Financial Crime World

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Financial Crime and Risk Management in Mauritius: A Growing Concern

In a world where financial crime has become a trillion-dollar industry, it’s no surprise that businesses are struggling to keep up with the ever-evolving landscape of fraud and corruption. According to the World Economic Forum, private companies spent approximately US$8.2 billion on anti-money laundering (AML) controls alone in 2017. In Mauritius, the situation is particularly concerning, as the country has recently been added to the Financial Action Task Force’s (FATF) list of jurisdictions under increased monitoring.

The FATF Assessment and Regulatory Updates

The FATF’s assessment revealed deficiencies in Mauritius’ AML/CFT legal framework, prompting the government to review and update its regulations. The Bank of Mauritius and the Financial Services Commission have since issued new guidelines for regulated entities, but more needs to be done to combat financial crime in the country.

The Impact of Fraud on Businesses

  • In recent years, fraud by numbers has become a major concern, with half of respondents in PwC’s 2020 Global Economic Crime and Fraud Survey reporting that they had experienced some form of economic crime or fraud.
  • The top four instances of fraud identified by the survey were:
    • Customer Fraud
    • Cybercrime
    • Asset Misappropriation
    • Bribery and Corruption

The COVID-19 Pandemic and Financial Crime Risk Management

The COVID-19 pandemic has further exacerbated the problem, creating additional risks for organisations as they operate remotely and digitally. As one local banking CEO quipped recently, “it feels like the CEO’s job nowadays is mostly dealing with risk and compliance without much success.”

What is Financial Crime?

Historically, financial crime has referred to activities such as money laundering, terrorist financing, and other illegal transactions. However, in today’s digital age, financial crime has evolved to include cyber-enabled fraud, identity theft, and other forms of economic crime.

Current Challenges in Financial Crime Risk Management

The current reality of financial crime risk management relies on: * Rule-based scenarios * Manual interventions * Generic risk scoring models * Silo-based approach

However, this model is inadequate for the emerging needs of the business and customer. In fact, it has resulted in increasing compliance costs and poor customer experience without a corresponding increase in compliance levels, risk mitigation, and loss prevention.

The Way Forward: An Integrated Approach to Financial Crime Risk Management

To get it right, financial institutions must adopt an integrated approach to financial crime risk management that involves: * Identification and authentication of customers * Monitoring and detection of suspicious or anomalous behaviour * Action taken in terms of response, investigation, and crisis management

By taking a more holistic view of the underlying governance, risk management framework, and processes, financial institutions can create an appropriate operating model for the management of these risks in an efficient and cost-effective manner.

The Key to Successful Financial Crime Risk Management

Ultimately, simplified processes and better customer experience are key to successful financial crime risk management in Mauritius. With the right approach, businesses can reduce compliance costs, improve customer satisfaction, and prevent financial loss.