Seven Surprising Financial Crime Compliance Trends to Watch in 2024

According to LexisNexis Risk Solutions, a leading provider of financial crime compliance solutions, the following trends will significantly impact the financial crime compliance landscape in 2024.

1. Synthetic Identity Fraud: Increased remote work, digital adoption, and regulatory complexity set the stage for synthetic identity fraud. This sophisticated form of identity fraud involves combining real and false information to create new identities. To combat synthetic identity fraud, businesses must invest in advanced analytics and machine learning technologies to identify these deceitful activities.

   • Tips: Keep up-to-date with synthetic identity fraud tactics.
   • Implement advanced analytics for detecting synthetic identities.

2. Ransomware Attacks: The frequency and intricacy of ransomware attacks against financial institutions and other industries continue to rise. These attacks not only cause monetary losses but also disrupt critical operations. To counteract this trend:

   • Bolster cybersecurity defenses.
   • Invest in employee training programs.
   • Develop robust data backup and recovery plans.

3. Proactive Risk Management: Traditional reactive risk management strategies are insufficient in today’s complex financial crime landscape. Proactive risk management initiatives should focus on:

   • Data analysis.
   • Scenario planning.
   • Threat intelligence gathering.

4. Vendor Management: As financial institutions outsource more operations to third-party vendors and service providers, their potential compliance risks rise. Effective vendor management programs should include:

   • Rigorous onboarding procedures.
   • Ongoing assessments.
   • Clear communication channels.

5. Impact of Emerging Technologies: Emerging technologies like AI, blockchain, and biometrics are transforming the financial services industry. Organizations must:

   • Understand the regulatory implications of these technologies.
   • Collaborate with technology experts for compliance.

6. Regulatory Landscape: Regulatory bodies worldwide are introducing new regulations to address emerging risks and close regulatory gaps. For example, the European Union’s 5th Anti-Money Laundering Directive (5AMLD) will come into force in 2024. Businesses need to:

   • Adapt to new requirements.
   • Prioritize regulatory compliance.

7. Cultural Transformation: An effective financial crime compliance strategy relies on a workforce that understands the importance of compliance and is committed to upholding an organization’s values. In 2024, organizations can expect to see:

   • Greater investments in employee education.
   • Ongoing training programs.
   • A focus on creating a compliant and ethical work environment.

Staying informed of these trends and taking proactive measures can help financial institutions and businesses effectively mitigate risks and remain compliant in an ever-changing financial crime landscape.