In a recent interview with ACAMS Today, three industry experts discuss the financial crime threats affecting the industry and possible solutions.
The techniques used by criminals continue to develop and become more sophisticated. So, what are the most significant threats faced by the industry in 2018 and which measures and developments will play the biggest role in addressing these threats?
The state of play today
On a positive note, we’re seeing an increased awareness of financial crime threats along with a more collaborative approach to strengthening the integrity of the financial system. Tougher regulation ensures banks are better equipped to fight financial crime, but that comes with additional costs and, potentially, risks.
Visible progress is also clear in the area of cybersecurity, with a richer fraud control and monitoring environment emerging. But alongside this, cyber criminals are finding new ways to target financial institutions and their client base.
The industry increasingly recognises that a ‘tick-box’ approach to financial crime compliance is not enough.
Filling in the gaps
As the number of smaller scale lone-wolf terrorist attacks increases, existing AML/CTF processes need to evolve. Terrorist threats have changed and the industry has moved on – the processes need keep pace.
The value of collaboration
Sharing financial intelligence between banks, regulators and law enforcement authorities is central to tackling financial crime effectively. Banks have information and governments have intelligence with which that information can be illuminated. Sharing information – with the appropriate oversight - can protect the financial system against potential threats.
Information sharing in the fraud community is quite well established, which is not the case in the cyber community. A more integrated approach could help to address this disparity and connect the dots properly.
So, to what extent are regulatory changes supporting banks in addressing financial crime? New regulations are putting pressure on banks to demonstrate the effectiveness of their compliance programmes – which although challenging can help banks address financial crime more effectively in the long run. And as long as regulation is drafted with the financial sector – rather than in isolation – it will foster greater financial integrity and should be welcomed.
As the nature of cyber threats continues to evolve, the need to globally raise the bar on banking security is imperative to maintaining industry integrity. Community initiatives, such as SWIFT’s Customer Security Programme, are helping to bolster industry defences by urging users to adopt the appropriate security controls.
It is essential to globally raise the bar on banking security.
The instant payment challenge
As payment processing becomes faster and more efficient, financial crime control processes need to keep up. And this is where RegTech solutions and other due diligence tools that facilitate real-time screening really come into their own.
RegTech solutions and other due diligence tools are being developed that can allow real-time screening to occur.
The key to success in 2018
The overriding theme for the year ahead is partnership and collaboration. The most effective way to overcome financial crime challenges is for banks to work with each other, with regulators, authorities and industry bodies to develop more standardised ways of working.
Read the full interview