Building the FinCrime team of the future

What are the key skills FinCrime teams of the future will need and how are they changing?

The growing complexity of the financial system and increasing regulatory requirements have led to significant challenges in the fight against financial crime.

Financial institutions should be, at a minimum, mandatorily equipping their staff with awareness on the internal and external financial crime risks their organization is exposed to and ensure that staff are able to recognize suspicious behaviour and activity and know what, when and how to escalate any suspicions.

There is a requirement for extreme vigilance, deep curiosity and thorough diligence at all times. Specialist financial crime compliance teams are required to have  thorough knowledge of the regulatory environment around money laundering, sanctions, fraud and corruption so they can set up  an internal compliance framework which is robust in ensuring that the organization is able to identify, monitor and mitigate financial crime risks.

The length and breadth of this framework will depend on the size of the organization, footprint, markets, products and type of clients.

Specialist FinCrime teams will need a though understanding of their markets and any new and emerging risks, technical products and associated risks and ensure they are fully equipped to handle any client due diligence escalations by the frontline.

They are also required to have advanced investigative skills, negotiation skills, advisory skills, documentation skills and technology skills, to name a few.

Client facing staff in the frontline need to have a thorough understanding of the financial crime risks their clients pose, strong due diligence skills, and need to be able to  holistically evaluate and articulate the FinCrime risks in their portfolios.

What are the biggest threats currently for AML/CTF compliance?  

Billions of dollars from Money Laundering flow through the financial system, allowing criminals to reap the rewards at society’s expense. Less than 1% of these proceeds are seized by the authorities. Besides lost lives and destruction of property, terrorism leads to significant negative economic effects, with businesses, cities and nations losing billions in the aftermath of attacks. 

Several areas have come into focus from an AML /CTF angle in recent times, many of them involving organized crime; gambling, money mules, fraud, tax evasion, drugs and arms trafficking to name a few.  Illegal wildlife trade is worth several billions annually and is linked with other crimes, such as corruption and human trafficking. Modern slavery generates illegal profits of around US$150 billion a year. The illicit proceeds generated from these criminal activities may become the subject of money laundering, including trade-based money laundering.

How can financial institutions and other AML-regulated bodies ensure they are on top of emerging risks? 

Financial institutions, aside from complying with the required regulation, can take active steps to combat financial crime by engaging in partnerships, such as public-private partnerships, conducting investigations to detect and disrupt suspicious financial activity, being fully aware of cyber and digital developments and using new tools and techniques to enhance  financial crime intelligence and investigations. Key to this is raising awareness of emerging risks posed by fraud, wildlife trafficking, human trafficking, cybercrime and crypto assets internally and externally through training.  

To what extent are cryptocurrencies and virtual assets a challenge for AML, or can they be part of the solution?

We are likely to see increased crypto-exposed project/deal activity and increased exposure risk, given crypto licensing developments in key markets. Banks have a regulatory obligation to manage Crypto-Assets risk, including developing staff expertise on crypto-assets to help identify the clients or activities which pose a high risk of financial crime and  maintaining a robust financial crime framework for crypto-related activities including intensive client due diligence.

To what extent can technology help in detecting financial crime  – What risks are we likely to see emerge in the coming years?

Criminals operate across geographic boundaries, using modern technology and global communications. Fraud is a core financial crime and we are seeing an increase in criminals attempting to target businesses and their banking processes.

Some groups use hacking to profit from cyber-crime. In other instances, financial crime predicate offences are facilitated by cyber or digital means. For example, illegal drug sales using darknet marketplaces where proceeds are usually subject to money laundering through the financial system. 

Digital disruption is creating significant opportunities as well as risks. New and innovative products and services such as virtual or crypto currencies give rise to AML/CTF, ABC risk due to anonymity. Criminals will be quick to exploit unregulated aspects in new products or platforms. Effective financial crime compliance risk mitigation in digital innovation and disruption is critical including increased levels of professional judgement amidst the risks, challenges and opportunities this brings.

Gayatri Viswanath, head of financial crime compliance training at Standard Chartered Bank, will be discussing the “FinCrime Team of the Future” at FinCrime World Forum on 1 December. Click here for more informatio