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The Ugly Truth About Financial Crime

According to the Financial Conduct Authority (FCA), Financial Crime is described as:

"any kind of criminal conduct relating to money or to Financial Services or Markets, including any offence involving:

  • fraud or dishonesty; or
  • misconduct in, or misuse of information relating to, a Financial Market; or 
  • handling the proceeds of crime; or
  • the financing of terrorism"

This actually covers a long list of activities to watch out for, ranging from identity theft to Cybercrime to Money Laundering. The list is far from exhaustive. Adequate protection for both firm and clients is essential as sophisticated criminals strengthen in packs by the minute. 

Unfortunately, should these criminals elbow their way in, it potentially means hefty financial losses and disastrous reputational risk. Add to this the media attention which greedily swirls around looking for the kill, spreading increased reports of breaches in Money Laundering, Counter-Terrorist Financing, Bribery and Corruption and Information Security to name a few. 

Challenges in Financial Crime are felt across the whole industry as statistics show that it costs the world economy $2.1 trillion - add to that Cyber Security breaches and the costs increase significantly. Some of the aches affecting senior executives include:

  • Regulatory fatigue and scrutiny
  • Diverse regional regulations
  • The ability to hire experienced Financial Crime staff
  • Sophisticated technology requirements
  • Increasing fines
  • Individual accountability 
  • The cost of compliance both financially and reputationally
  • Data privacy

As enhanced and new regulations such as MiFIDII and EU GDPR hover on the horizon, organisations are gearing themselves up by implementing procedures to attest compliance. It's also a fantastic opportunity to review the current landscape, to fix things. Recent reports indicate that over the last 2 years, only 1 in 5 firms have executed a full Financial Crime Risk Assessment. In a world which is happy to expose potential frauds, fines and breaches, it's important to ensure that effective tools and controls are in place to help identify, evaluate and record any lurking risks. Once these have been uncovered, a solid framework should be implemented in order to address them. 

What's interesting for me after being in the banking industry for 18 years, I have been amidst the frustrations of lengthy complex onboarding processes, keeping on top of ongoing client due diligence and ensuring robust transaction surveillance monitoring processes were in place to name a few. I understand the rigor of assessing existing controls, ensuring procedures adhere to policies, identifying gaps for remediation and looking at ways of working around the challenges, cost being one of them. Now I am on the other side. I am seeking industry best practices to help Financial Services with their pain points, help strengthen their controls and be regulatory ready. Being on both sides of the coin gives a rounded view of how these gaps can be closed in order to keep regulators at a safe distance. The bottom line is, it's all about Knowing Your Customer. 

TORI Global has an appreciation for the pain points within organisations. Our experienced practitioners can provide industry insights, highlight tried and tested methods and introduce available technology to help streamline and automate processes. Sometimes it's about both the knowns and the unknowns. We can help support you in undertaking an assessment of your internal controls, identify gaps for remediation, help in evidencing that your control environment is effective and support you in enhancing your risk culture across your business. 

The ugly truth about Financial Crime is that recent breaches and extensive fines indicate that the scrutiny on this is increasing and shows no sign of relenting. Surely this is one limelight that all organisations will want to avoid.

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