April 9, 2024


by: kiran


Tags: "Regulation"

Effective Measures to Combat Financial Crime

The FCA has published ‘Reducing and preventing financial crime’ which is an update on the progress they have made over the past 18 months, and a look at the challenges ahead which focus on four areas in greater depth. These four areas are:

  1. Data and Technology – on the one hand is transforming fraud and money laundering detection for the better, but on the other cyber fraud, cyber attacks and identity fraud are increasing in scale, sophistication, and effectiveness as the use of AI grows.
  2. Collaboration – improved information sharing, and collaboration are key factors in reducing financial crime and sharing data and intelligence is a vital tool in staying one step ahead of the criminals.
  3. Awareness – Consumers are still seen as the ‘weak link’ in the chain by criminals. Further collective work is needed to improve consumer awareness as fraudsters use increasingly sophisticated methods to deceive victims.
  4. Metrics – The FCA has a robust outcomes and metrics framework in place to measure the effectiveness of their financial crime work – this helps them know where to focus resources. Firms also need robust metrics to measure their own effectiveness, increasing transparency and giving consumers and stakeholders confidence in their anti-fraud efforts.

This month alone has seen two new enforcement cases in relation to financial crime. One individual has been found guilty of insider dealing and fraud and another four men are under investigation by the FCA and the National Crime Agency on suspicion of insider dealing and money laundering linked to financial crime. Since April 2023, the FCA has charged fifteen individuals with fraud offences, who have taken more than £25m from victims – that’s more charges this year than ever before and there is clearly more to come!

What Firms need to consider:

Firms should read the whole report and think about the actions that can be taken to help tackle financial crime. They should also look at the recent enforcement cases and determine whether they would be able to identify such issues occurring in their own firm before FCA intervention would be necessary.

Firms who are looking at new technology should be bolder and more collaborative in how they engage with such new technologies to keep up with emerging risks (make sure new risks are identified, included on your risk registers and appropriately mitigated – ensure attacks into new technologies are within your risk appetite).

The recent communication and fines in this area should act as a reminder that policies and procedures may need a refresh if you haven’t looked at them recently, especially if you are looking at new technology or areas of AI that may change your risk landscape in terms of financial crime.

It is also a reminder that Management Information is key. Is your reporting, right? Does this allow you to see where you are most at risk? Does it measure your own effectiveness in tackling financial crime? Are you comfortable that you are tackling this area appropriately considering the changing landscape!

Lots of questions to consider and if you need any help in this area, please do not hesitate to get in contact.