Financial Crime World

Enhancing Financial Crime Risk Management: Recommendations for Reform

Introduction

The fight against financial crime requires effective risk management to prevent and detect illicit activities. In this article, we will discuss key recommendations for reforming financial crime risk management on a global basis.

Recommendations for Reform

Enhance Collective Analysis of SARs and STRs

  • Governments and Financial Intelligence Units (FIUs) should commit sufficient resources (human and technological) to the collective analysis of Suspicious Activity Reports (SARs) and Suspicious Transaction Reports (STRs).
  • This will enable a more comprehensive understanding of financial crime threats and improve the effectiveness of risk management efforts.

Improve Feedback Mechanisms

  • A specific focus should be placed on enhancing the speed, volume, and quality of feedback on threats and priorities.
  • Feedback mechanisms should be developed to enable the public sector to inform the private sector about which SARs are of high value to the FIU.
  • This will ensure that relevant stakeholders have access to timely and accurate information, enabling them to take effective action against financial crime.

Prioritize Quality Over Quantity

  • Governments should prioritize quality over quantity in supervisory frameworks for SAR reporting.
  • This means that the focus should be on ensuring that reports are accurate and thorough, rather than simply increasing the number of reports submitted.

Dynamic Threat Management

  • Efforts to address financial crime should be dialed up or down against mutually agreed threats or priorities.
  • This will enable a more flexible and responsive approach to risk management, allowing for adjustments to be made as needed in response to changing threats.

Breaking Down Borders

  • National and organizational borders that limit data and information sharing should be bridged through processes and arrangements that operate with agility, such as Geographical Targeting Orders.
  • This will enable a more comprehensive understanding of financial crime threats and improve the effectiveness of risk management efforts.

Global Information Sharing

  • International information sharing should be improved to enable a global view of suspicious activity across multiple institutions.
  • This will facilitate a more coordinated and effective response to financial crime, enabling authorities to take action against transnational threats.