The damage to society

Financial crime has a direct link to terrorism, human trafficking, drugs trafficking and illegal arms dealing. The cost of executing the Paris terrorist attacks in 2015 was just $10,000, yet the tragic loss of life, damage to the Paris economy (an estimated $2.1 billion) and the geopolitical repercussions were catastrophic. Human trafficking is a $150 billion global industry and a third of all victims are children. Global illicit drug sales are reportedly worth around $360 billion a year, and the illegal arms trade is worth an estimated $10 billion a year.

Arguably every country in the world will have been affected by these crimes and addressing financial crime sits high on the political agenda.

There is a social, political and regulatory imperative for financial institutions to take diligent and rigorous steps to mitigate financial crime risks, and prevent the creation of any business environment that allows these crimes to thrive.

Reducing the impact on the bottom line

Fines and sanctions have a significant financial impact on institutions that fail to comply with the regulations. While global firms can budget for the liability in some cases, smaller institutions or newer entrants will struggle to absorb these fines and/or allocate the appropriate funds to adequately fix the issue.

Protecting the reputation of the organisation and its Senior Managers

Financial institutions spend billions on marketing and communication strategies to influence how they are perceived by customers, shareholders, competitors and key decision-makers. Yet, the reputational damage of a fine or sanction for non-compliance should not be underestimated. Managing negative press and increased supervision from the regulator comes at a hefty price. The risks to personal reputations are also significant; as well as losing their jobs, or potential freedom, executives can face relentless public scrutiny fuelled by a global, 24 hour media.

Future-proofing compliance programmes

Firms need a robust and risk-based approach to financial crime. Organisations are often concerned with remediating the issue in response to regulatory pressure through a tactical fix. While the fix or solution might be ‘fit for purpose’ today a key consideration is whether it will support evolving regulatory requirements and growth of the business. Financial services organisations need smarter, cost-effective and scalable solutions to manage financial crime compliance and reduce their financial risk exposure.