Financial crime is a serious issue that can have a devastating impact on individuals, businesses and the economy as a whole. A recent report revealed that UK financial services organisations spend an eye-watering £34.2 billion each year on financial crime compliance (FCC). TEST
The impact, however, extends far beyond numbers and spreadsheets. In this financial crime blog series kickoff, we delve into why organisations like yours should be proactive in mitigating financial crime risks and the steps you can take to bolster your defences.
What financial crime looks like.
The issue with the term ‘financial crime’ is that it’s broad and encompasses a number of illegal activities, including:
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The act of deceiving someone to gain money or property.
The provision of funds for terrorist activities
The process of making the proceeds of crime appear legitimate. In this series, we'll take a closer look at this common and challenging area of financial crime.
The offering or receiving of money or other benefits in exchange for preferential treatment.
Why taking action is critical.
Financial crime isn't a victimless act. Beyond personal losses, organisations face severe consequences, which is why you must:
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Protect your customers. Safeguarding your clients from financial crime's devastating effects should always be your top priority.
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Protect your reputation. If your organisation is found to be involved in financial crime, you can suffer serious reputational damage, leading to lost customers, investors and partners.
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Avoid regulatory fines and penalties. Failing to comply with financial crime obligations (anti-money laundering (AML) and counter-terrorist financing (CTF)) regulations can result in significant fines and penalties.
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Secure your business. Financial crime can have a direct impact on your bottom line. For example, organisations that are victims of fraud may lose money or have to invest in additional security measures.
What can you do?
There are a number of steps organisations can take to mitigate risks around financial crime, including:
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Conducting Customer Due Diligence (CDD) and/or Enhanced Due Diligence (EDD).
The process of collecting and verifying information about customers. Organisations should conduct CDD/EDD on all new customers and on existing customers on a regular basis.
Monitoring transactions.
Organisations should monitor transactions for suspicious activity either manually or using automated systems.
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Customer Screening.
Regular screening to make sure that your customer base, suppliers and employees are not on economic Sanctions Lists, are Politically Exposed Persons (PEPs) or there are Adverse Media issues.
Reporting suspicious activity.
Any and all suspicious activity should be reported to the relevant authorities.
In this series, we'll be paying particular attention to financial crime controls and exploring how you can implement them effectively to unlock significant benefits. Stay tuned for our next instalment, where we'll uncover the key ingredients of effective financial crime controls in your organisation.
Looking for help managing your financial crime risks?
We are experts in helping organisations manage their financial crime risks, supporting them through s166 reviews and ensuring they achieve the right outcomes. Brighter can also help you to conduct CDD / EDD, carry out screening, monitor transactions for suspicious activity, and generally support you in any financial crime control areas where you have shortfalls in capability or capacity. If you’d like a confidential chat on anything financial crime control-related, please contact Simon Davis today.
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