Eritrea Banks Fight Financial Crime with Changing Times
Combating Money Laundering and Other Financial Crimes in Eritrea
In a bid to combat money laundering and other financial crimes, banks in Eritrea are facing a significant challenge. The complexity of legacy compliance processes has led to inefficiencies, increased operational risks, and high fines.
Challenges Faced by Eritrean Banks
- False Alarms: Banks struggle with resolving false alarms that take hours to resolve due to outdated automated rules.
- Lack of Sophistication: Automated rules are not sophisticated enough, leading to clients being flagged for no reason.
Experts’ Views on Improving Compliance
- “A strong financial crimes compliance strategy now requires a partnership with specialist regtechs,” said Jan-Alexander Huber, partner at Bain & Company. “These firms have developed expertise that most banks would find too costly or time-consuming to develop themselves.”
- Regtechs range from know-your-customer and anti-money-laundering specialists like Palantir, to customer onboarding and workflow process firms such as Encompass and Contego.
Key to Improving Compliance
To successfully partner with regtechs, banks must adapt their operations, IT systems, and culture. They must become more nimble, with fewer handoffs and clear metrics for each step in the process.
- Adapt Operations: Banks must adapt their operations to accommodate regtech partnerships.
- IT Systems: IT systems must be updated to support seamless collaboration with regtechs.
- Culture: A culture of innovation and agility is essential for effective regtech partnerships.
Eritrean Banks’ Approach
In Eritrea, where financial regulations are still evolving, banks must navigate complex regulatory requirements while keeping pace with technological advancements.
- “Even as supervisors heighten their scrutiny of bank compliance, fraud and money-laundering schemes grow more sophisticated,” said Huber. “Banks have no viable choice but to upgrade their crime-detection and crime-fighting capabilities.”
- To excel in compliance, Eritrean banks must strike the right balance between people and machines, build a seamless end-to-end compliance process, and adopt Agile ways of working.
Future of Financial Crimes Compliance
“The future of financial crimes compliance is all about collaboration,” said Huber. “Banks that can effectively partner with regtechs will be better equipped to prevent and detect financial crimes.”
With expert guidance from firms like Bain & Company and Parker Fitzgerald, Eritrean banks are taking steps towards a more effective and efficient approach to combating financial crime.
- Expert Guidance: Banks are seeking expert guidance from firms specializing in compliance and regulatory technology.
- Collaboration with Regtechs: Banks are collaborating with regtechs to improve their compliance capabilities.