The Inefficiencies of Financial-Crime Compliance: A Call for a New Approach
Financial-crime compliance (FCC) and anti-money laundering (AML) practices in banks are essential to preventing financial misdeeds such as money laundering, drug smuggling, human trafficking, corruption, and embezzlement. However, the current state of FCC/AML practices is marred by inefficiencies and limitations. In this article, we will discuss these issues and propose a new approach that focuses on intercepting high-risk proscribed activities.
The Current State of FCC/AML Practices: Inefficiencies and Limitations
Financial institutions devote massive resources to FCC/AML operations, but many activities are not required by regulations or beneficial to law enforcement. Some key points made by the author are:
1. Current AML infrastructure is inefficient
- Financial institutions devote vast resources to FCC/AML operations, with little evidence of effectiveness.
- Many activities performed under current FCC/AML frameworks are not required by regulations or beneficial to law enforcement.
2. Streamlining current operations can free up resources
- Banks can review all FCC/AML activities and stop doing anything that is not required or beneficial.
- This can help clear away redundant controls and processes, freeing up resources for more valuable activities.
3. Intelligence-driven approach can improve effectiveness
- By adding more intelligence to decision-making across organizational silos, databases, and systems, banks can significantly reduce the strain on resources.
- An intelligence-driven approach can also improve the accuracy of risk assessments and prevent false positives.
4. Benefits of the investigator-led approach
- This approach can dramatically improve effectiveness in detecting financial misdeeds.
- It can also reduce the strain on organizational resources, elevate the profile of financial institutions as socially responsible actors, and foster deeper regulatory engagement.
A New Approach to FCC/AML Practices: Intercepting High-Risk Proscribed Activities
The current state of FCC/AML practices is insufficient in preventing financial misdeeds. A new approach that focuses on intercepting high-risk proscribed activities can improve effectiveness, reduce costs, and enhance the reputation of financial institutions as socially responsible actors.
Key Benefits
- Improved Effectiveness: By focusing on intercepting high-risk proscribed activities, banks can significantly reduce the risk of money laundering, drug smuggling, human trafficking, corruption, and embezzlement.
- Reduced Costs: Streamlining current operations and adopting an intelligence-driven approach can help clear away redundant controls and processes, freeing up resources for more valuable activities.
- Enhanced Reputation: By prioritizing socially responsible practices, financial institutions can elevate their profile as socially responsible actors.
In conclusion, the current state of FCC/AML practices in banks is marred by inefficiencies and limitations. A new approach that focuses on intercepting high-risk proscribed activities can improve effectiveness, reduce costs, and enhance the reputation of financial institutions as socially responsible actors.