Enhancing Regulatory Effectiveness: Preventing Financial Crime

Introduction

Financial crime, such as money laundering and financing terrorism (AML/CFT), poses a significant threat to the stability of financial systems worldwide. While regulations are in place to prevent these crimes, simply complying with them is not enough. Institutions must take proactive measures to detect and prevent financial crime.

The Gamekeeper vs. Poacher Analogy

Compliance can be likened to the relationship between a gamekeeper and a poacher. A competent gamekeeper who understands their environment is effective in preventing financial crime. In contrast, a poacher will seek to exploit weaknesses in the system.

To prevent financial crime, institutions must go beyond mere compliance.

Strategies for Enhancing Regulatory Effectiveness

The following strategies can help institutions enhance their regulatory effectiveness:

1. Support from IT Systems

• Adequate support from internal lists
• Industry lists
• Commercial lists
• Media information
• Open-source intelligence
• Linked databases

2. Investigation Services and Field Inspections

• Assess human resources of contracting parties
• Evaluate premises, equipment, and machinery parks

3. Leverage Third-Party Professionals

• Experience and expertise in AML/CFT

Conclusion

While regulations provide a foundation for preventing financial crime, going beyond the minimum requirements can generate additional costs but may ultimately be more effective.

Expert Support from Sii

Damian, an analyst at Sii, offers professional support to companies ensuring compliance with regulations while optimizing costs. Sii’s services include:

• Process optimization through business know-how and technology
• Gaining control and transparency in KYC/AML processes
• Strong experience in the banking and insurance sectors