Preventing Financial Crime in Svalbard and Jan Mayen: The Banking Industry’s Role
The recent market stress has brought significant challenges to the banking industry, including operational strain, unintended customer impact, heightened risk of fraud and other financial crime, and risk oversight issues. In this article, we will explore these challenges and provide guidance on how banks can mitigate them.
Operational Strain: Managing Increased Transaction Volume
Banks are facing a surge in transaction volume, which is putting pressure on their systems and resources. This can lead to operational backlogs, which can be exploited by fraudsters and scammers.
Mitigation Strategies
- Evaluate fraud detection controls, including identity proofing, authentication, and rules and models
- Work with commercial onboarding teams for fraud referrals when unusual activity is identified
- Review transactions to determine if concerns related to money laundering, insider trading or other financial crimes might apply
Unintended Customer Impact: Protecting Against Targeted Scams
The surge in transaction volume can also lead to unintended customer impact, including targeted phishing and phone-based scams.
Mitigation Strategies
- Evaluate fraud detection controls, including identity proofing, authentication, and rules and models
- Review transactions to determine if concerns related to money laundering, insider trading or other financial crimes might apply
Heightened Risk of Fraud and Other Financial Crime: Preventing Impersonation
Fraudsters and scammers are likely to take advantage of the surge in transaction volume by impersonating customers or using stolen or synthetic identities.
Mitigation Strategies
- Evaluate fraud detection controls, including identity proofing, authentication, and rules and models
- Review transactions to determine if concerns related to money laundering, insider trading or other financial crimes might apply
Risk Oversight Issues: Adjusting to Increased Transaction Volume
Banks need to have the capabilities to adjust to the surge in transaction volume and mitigate operational backlogs. This includes monitoring more frequently and differently, as well as evaluating key risk indicators (KRIs) to understand the impact on the risk and control environment.
Mitigation Strategies
- Increase the cadence of independent monitoring over first line functions
- Monitor and evaluate fraud KRIs to understand true fraud impacts and inform short- and long-term strategic decision making
How PwC Can Help
PwC offers a variety of services to help clients address activity surges in an agile way, including:
- Identity proofing and verification
- Fraud alert vetting and review (new account opening, transactional)
- Fraud investigations
- Customer due diligence and enhanced due diligence reviews
- SAR drafting
- Fraud detection rules and model tuning
In addition, PwC specializes in enhancing Fraud and AML programs by advising on the design and implementation of organizations, policies, procedures, processes and controls. Our teams help clients identify and assess regulatory risks, gaps and controls.
By following these guidelines, banks can mitigate the challenges presented by the surge in transaction volume and ensure that their customers are protected from fraud and other financial crimes.