Revolutionizing Financial Crime Management Through Technology

Despite enormous investments in detection, prevention, and deterrence capabilities, financial crime continues to be a trillion-dollar problem and one of the major threats that both the financial services industry (FSI) and society confront today.

This study looks at how organizations can utilize technology to fight financial crime to boost efficiency, raise effectiveness, and raise the caliber of results while simultaneously cutting costs over time. The Asia Pacific (AP) region is represented by five case studies that offer industry best practices and insights into how technology is being used to deter and detect financial crime.

Even though businesses adopt technology at varying rates and have varying appetites for risk and budgets, all organizations can benefit from the deployment of technological solutions. Furthermore, the benefits of technology can be increased by embracing its use holistically throughout the entire client lifecycle.

Key Takeaways

By combining different Tech solutions, businesses can occasionally “supercharge” their financial crime management procedures and get the greatest benefits.

Thus, the organizations will need to make sure that their technological solutions are created about data, infrastructure, and talent and supported by a strong governance framework to get the most return on their investment.

Important factors to take into account while using technology solutions:

• The readiness and quality of the data
• Identify your systems
• Ensuring compliance by using design.
• Create a strong governance framework.
• Obtain stakeholder consent
• Create a variety of cross-functional, cross-regional teams.
• Examine third-party vendors in-depth
• Equip the organization with information

Policies, Procedures, and Processes

The FCA mandates that businesses implement procedures to support their efforts to combat financial crime. Then, companies set up processes to implement these regulations. Many strategies, for several reasons, tend to get worse over time.

To make sure that the policies’ goals are being achieved and that the procedures are being followed, it is a good idea to conduct a quarterly audit of the processes. Employees are frequently unable to handle the procedures because of a staffing shortage or a system malfunction, which results in policy non-compliance. Recognizing and solving such issues is a useful practice. Having statistical process control throughout the entire process is one method to identify such problems.

Thus, periodic audits of the operations and statistical process control can be helpful procedures to maintain the efficacy of your financial crime prevention.

Information Systems

The most effective instrument in the battle against financial crimes may simultaneously be its greatest weakness: the information system. It is incorrect to assume that implementing an information system as part of a strategy to fight financial crime will make attacks less likely.

The application of information technology in financial crime prevention has evolved in tandem with the expansion of laws and regulations governing financial crime. Typically, there are several systems collecting data, sending that data to a third layer of systems, which evaluates the data and then triggers the required actions.

The task of monitoring the activities and reporting the decisions back to the system that served as the data source may fall under the purview of a different layer of systems. Any of these systems, as well as their interconnectedness, could have problems. The different segregated systems evolved naturally throughout time in response to particular regulatory pressures.

These separate systems put you at risk of being exposed, so if you haven’t done so previously, this would be a good moment to do so. Many integrated solutions are available on the market that offers this unified capability and can be utilized.

An integrated platform for the prevention of financial crime supported by dependable release and testing methods can be used to solve information system-related issues.

Automation

The company’s strategy for preventing financial crime enjoyed the luxury of time while functioning in the pre-digital era. In a digital world controlled by Gen-Z consumers, time is one resource that is squeezed out of every business transaction. As a result, it is anticipated that processes that used to take days to complete will now be finished in a matter of hours. Additionally, firms are being pushed to spend less on tasks connected to regulatory compliance. Automation can be helpful in some circumstances.

Businesses can prevent swivel chair integration, which occurs when a human actor merely replicates data from one information system into another by automating the management of disparate internal systems. Firms can also automatically gather and handle outside inputs like a PEP or a media alert with negative coverage.

In addition to resolving the legal conundrum, using the right automation approaches would also improve the client experience.

Organization Structure

An unsuitable organizational structure is frequently at the root of all problems. There is no magic solution to this. Large multi-national banks have a regional shared services structure to address the needs of regional financial crime. A few of them are part of a large organization. A global organization could provide economies of scale, but the company might lose out on expertise in specific jurisdictions.  An organization that offers shared services locally can benefit from both worlds.

A firm-wide shared service may make sense for small to medium-sized businesses. But even small businesses should avoid segmented products or organizational structures that are focused on the region. As regulations change, this could be a legacy that needs to be changed as soon as possible.

In Conclusion

Therefore, adopting digital operating procedures provides various advantages for firms. It might be the only way to function in the future. However, businesses need to be prepared for the stricter regulatory requirements that come with digital transformation. And as a result of the digital revolution, the attitude toward regulatory compliance would also need to alter, and businesses shouldn’t act as if this has no impact.