Breaking News: Financial Institutions Embark on New Path to Combat Financial Crimes
Financial institutions are revolutionizing their approach to fighting financial crimes by adopting an intelligence-driven, investigator-centered model. This groundbreaking move aims to combat the current system of procedure-driven activities that have resulted in a massive strain on resources and low detection rates.
The Current State of Affairs
According to industry experts, the current system is woefully inadequate, with false-positive rates reaching as high as 90%. This has led to a substantial waste of time and money on activities that yield little to no results. The current approach focuses on procedure-driven activities rather than effective detection and resolution.
The New Approach
Financial institutions are turning to advanced technology and data analysis to improve entity and network resolution, providing greater clarity on high-risk connections and beneficial ownership. This will enable investigators to:
- Identify and prioritize cases more effectively
- Streamline the process
- Free up resources for more valuable activities
Additionally, financial institutions are building a network of external partnerships with law enforcement agencies, other financial institutions, tax-collection agencies, shipping companies, airlines, social-media companies, and non-profits. By sharing intelligence and information, investigators will be better equipped to identify and disrupt criminal networks.
Streamlining Current AML Operations
To further enhance efficiency and effectiveness, financial institutions are:
- Automating manual tasks
- Eliminating redundant controls
- Improving data quality
This will enable them to redeploy resources to more valuable activities, such as special investigative teams that partner with law enforcement agencies to combat financial crimes.
Benefits of the New Approach
The benefits of this new approach are numerous:
- Improved detection rates
- Reduced strain on organizational resources
- Elevated profile of financial institutions as socially responsible actors in society
- Built public confidence in banks and the financial system
Regulatory engagement is also expected to increase, with regulators indicating their openness to innovative approaches. This new model has the potential to significantly reduce instances of:
- Money laundering
- Drug smuggling
- Human trafficking
- Corruption
- Embezzlement
The Future of Financial Crime Detection
As financial institutions embark on this new path, it is clear that the old model is no longer sufficient. The time for an intelligence-driven, investigator-centered approach has arrived. With its numerous benefits and potential to significantly reduce financial crimes, this new approach is set to revolutionize the way financial institutions combat financial crimes.