Financial Crime World

Banking Security Measures Against Fraud in United States Minor Outlying Islands

As the financial landscape continues to evolve, regulatory bodies are focusing on measures to mitigate fraud and financial crime in the United States Minor Outlying Islands. The KPMG report “Ten Key Regulatory Challenges of 2023” highlights key areas of focus for regulators, including anti-money laundering (AML) and counter-terrorism financing (CFT), consumer protection, and evolving risks.

Top Priorities

Regulators are particularly concerned about the increased complexity of financial networks, as well as the sophistication of perpetrators. To combat these threats, they will continue to monitor companies’ AML/CFT frameworks, risk mitigants, and investigation processes. Insider corruption, cybercrime, and robust cybersecurity risk management also remain top priorities.

Regulatory Focus Areas

The report emphasizes the need for expanded regulations in areas such as:

  • Crypto and digital assets
  • NFTs (non-fungible tokens)
  • DeFi (Decentralized Finance) platforms

With the rapid growth of these technologies, regulators are expanding AML requirements to include assessing customer due diligence (CDD) and suspicious activity reporting related to these platforms.

Consumer Protection

In addition to technological advancements, sanctions and price cap compliance remain a significant concern. Regulators will continue to focus on:

  • Virtual currency mining
  • Dark net markets
  • Bans on services to sanctioned entities or countries

The report also highlights the importance of consumer protection, recognizing that companies must balance fraud controls with fair treatment of consumers. Regulators will assess companies in areas such as:

  • Account holds and freezes
  • Model development and validation
  • Payment sender/receiver authentication procedures

Vulnerable Populations

To better protect vulnerable populations, regulators expect companies to implement risk programs that identify and mitigate fraud directed at these groups. Companies are also encouraged to conduct analysis of outcomes and models across consumer segments.

Staying Ahead of Evolving Risks

The report emphasizes the need for companies to stay ahead of evolving risks, including:

  • Domestic and international terrorist financing
  • Transnational criminal organizations
  • Drug and human trafficking
  • Synthetic identity fraud

Companies must enhance their risk and compliance frameworks to ensure effective oversight and governance in areas such as:

  • Anti-bribery and corruption
  • Competitive behavior
  • Lobbying
  • Code of conduct

Key Takeaways

To better protect customers, companies should:

  • Implement analytics and automation in client onboarding
  • Eliminate antiquated technology
  • Establish a mature conduct risk program
  • Strengthen controls in regulatory focal areas (FinCEN priorities)

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