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How to fight financial crime in 2019

Che Sidanius
Che Sidanius
Global Head of Financial Crime & Industry Affairs

To fight financial crime in 2019, organizations will need to work even smarter to pinpoint third-party and customer risk. How can AI and cloud-based API technology assist stretched compliance teams in a tightening regulatory landscape?


  1. We anticipate more regulatory pressure in order to fight financial crime in 2019, including from the EU’s 5th Money Laundering Directive and the Financial Action Task Force.
  2. Our World-Check One Customer Risk Screener webinar on 14 January will highlight innovative ways to simplify and accelerate third-party and customer risk due diligence.
  3. Artificial intelligence, machine learning and cloud-based API technology have many practical applications that can offer immediate help to compliance teams.

Financial crime is the challenge of our times. Its true cost extends far beyond economic loss, impacting countless communities and the lives of millions of individuals across the globe on a daily basis.

Over the course of 2018, Refinitiv focused heavily on raising awareness about this important issue, while reaffirming our commitment to proposing global strategies to combat pervasive corruption.

In early 2018, along with the World Economic Forum (WEF) and Europol, we launched the Global Coalition to Fight Financial Crime as part of a comprehensive, concerted international effort to tackle corruption and to promote greater public private collaboration.

This year, the Coalition will be hosting a financial crime breakfast at the annual WEF meeting in Davos.

Watch: Refinitiv leads the fight against financial crime at Davos 2019

Reducing global inequality: Two trillion reasons to fight financial crime” will feature a discussion between political and business leaders and focus on the human cost of corruption, shining a spotlight on the need to overhaul and intensify global strategies to fight financial crime.

This critical issue will remain high on the global agenda in 2019, with the UK’s Financial Conduct Authority highlighting in its 2018/19 business plan that combating financial crime was a priority.

Watch: The Global Coalition to Fight Financial Crime – working towards establishing a global AML standard

A tighter regulatory landscape

In 2019, we anticipate increased regulatory pressure on banks and financial institutions (FIs).

In Europe, the 5th Money Laundering Directive (5MLD) came into force in July 2018 and requires member states to implement the new rules — which center on tighter anti-money laundering (AML) controls — into national law by 10 January, 2020.

World-Check One. How to fight financial crime in 2019In addition, the Financial Action Task Force (FATF) announced in October 2018 that it would release its first rules and guidelines relating to cryptocurrencies by June 2019.

The last decade has seen rapid growth in the popularity of bitcoin and other cryptocurrencies, inadvertently creating new opportunities for financial criminals.

These currencies offer anonymity and have pioneered the use of a decentralized ecosystem for making financial payments, two factors that can be used to conceal illicit funds to further financial crime. We therefore welcome the FATF’s announcement.

Brexit uncertainty

Ahead of the UK’s departure from the EU in March 2019, many banks and FIs are moving all or some of their client portfolios to different jurisdictions within the EU, but uncertainty around their final strategies remains.

Several issues, including the impact of GDPR and a lack of clarity around the legality of transferring data, continue to muddy the waters.

A further issue is uncertainty around 5MLD. Guidance from the UK government indicates that during the implementation period (29 March 2019 to 31 December 2020), the UK will continue to be treated as part of the EU’s single market and will therefore be obliged to implement 5MLD during this time.

Even after Brexit, however, we expect the UK to remain largely aligned with EU AML standards. This will be in the best interests of sustaining a favorable trade agreement with the EU, but we anticipate further uncertainty around exact developments.

How to fight financial crime in 2019

Private sector innovation

Refinitiv research tells us that 47 percent of organizations in our 2018 global survey had fallen victim to some form of financial crime during the preceding year.

Moreover, the survey revealed that significant gaps in formal compliance procedures remain. This situation allows financial crime to flourish, but emerging technology offers the tools to bridge these gaps.

2019 forecast: institutions' IT budget spend on the public cloud per region. How to fight financial crime in 2019

 

Supporting this view, FinCEN and its regulatory partners issued a joint statement in December 2018 highlighting the role of private sector innovation.

This included new ways of using existing tools or adopting new technologies in helping banks to identify and report money laundering, terrorist financing, and other illicit financial activity, and by enhancing the effectiveness and efficiency of Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance programs.

Furthermore, the statement highlights that “regulators are committed to continued engagement with the private sector”, supporting Refinitiv’s belief that public private collaboration is a crucial tool in the ongoing war on corruption.

Technology and collaboration

Emerging technologies have many practical applications that can offer immediate help to stretched compliance teams, enabling skilled professionals to assess risk more quickly and more intelligently, as in the following two examples:

  • Artificial intelligence (AI) and machine learning can be used to unlock value in volumes of content. For example, technology in this space can enhance efficiencies through information de-duplication or intelligent tagging that enables content to be searched with ease and precision.
  • Cloud-based API technology can deliver industry leading data and intelligence directly to in-house compliance workflow systems to help professionals make informed decisions about risk more quickly and efficiently.

While these advances cannot replace human intelligence, they will prove invaluable tools to help compliance teams close the gap on financial criminals.

How to simplify and accelerate your customer & third-party risk due diligence. How to fight financial crime in 2019

Fighting financial crime in 2019

In 2019, Refinitiv will continue to raise global awareness around the devastating and pervasive nature of financial crime, and will actively promote multi-stakeholder engagement and greater public private collaboration as key tools to combating corruption.

At an organizational level, we believe that the early adopters of emerging technology will reap significant benefits by harnessing the power of AI.

As the war against financial crime continues, forward-thinking organizations should seek to work smarter this year and ensure that they equip themselves with the right tools to help them pinpoint potential third-party and customer risk and remain ahead of a tightening regulatory curve.

Revealing the true cost of financial crime – 2018 report. How to fight financial crime in 2019