To turn the tide against financial criminals, compliance professionals need to harness a combination of innovation, trusted data and human intelligence. Our new global survey and in-depth report examines the new approaches to fighting financial crime.
- A global Refinitiv survey of 3,000+ managers with compliance roles finds that 72 percent were aware of financial crime in their global operations over the preceding 12 months.
- Many organizations are already taking advantage of new technologies to maximize resources, but add that greater collaboration among industry stakeholders is also needed.
- Organizations using new technologies for fighting financial crime are almost twice as successful at performing KYC checks on the identity of clients as those who don’t use new technologies.
Financial crime is ubiquitous. This is the key finding of our latest Refinitiv research, which revealed that nearly three quarters (72 percent) of the organizations that participated in our survey were aware of financial crime in their global operations over the preceding 12 months.
This was despite the fact that these companies spent an average of four percent of turnover on customer and third-party due diligence checks.
View our interactive infographic, Global Challenges and Solutions around Financial Crime 2018.
One potential explanation is that, in spite of this expenditure, gaps in formal compliance were evident, with respondents revealing that over half (51 percent) of external relationships did not have an initial formal due diligence check at the onboarding stage.
These headline findings suggest that existing processes are failing and that innovation and new approaches to fighting financial crime are needed.
The need for innovation
The Refinitiv-commissioned survey involved more than 3,000 managers with compliance-related responsibilities at large global organizations across 24 geographies.
It focused on the critical topic of innovation — and specifically how emerging technologies and new collaborations are helping to turn the tide on financial crime.
The full report on our findings also includes interviews with leading industry stakeholders and relevant NGOs to deliver a wider perspective on the role of innovation and new approaches to fighting financial crime.
Drivers and blockers
Our survey confirmed that respondents are highly aware of the potential of innovation, with an overwhelming majority of 97 percent saying that they believe technology can significantly help with financial crime prevention.
A noteworthy majority (82 percent) confirmed that they are under pressure to be more innovative in order to reduce risk and contain costs, but nearly three quarters (73 percent) are struggling to harness technological advancements.
A possible explanation for these difficulties is a lack of digitization.
Respondents revealed that only half (54 percent) of the data and legal documentation actually obtained to carry out due diligence is in a digitized format — and this could be stalling efforts to embrace innovation.
The good news is that 60 percent across the globe say they are prioritizing automation and digitization for investment.
Regulations designed to protect customers’ personal data also appear to be holding back the data collection and sharing that could power collaboration and fuel innovation. Eighty-one percent say data privacy regulations are restricting their ability to collaborate against financial crime.
Unlocking the power of innovation
Clean, complete and reliable data is the foundation of effective technological innovation.
Machine learning involves running complex algorithms that require significant volumes of reliable data, with poor data quality identified as a key obstacle to progress in this area.
Fueled by trusted data, technology can help organizations in numerous ways, from reducing the burden on compliance teams, to pinpointing potential risk; from uncovering hidden networks of potential financial crime activity to improving the customer experience.
Findings in support of this include:
- 94 percent of respondents confirmed that the technology they use helps both with detecting financial crime and with enhancing customer engagement.
- Organizations using new technologies to prevent financial crime are almost twice as successful at performing KYC checks on the identity of clients as those who don’t use new technologies.
Given these statistics, it is hardly surprising that, with 51 percent more budget due to be allocated to combating financial crime over the next 12 months, technology is set to be the biggest investment area.
The value of collaboration
Trusted data and technology must, however, be supported by invaluable human expertise.
Respondents overwhelmingly believe that humans are a necessary asset to source trusted data and train algorithms to create effective outputs, with a significant 86 percent of respondents voicing this opinion.
Moreover, there is widespread support for collaboration in the fight against crime.
Success in turning the tide against financial crime will only be fully achieved with greater collaboration between all stakeholders.
The view is fundamentally supported by survey respondents, with 86 percent considering that the benefits of sharing information to fight financial crime outweighs the risks.
Our 2018 True Cost of Financial Crime report focused heavily on the real impact of financial crime, not just on companies and governments, but also on the countless human victims impacted across the globe on a daily basis.
Our new report serves to highlight the increasing sophistication of financial criminals, the continued widespread impact of financial crime and the urgent need for organizations to fight back with a combination of the right technology, trusted data and invaluable human intelligence.