Financial Crime World

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Financial Crime Risk Management Reform: A Call for Change

It’s time for a revolution in financial crime risk management. The current system needs an overhaul, and it will take courage to achieve greater success. Investment in time and material can create inertia, but there’s broad agreement that the global financial crime framework must change.

Key Principles

  • Whole System Approach: Criminals don’t operate in silos, and neither can anti-financial crime architecture. A ‘whole system’ approach across jurisdictions is necessary.
  • Enablers for Reform:
    • Standards for information sharing
    • Data privacy considerations
    • Multilateral cooperation on financial crime data
    • Public private partnership
    • Asset recovery
    • Fraud detection and prevention
    • Whole system capabilities
    • Measurement of effectiveness combined with prioritization

Specific Challenges

  • Standards for Information Sharing: The FATF made progress in this area, but challenges persist, such as group-wide sharing and inconsistent application across jurisdictions.
  • Data Privacy Considerations: Building on the German FATF Presidency’s report, further changes to the FATF standards are needed to incorporate a new standard on establishing domestic and cross-border information sharing mechanisms.

Recommendations for Reform

  1. Review Implementation Status: Review the implementation status of Recommendation 18 (R.18) through the Mutual Evaluation Report (MER) process.
  2. Revisions to Interpretative Note: Consider revisions to the associated interpretative note (INR.2).
  3. Strengthen Cooperation and Coordination: Strengthen the basis for implementation to ensure increased cooperation and coordination between financial crime and data privacy authorities genuinely leads to operative information gateways in legislation or clarification of existing rules.
  4. Move from Non-Binding to Binding Recommendations: Move from non-binding to binding recommendations to set a global baseline that would help achieve better results.

By implementing these changes, we can create a more effective system for managing financial crime risk and preventing illicit activities. It’s time for action – let’s work together to make this vision a reality!