Financial Crime World

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Financial Crime Risk Management Strategies Face Global Scrutiny

A new report from The Institute of International Finance and Deloitte highlights significant progress made worldwide in addressing illicit financial flows, but warns that sustained efforts are needed to prevent the misuse of finance.

A Growing Focus on Faroe Islands

The Faroe Islands, a self-governing territory within the Kingdom of Denmark, is one jurisdiction where financial crime risk management strategies are being implemented.

Combatting Illicit Financial Flows

In 2019, Deloitte and the Institute of International Finance published a white paper outlining ways to combat illicit financial flows through regulatory reform and intelligence-led approaches. Since then, notable advancements have been made globally, thanks in part to efforts by the Financial Action Task Force (FATF) and collaboration between public and private sectors.

Tracking Progress Against Recommendations

The new report builds on the 2019 paper, tracking progress against recommendations and identifying key areas for improvement in global regulatory architecture. It draws from industry experience and interviews with financial compliance leaders, law enforcement officials, policymakers, and regulators.

Global Outlook on Financial Crime Risk Management Reform

The first part of the report provides an overview of international standard-setting bodies and jurisdictions implementing financial crime risk management reforms. Notable efforts include:

  • FATF’s Ongoing Work: Strengthening anti-money laundering (AML) and combating the financing of terrorism (CFT) frameworks
  • Regulatory Initiatives in Key Jurisdictions: The European Union’s AML Directive and the United States’ Bank Secrecy Act

Enhancing Effectiveness in Financial Crime Risk Management

The second part of the report offers a framework for public and private sector stakeholders to enhance their anti-financial crime strategies through implementation of recommendations in key areas:

  • The Use of Financial Intelligence: Leveraging data analytics and AI to identify suspicious transactions
  • Risk Prioritisation: Focusing on high-risk customers, products, and geographic regions
  • Technology and Innovation: Embracing emerging technologies to improve AML/CFT effectiveness
  • International Cooperation and Capacity Building: Strengthening global collaboration and capacity-building initiatives

The Road Ahead

While jurisdictions like the Faroe Islands have made progress in financial crime risk management, the report emphasizes that sustained collective efforts are necessary to prevent the misuse of finance and mitigate its impact on society and financial stability.