The future of financial crime

The future of financial crime

When thinking about the future of financial crime compliance, compliance officers should consider five main areas in order to assess and prioritize investments to pave the foundations for their future financial crimes programs.

Koen De Loose, Partner, Head of Risk & Regulatory

Partner, Head of Risk & Regulatory

KPMG in Belgium


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The future of financial crime


In these challenging times with continuous regulatory pressure, financial institutions need to be agile. To maintain competitive a competitive advantage, institutions need to pursue strategic compliance investments. The following five key areas can help to position the programs to compete in the future:

1. A culture of compliance:
Globally, regulators are identifying poor culture as the root cause of many types of misconduct. To be prepared, compliance leadership should be able to:

  • Demonstrate that steps have been taken to assess their culture of financial crime compliance and that they have identified and scoped any cultural issues.
  • Timely respond to instances where it seems the culture of compliance may not be a focus or as strong.
  • Demonstrate a strong commitment at the top, as well as in the middle, with a focus on understanding systemic risks and mitigation of those risks.

2. Integration:
Regulators are increasingly expecting a consistent approach to financial crime compliance across organizations. Organizations can begin by creating better coordination and communication mechanisms between their various compliance units. Moreover, organizations should breach down business unit barriers by fully integrating teams, systems and processes under one financial crimes umbrella. And, they can establish enterprise wide monitoring and testing protocols to manage financial crime risks centrally.

3. Data and technology infrastructure:
Financial institutions must understand how technology is used across departments and business lines and integrate it where possible. Regulatory obligations require institutions to:

  • Assess the technology infrastructure and identify the gaps.
  • Assess whether data has the integrity and accuracy that is needed.
  • Leverage dynamic, multidimensional predictive analytics.
  • Ensure that systems can adeptly handle regulatory change that is highly probable to occur (e.g. Rule 504 and the new Customer Due Diligence)

4. Regulatory change management:
Thinking about change management allows an institution to systematically and consistently manage current regulatory risks and anticipate the future by:

  • Assessing which regulatory changes are most probable.
  • Prioritizing anticipated changes by projected impact.
  • Evaluating where convergences occur globally.
  • Developing a more strategic vision.

5. Staffing model and digital labor:
Over the past years, institutions have struggled with high attrition rates, particularly within their AML compliance departments. This has resulted in a loss of institutional knowledge. Automated processes and incorporation of digital labor would greatly help AML and future financial crime compliance departments with this human resources issue.

Compliance officers will benefit from prioritizing work streams and evaluating how investments in these areas above will impact their organizations AML and financial crime compliance approach, and benefit the institution overall.

Return to the Risk + Newsletter October 2017

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