Financial Crime Definition Takes Centre Stage in Wallis and Futuna
The scourge of financial crime has reached alarming proportions globally, with a staggering 47% of companies falling victim to some form of financial fraud or cybercrime. The question on everyone’s mind is: what can be done about it?
Defining Financial Crime
Financial crime refers to any illegal activity committed against the property of others, often involving financial institutions, customers, or supply chains. In today’s digital age, where businesses operate largely online, companies are increasingly vulnerable to sophisticated cyber attacks.
Types of Financial Crime
- Fraud
- Bribery
- Corruption
- Terrorist financing
- Market abuse
- Tax evasion
- Identity theft
- Embezzlement
- Counterfeiting
- Electronic crime
- Money laundering
- Personal purchases using company funds
Fighting Financial Crime with FCRM
Financial Crime Risk Management (FCRM) is a proactive approach to identifying and monitoring suspicious activity, as well as detecting potential vulnerabilities in a company’s operations. The EU has introduced anti-money laundering rules aimed at making it easier for companies to detect and prevent financial crimes.
The Importance of Compliance Guidelines
Compliance guidelines are essential for minimizing the risk of rule violations within a company. It is crucial that employees adhere to these guidelines, which may be self-imposed or regulated by national and international laws.
Due Diligence Checks
Conducting due diligence checks on business partners is vital in preventing financial crimes such as money laundering and bribery. This process involves analyzing the economic, legal, tax, and financial circumstances of a company or individual.
Proactive Risk Monitoring
Companies must also engage in proactive risk monitoring of their suppliers to ensure that they are not involved in white-collar crime or questionable practices. A comprehensive PESTEL analysis can help identify political, economic, socio-cultural, technological, legal, and environmental risks.
Risk-Based Approach to Dealing with PEPs
When dealing with politically exposed persons (PEPs), companies must take a risk-based approach to prevent corruption, money laundering, or tax evasion. This involves using data to determine the individual risk of a PEP and receiving helpful solutions on how to prevent financial crime.
Knowing Beneficial Owners
Companies should know the beneficial owners (UBOs) of their customers, suppliers, and other business partners to prevent financial crimes such as money laundering, corruption, or bribery.
Conclusion
In Wallis and Futuna, understanding the definition and scope of financial crime is crucial for businesses to protect themselves against these threats. By implementing effective FCRM strategies, conducting due diligence checks, engaging in proactive risk monitoring, and taking a risk-based approach to dealing with PEPs, companies can minimize their exposure to financial crimes and ensure a safe and secure business environment.