Behind the scenes with Pauline, Operations Manager and Compliance Officer

Investors or borrowers, are you curious about how October and our Operations and Recovery Officer work from the inside? How are company projects selected and funded from end-to-end?

In this new series, we will explore the behind-the-scenes of October’s platform.

First, we sit down with Pauline, a member of the Operations and Recovery team since 2019. She shares with us how compliance checks and contracting are managed within October.

Who are the members of the Operations and Recovery team? And what are your respective missions?

Europe-wide, we have our own Operations team, composed of 10 people under the leadership of our Head of Client Operations. In France, October has its own Operations and Recovery team. I am in charge of contractualization, project implementation, but also of the fight against fraud and money laundering. Then Camille is in charge of recovery and litigation. Finally, Samantha works mainly on recovery but also on contractualisation and the fight against fraud.

At which stage of the borrower’s journey are you involved?

We start to work on the implementation of the project, when the client has agreed to our loan offer.

How does the contractualization process work?

We create a loan contract containing all the financial conditions of the offer accepted by the client. This contract is reviewed internally and reflects the platform texts presented to the lender on our website. We then send the contract to the borrower for their electronic signature to simplify the contractualization process.

In which cases do you refuse a project at your level?

Throughout the process of entering into a new business relationship, our teams in charge of the project carry out compliance checks. On the operations side, these checks will mainly concern the fight against money laundering and documentary fraud. At the time of our review, we refuse a project if the documents have been falsified, and the potential borrower or its representatives or beneficial owners are at risk of money laundering or of reputational risks for October. These operations are the last checks in the process before contractualization, the last line of defense against fraud attempts. These checks provide an additional layer of security for lenders and help us to ensure compliance with all regulations.

What KYC (Know Your Customer) and AML (Anti-Money Laundering) checks do you perform and for what purpose?

First, we ensure that the KYC – documents required by regulation for each of our borrowers are up to date. We use several databases, both public and private, and cross-reference information to identify officers and beneficial owners and to perform our due diligence. We complete the documents we receive with probity and reputation checks in an open database.

How do you fight fraud at October?

Fraudsters are very opportunistic and will turn some situations to their advantage. We are always exposed to fraud, with typical cases. But there are specific situations that are more likely to lead to fraud and place us at greater risk. We are aware of these situations, hence the implementation of a strong defense to prevent fraud attempts.

On the borrowers’ side, we notice that during a crisis (for example the Covid crisis), the number of frauds attempts will rise because people are trying to take advantage of a challenging situation in the wider economy.

When we first proposed the State-guaranteed loans, we noticed numerous unrealistic requests from companies with no or dormant activity, who provided us with falsified bank statements and accounts in order to obtain a State-guaranteed loans, sometimes claiming that the amounts were 90% guaranteed… They were automatically flagged by our scores, developed to raise awareness on any potential tampering of documents uploaded on our platform.

On the lender side, we remain vigilant to identify any fraud attempts before it goes any further. We are prepared throughout the year, and even more so when we anticipate a spike in fraudulent activity (Black Friday for example). This includes reminders from the Lenders and Borrowers team, with systematic reporting in case of suspicion.

What types of fraud can you encounter?

Financial institutions like October are used to deal with common type of frauds. The most common type of fraud is falsified bank accounts, with clients trying to hide foreclosures, inflate their balances, and modify their reported transactions to pretend that they have more clients and business than they do actually. This type of fraud is easily managed at October thanks to our different scores that detect any falsification in a document and spot any suspicious bank activity.

There are also cases of straw management. Some non-managers are artificially at the head of a company because the owner is forbidden to practice due to one or more judicial liquidations. On our side, we work with the best tool to detect this kind of practice as it looks into all the managers history and can detect suspicious counterparty behaviour.

On the lenders’ side, we can encounter cases of financial mules. These are people who open an account in their name (or provide their identity documents so that an account can be opened) to transfer funds of illegal origin, without the true originator being identified. We identify and block these kind of money laundering attempts by having a strict KYC policy with multiple checks.

This KYC policy also helps us spotting people who are trying to open an account in the name of people who have had their identity documents stolen. We know how to prevent such fraud. When it is a borrower, we simply refuse to contact them and block the application. If we can, we report it to the company in question. If it is a lender, we block the account directly. In both cases we report the fraud to the authorities.

How do you track defaults and recoveries?

As soon as we observe a rejection, we will contact the borrower, by telephone and by e-mail. The purpose is to understand the situation, the reason for the rejection, and to organise the regularisation as quickly as possible to be able to reimburse our lenders. We carry out several reminders with collection fees and interest on delayed payments, but fortunately most cases are brought back on track after the first contact. On the rare cases where the borrower fails to respond to our reminders, we send a formal warning, prior to the expiry of the term and the setting up of a legal procedure in the most complicated cases. In this respect, we have recruited a recovery and litigation manager to structure our procedures and improve in efficiency.

Which perspectives of development for your team?

We have already doubled in size. There are currently 3 of us in France, plus Julien Ramezani who is responsible for Client Operations across Europe.

We focus the development of our division on 3 points: automation, fraud and recovery. We aim to automate as many tasks as possible that have previously been carried out manually. So that we can focus more on higher value-added tasks, particularly combating fraud. On the fraud side, we want to intensify our controls by improving our tools and increasing the competences of all our team members. Finally, regarding recovery, we have created a dedicated unit, that will be 100% focused on the matter, to increase our efficiency and our collection statistics.

Pauline and her team are key to the success of October. They ensure the latest security checks on both the borrower and lender sides as well as the smooth repayment of loans, keeping our platform stable on a daily basis. They use 3 of our scores to help them identify suspicious behaviours and potential fraud attempts. These scores have been processed and trained in more than 200,000 projects. They are at the core of our October Connect offer for financial services providers.

In the next episodes, you will discover other essential actors’ stories for the successful running of our October lending platform. Which do you think will be next?