Banks in Faroe Islands Fight Financial Crime with Complexity
The legacy compliance processes used by major banks to fight financial crimes have grown so complex that they are barely manageable. This complexity leads to operational risks and large fines, with executives at banks describing how it affects their daily activities.
Challenges Faced by Banks in the Faroe Islands
Banks in the Faroe Islands face several challenges in fighting financial crime:
- Processes are still manual, making it difficult to keep up with the speed and complexity of financial crimes.
- Advanced analytics are not used effectively, leading to missed opportunities for early detection.
- Regtechs (regulatory technology firms) are not partnered with effectively, hindering the ability to leverage their expertise.
Upgrading Compliance Capabilities
Bank supervisors have increased scrutiny of bank compliance, but fraud and money-laundering schemes grow more sophisticated. Banks in the Faroe Islands must upgrade their crime-detection and crime-fighting capabilities.
Regulatory technology firms (regtechs) can help banks detect financial crimes, but only if they prove that their business models are sound. This requires a strong partnership between banks and regtechs to leverage each other’s strengths.
Balancing People and Machines
Banks in the Faroe Islands must strike a balance between people and machines to effectively use regtechs. A strong financial crimes compliance strategy now requires some form of partnership with specialist regulatory technology firms. However, banks must let go of their traditional bent to build systems themselves.
Adopting Agile Methods
Banks in the Faroe Islands must adopt Agile methods to collaborate effectively with regtechs. This involves becoming more nimble and adopting processes that facilitate faster testing cycles and fewer handoffs. Clear metrics for each step in the process are also essential to ensure reliability and quality.
Proving Regtech Partnerships Effective
Bank supervisors in the Faroe Islands must be convinced that regtech partnerships will not hamper reliability and quality. This requires banks to gain the confidence of regulators by demonstrating their ability to outsource activities without compromising reliability and quality.
Adapting Core System Interfaces
Banks in the Faroe Islands must adapt their core system interfaces to work seamlessly with regtechs. Faster testing cycles are essential to reduce the risk of fraud, but this also requires adapting processes to ensure reliability and quality.
Letting Go of Traditional Bents
Banks in the Faroe Islands must let go of their traditional bent to build systems themselves. A strong financial crimes compliance strategy now requires some form of partnership with specialist regulatory technology firms. However, banks must strike a balance between people and machines to effectively use regtechs.
Conclusion
The complexity of legacy compliance processes is no longer manageable for banks in the Faroe Islands. To fight financial crime effectively, banks must upgrade their capabilities by adopting regtechs, striking a balance between people and machines, and adapting their core system interfaces. By doing so, they can reduce operational risks, large fines, and increase reliability and quality.