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Faroe Islands Banks Tackle Financial Crime Amid Economic Uncertainty
The Faroese banking industry is facing a daunting task in balancing the evolving landscape of financial crime and compliance requirements amidst an uncertain economic future. As the global economy teeters on the brink of recession, banks are under pressure to adapt quickly to changing circumstances.
Challenges Facing Faroese Banks
One of the major challenges facing Faroese banks is the increasing sophistication of financial crimes, such as money laundering and cyberattacks. According to a report by Thomson Reuters, there were over 220 international regulatory changes in 2019 alone, with no signs of let-up in terms of regulatory pressure.
- Money Laundering: Banks are under scrutiny to prevent the flow of illicit funds through their systems.
- Cyberattacks: The increasing threat of cybercrime puts banks at risk of data breaches and system disruptions.
- Regulatory Pressure: The need to comply with ever-changing regulations adds complexity and cost to banking operations.
Cloud-Based Compliance Solutions Offer Hope
However, cloud-based compliance solutions are offering a glimmer of hope for Faroese banks. These platforms enable organizations to handle expanding regulations in an elastic way, providing long-term data storage and flexible computing power that can scale according to demand.
- Scalability: Cloud-based solutions allow banks to scale up or down as needed.
- Cost-Effectiveness: Moving from a capital expenditure (CapEx) to an operating expenditure (OpEx) model reduces costs.
- Flexibility: Cloud-based platforms provide flexibility in managing infrastructure and maintenance.
Economic Forecast: A Major Concern
The economic forecast is also a major concern for Faroese banks. The OECD predicts a global economic contraction of up to 7.6% in 2020, which has put pressure on banks to become leaner and more efficient.
- Global Economic Contraction: The predicted decline in the global economy puts pressure on banks to reduce costs.
- Becoming Leaner: Banks must adapt to changing circumstances and become more agile.
Combating Changing Cybercrime
Another challenge facing Faroese banks is combating changing cybercrime. The annual cost of UK banks combating cybercrime and online fraud is £6.7 billion, according to the Financial Conduct Authority.
- Advanced Analytics: Cloud-based solutions enable banks to detect fraud more accurately through advanced analytics.
- Due Diligence: Banks can perform due diligence and risk rate customers more effectively.
- Transaction Monitoring: Cloud-based platforms allow for real-time monitoring of transactions and suspicious activity.
Conclusion
In conclusion, Faroese banks are facing a complex landscape of financial crime and compliance requirements amidst an uncertain economic future. However, cloud-based compliance solutions offer a scalable and affordable way for banks to meet their regulatory obligations, reduce costs, and ensure maintenance and management.
Sources
- [1] https://www.gfmag.com/magazine/april-2020/financial-crime-worries-rise
- [2] https://www.cnbc.com/2020/06/10/oecd-economic-outlook-global-economy-to-contract-by-up-to-7point6percent-in-2020.html
- [3] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/674046/understanding-costs-of-cyber-crime-horr96.pdf
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