illicit financial flows (IFFs) across our platform.
Our approach is endorsed by the FATF, G20, and the regulatory authorities of other Partner Nations to Qatar. Global money movers see the value in Tintra’s solution and have accordingly invested and partnered in its growth.
Details of relevant market research and identified gaps in the market
Tintra is solving a problem that is perhaps the real defining problem left in cross border financial services. How to create true fiscal inclusion across geographies in a way that is fair and even handed. There is currently a distinct line between Europe & the US and the rest of the banking world.
There are established, instant and free flowing commercial and financial corridors between markets that are considered “good”. The US, EU & UK have free flowing settlement networks where 99% of transactions complete within a few hours. The regulatory frameworks and regulatory bodies are established, familiar with one another and have a common understanding and easy access to company and personal data in each jurisdiction.
Other global regions have developed localised regulatory frameworks to enable short range cross border trade and transactions, and these work. However, when these markets interact with so-called more established markets, friction develops as demands for information that is either difficult to access or simply does not exist causes delays and even rejection, forcing companies and individuals to devise risky and expensive work arounds to complete transactions. With these efforts up making the system weaker not stronger. Even simple transactions are difficult for local individuals and businesses, for example it is not possible to order products from Amazon in Tanzania with a locally issued credit card. Local consumers are forced to obtain offshore accounts and cards, where KYC requirements often ask for information that is difficult to verify or doesn’t exist. The impact of this prejudice is that it penalizes those wishing to carry out valid transactions and prevents the establishment of a level playing field across worthy jurisdictions.
This scale of this issue is evidenced in the estimated one billion people worldwide that face the challenge of proving who they are, according to a World Bank Group report by its ID4D initiative, that states that 81% of this number live in sub-Saharan Africa and South Asia without official proof of identity. Moreover, an estimated 500 million Africans, with no formal identification at all, are forced to spend an inordinate amount of time trying to prove or verify their identities to gain access to address proofs, financial accounts, loans, SIM cards and social services.
This issue reflects the African regulatory systems which mirror European approaches to KYC, in particular, verifying someone’s address. For instance, in the UK, you must provide a proof of address (POA) document which is typically a utility bill issued in the last 3 months. This works because every building is plugged into a utility provider and there is an established invoicing system. People readily have utility bills and POA is straightforward.
However, utility bills are not viable in Africa. Different countries have very different infrastructure and market challenges. Many people in Africa don’t have a utility bill, or if they do, it’s not in their name if they do not own the property as is true in many cases. A large factor in this is a young population, with high urban migration, and therefore a lot of temporary residents staying with family or friends. Often without an address, the utility bill doesn’t have sufficient proof of address information.
This results in people being asked for something they don’t have, and denies those people the right to participate fully in their society and economy and to be recognized as a person before the law, which is a fundamental human right.
We do not aim to help these people directly, there are actors better placed to do this in country. Instead, we are building the infrastructure to allow those businesses to flourish cross border, where they don’t currently due to the preconceptions and biases they face. When a legacy bank sees a client who is outside of their dynamic business domain or outside of their current business risk appetite, they do one of two things: either apply unsustainably high margins to each transaction making it uneconomical, or they simply close the access those clients have to those banking rails.
They do not offer a plan B or help those people find alternative solutions – the banking service simply stops. 81% of payments in Africa and 38% in Asia take the form of electronic money yet that form of payment is woefully under served in those markets.
Over the next 5 years, all banks will become digital banks of some form or another as the rate of digital change becomes faster.
We talk today about fintechs vs legacy banks. But ultimately they are the same. The main difference with Digital Banks today is that they are light touch licences and not full banks. Conversely, legacy banks have no incentive to address these new markets as they become more conservative in their outlook due to draconian penalties from US and EU regulatory bodies.
It’s easier and less risky for them to generate profit locally than entering emerging and frontier markets. With little incentive for traditional banks to solve the issues of currency trades between markets, emerging marketsare left underserved. The below diagram depicts just a few of the ways that inequality in international banking markets plays out.
As things stand, a single payment from an emerging jurisdiction may involve the services of 3 electronic money institutions to get it from payer to payee.
Fintech businesses across the world are doing a good job at solving the customer interface problem and the payments problem, domestically or regionally. Emerging markets are solving the ability to trade within their own jurisdictions through technology; at the same time, the evolution of fintechs in developed markets has taken place. Despite this, disconnection remains between local and established markets, and a gap in the market [prevails/exists].
Outline and General Business Description of the Proposed Activities in/from the QFC
Tintra as the Solution
Tintra has identified the need to apply leading large-scale technology in emerging and frontier markets utilising API and AI innovation to link these new markets with other emerging markets or established markets around the world.
By pursuing such co-operative internationalism, we believe nations can build new networks for a more inclusive, resilient and sustainable globalisation. Freer trade in services can spread opportunity globally. While multinational trade deals have existed for decades, the time is right to transform financial inclusion for free trade for small and medium enterprises.
In seeking to address this gap, Tintra is establishing itself as a leader in this extremely important space within the global financial market. Our desire to create best practices in markets where conventional know-your-customer (KYC) and anti-money-laundering (AML) data standards lack cultural applicability presents a significant and unique opportunity for the use of advanced data and technology capabilities.
To achieve this, our strategy is to have all the regulatory benefit of full bank licences but with the innovations of technology in a best-of-both-worlds format. We onboard clients because they are a good risk prospect or don’t because they are not. We don’t make broad brush strokes because of biases of where they come from or how they speak. We are building our processes from the ground up, understanding each market in its own right.
Our KYC, AML and CFT practices will fully comply with international standards but, in parallel, we are building new AI-driven capability to be statistically proven for its accuracy and effectiveness, prior to full deployment. In striving for this, Tintra represents a unique opportunity; it has the stability and maturity of a large company together with the insight, drive and innovation of a young and dynamic business.
It:
Encapsulating the very essence of the Authorised Firm, Richard Shearer, CEO, Tintra plc says, “Tintra is building emerging market focused banking technology and infrastructure to enable financial institutions, multinationals and large corporates in the emerging world to access global banking infrastructure without bias or prejudice in an environment where we control the compliance exposure from end to end.”
Passionate about the right of each individual to be judged on their own merits, not where they come from or their culture, we believe that working with QFC through licensing in Qatar is key to that.In doing so, we represent a cultural bridge from emerging markets to current international banking hierarchy. Trying to solve emerging market problems with western myopic thinking is clearly not solving the problem in its entirety.
Tintra’s is levelling the playing field and we strongly believes that the answer is the automation of KYC/AML and bringing artificial intelligence (AI) to the forefront of the space.
How it will work / Who it’s for
Tintra is building banking and infrastructure technology systems that are focused on frontier and emerging markets, which are underserved by today’s environment.
Achievable through an open, integrated banking capability, Tintra offers software as a service (“SaaS”) to its clients sitting on its own global banking platform, using scalable infrastructure and application programming interface (“API”) innovation. With the key being to develop a cultural API with full banking licenses so that we control the entire tech stack.
Ultimately, we see ourself aligning with a traditional bank model but with full deployment of smart technology, including true Artificial Intelligence to improve compliance and standards in KYC, AML and Fraud Detection and Prevention, while allowing Tintra to offer its services at scale to a much wider audience than is serviced presently. To achieve this, we are building industry changing regulatory technology, utilising or creating advance end-to-end Artificial Intelligence Technology, some of which has already been patented, to rethink how compliance between developed and emerging economies works. This exciting and innovative technology uses real-time large scale predictive modelling and semantic embedding of financial data based on deep thinking and Bayesian inference for robust and explainable predictive modelling.
Moreover, Tintra will be the world’s first financial institution that combines both an artificial intelligence
system that is specifically engineered to radically improve both compliance accuracy and economic inclusion and development with a global network of banking licenses. These are the twin goals of every single international organization: the United Nations, International Monetary Fund, the World Bank, the Organization for Economic Cooperation and Development (OECD), and the Financial Action Task Force (FATF). It is through our grounding in the most stringent compliance processes that we will drive change in cross-border paymentsIn achieving this, the Authorised Firm will operate in the QFC by taking Deposits in the same way a Traditional Bank would, with the integral deployment of high end, smart technology as a “tech stack”. As a Bank, the Authorised Firm will become the banking interface between African and Gulf state for businesses in those jurisdictions to be able to bank outside of their own territory and to be able to make payments globally in a manner that has global levels of standards in terms of service and KYC/AML and in a more cost efficient way.
Hub and Spoke Model
Applying for banking licences in four key regulatory centres allows Tintra to provide open banking access that understand the needs of emerging and frontier markets without prejudice. In executing this, Tintra is adopting a Hub and Spoke model where we control the API stack and the compliance framework. This will operate in support of but not inside the Authorised Firm.We will have local operations and technical supports teams to manage our activities in each country and customer service teams to support the business development of Tintra and our clients.
In this construct, Kenya to London now looks like this:
Simplified, end to end transaction process gives much greater certainty of successful completion of each money instruction. Further, this construct avoids the need for intermediaries facifacilitating both reduced transaction cost and a faster end-to-end transaction timeline.
QFC as the basis for our solution
The Authorised Firm will become the banking interface between African and Gulf state for businesses in those jurisdictions to be able to bank outside of their own territory and act as the interface between those territories and the Group’s UK bank, it will to be able to make payments globally in a manner that has global levels of standards in terms of service and KYC/AML and in a more cost-efficient way.
Financial Regulation across the Africa continent
To achieve global implementation of the FATF Recommendations, the FATF relies on a strong global network
of FATF-Style Regional Bodies (FSRBs), in addition to its own 39 members. The nine FSRBs have an essential role in promoting the effective implementation of the FATF Recommendations by their membership and in providing expertise and input in FATF policy-making. Over 200 jurisdictions around the world have committed to the FATF Recommendations through the global network of FSRBs and FATF memberships.
With reference to our FATF document., it is clear that market differences exist between nations, even within
FATF-Style Regional Bodies.
Qatar is an paradigmatic example of a country which has both implemented a legal, judicial and regulatory
framework based on English common law and international best practice, combined with its co-operation with other MenaFATF countries and its commitment to work with other countries in the MENA Region jointly to comply with FATF’s standards.
While a number of other African nations have specific bodies which provide regulation of domestic and cross border financial affairs, a similar number have a system involving their central bank alone A number of other nations appear to have no appointed regulatory body at all, largely suggesting they rely on their domestic central bank.
Certain jurisdictions in Africa have their own licensing requirements for local payment system providers, an
example of which is the standards and framework set out by the Central Bank of Nigeria (CBN) which updated its categories and licence requirements for financial technology businesses within the Nigerian Payments system in May 2021. Such regulation is essential and welcome; however, to truly compete on the international stage, payments services providers must operate to banking license and regulatory standards – and to be regulated as a bank by highly regarded regulatory regimes such as the Qatar Financial Centre, among others.
We are highly interested in the opportunity to be regulated by QFC because:
For those reasons, Tintra plc made the key decision very early on that creating a bank to support business across Africa would be best done supported by committing to the best practice standards, frameworks and safeguards that are required as part of being regulated by the QFCRA.
Having QFCRA’s support in its very well regulated framework is strategically important to Tintra and the African markets in Africa it wishes to address. The QFCRA is the most important and relevant regulatory authority who might address this the trade imbalance and the prejudices that exist for African nations.
Tintra views Qatar Financial Centre as the cornerstone in its plans
Building a global network of banks across 4 jurisdictions in a well-publicised play to build a technology led banking infrastructure. Tintra’s intention to develop a key banking hub in Qatar, having reviewed other regional options, decided that QFC was a standout option. It is ideally situated and has created a supportive infrastructure to enable foreign owned financial institutions to benefit from, and contribute to, Qatar’s diversified economy.
Tintra wishes to establish and operate a full-service business-oriented bank in Qatar in order to serve regional and international markets. The QFC is particularly attractive as it presents a supportive and forward-thinking regulatory framework which meets international best practice underpinned by world-class service standards.
Qatar fits into the broader objectives of the Group and in particular the goal of the Qatar hub is to act as a gateway into MENA and certain emerging African and South Asian nations. We are setting out to change the way the technology and in particular artificial intelligence can enhance compliance and security by developing in-house world-class technologies to achieve the scale and reach desired.
QFC’s enviable reputation, having developed a transparent and professional regulatory framework, will play a vital part in assuring legacy banks in developed markets that transactions are initiated, monitored, and executed in a familiar regulatory environment and that risks are mitigated.
This in turn will help us solve the major hurdle of emerging economies, namely to change the dynamics of unfair prejudices that exist in developed market legacy banking. With its onshore presence QFC’s suitability for establishing Tintra’s Middle Eastern & African hub is compelling and it offers an unmatched suitability for Tintra to develop serious banking capabilities.
Furthermore, given the developing licensing relationships Tintra is developing with the United States and the United Kingdom, a QFCRA license would create a triunity of highly respected, international regulatory regimes each with a broad geographic reach and highlight Qatar’s role as a pre-eminent regulatory authority to stand alongside both London and New York. In working with Tintra, the QFC would be a centre of excellence, the leader in the MENA and Africa region, on a global scale.
According to its website, the Qatar Financial Centre missions and values are “to transform Doha into a leading global financial and commercial capital” and “to drive economic development and diversification by providing a world-class, commercial, legal and regulatory environment.”The Qatar Financial Centre granting Tintra a banking license reasserts its prestigious position as a centre of excellence and brings the Financial Centre in line with the commitments and international standards it shares with global partners.
Technology is moving fast and, as expected, Tintra’s thinking and build-out plans with it. As previously detailed in our initial submission to QFC, Tintra intends to build a core banking operations hub in Qatar, fully serviced by key compliance, operations, finance, customer management, HR and IT roles that would be expected in such a hub.
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