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Global Financial Crime Framework Needs Overhaul: Experts Agree

A consensus has emerged among experts that the global financial crime framework is not delivering the required outcomes, with too much focus on mandating compliance rather than driving success. The system needs a fundamental overhaul to prioritize the delivery of outcomes, such as providing highly useful information to law enforcement.

Key Characteristics of an Effective System

According to a recent study, there are several key characteristics of an effective system, including:

Clear leadership
A supervisory framework that incentivizes high-value activities
Coordination across stakeholders
A “whole system” approach, where all jurisdictions work together to address financial crime

Stakeholder Fragmentation Undermines Success

The national level is plagued by fragmentation between regulators, policymakers, law enforcement, and the private sector, which often leads to conflicting priorities and ineffective outcomes. A clearer structure with set priorities, deconflicted legislative frameworks, and coordinated data sharing would help overcome these challenges.

Risk-Based Approach Remains Critical

Experts agree that a risk-based approach is still crucial for driving improvements in financial crime risk management. Intelligence sharing, collective prioritization, and coherence between policymakers and supervisors are key enablers of this approach.

Addressing Mismatch Between Input and Outcomes

The study highlights the need to address the mismatch between what is put into the system and the outcomes achieved. For example:

Huge resources are mobilized by the private sector to meet reporting obligations, but FIUs often lack the capacity to properly capitalize on the information provided.

Implementing Reforms for Greater Success

Ultimately, courage is needed to achieve greater success in the fight against financial crime. Investment in time and material that only delivers the status quo can create inertia. However, there is broad agreement that implementing reforms to prioritize the delivery of outcomes will be crucial to achieving greater success.

The study emphasizes the need for effective standards for information sharing, both domestically and internationally. While progress has been made in this area, many challenges remain, including:

Inconsistency in the application of standards across jurisdictions

Conclusion

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In conclusion, a consensus has emerged that the global financial crime framework needs an overhaul to prioritize the delivery of outcomes. Implementing reforms, improving standards for information sharing, and addressing stakeholder fragmentation will be crucial to achieving greater success in the fight against financial crime.