Financial Crime Definition in Svalbard and Jan Mayen: A Growing Concern for Companies
Introduction
A staggering 40% of companies have fallen victim to financial crimes, leaving many wondering what can be done to prevent such incidents. In this article, we’ll delve into the definition of financial crime, its types, and most importantly, what companies can do to safeguard themselves.
Definition of Financial Crime
Financial crime, in essence, refers to any illegal act committed against another person’s property. With the increasing reliance on online transactions, companies have become vulnerable to cybercrime. Criminals are constantly developing sophisticated methods to obtain sensitive financial data, making it essential for businesses to take proactive measures.
Types of Financial Crime
The scope of financial crimes is vast and can be committed by both external attackers and internal employees. The main types of financial crime include:
- Fraud
- Bribery
- Corruption
- Terrorist financing
- Market abuse
- Tax evasion
- Identity theft
- Embezzlement
- Counterfeiting
- Electronic crime
- Money laundering
- Personal purchases with company funds
- Stealing
Financial Crime Risk Management (FCRM)
To combat these crimes, FCRM has emerged as a crucial strategy. FCRM involves:
- Monitoring suspicious activity
- Detecting vulnerabilities in the company
- Taking appropriate measures to mitigate risks
Compliance and Due Diligence
The European Union’s anti-money laundering rules aim to make it easier for companies to uncover suspicious transactions and activities. The regulations obligate businesses to protect their data to the best of their ability or face hefty fines.
To stay compliant, companies must:
- Observe industry-specific guidelines
- Adhere to national and international laws
- Employ fixed compliance guidelines
- Ensure employees act in accordance with the rules
Due Diligence Check
When dealing with business partners, it’s essential to conduct a thorough due diligence check. This process helps analyze the company or individual for:
- Economic circumstances
- Legal circumstances
- Tax circumstances
- Financial circumstances
Proactive Risk Monitoring
To ensure a secure supply chain, companies must engage in proactive risk monitoring. A comprehensive PESTEL analysis can help identify potential risks from:
- Political factors
- Economic factors
- Socio-cultural factors
- Technological factors
- Legal factors
- Environmental factors
Politically Exposed Persons (PEPs)
When dealing with PEPs, a risk-based approach is necessary to determine the individual risk of corruption, money laundering, or tax evasion. Knowing the beneficial owners of customers, suppliers, and other business partners is crucial in preventing financial crimes such as:
- Money laundering
- Corruption
- Bribery
Conclusion
In conclusion, financial crime is a significant concern for companies operating in Svalbard and Jan Mayen. By understanding the definition, types, and risks associated with financial crime, businesses can take proactive measures to safeguard themselves against these criminal activities.