FCA financial crime findings highlight the need for better controls
“Ensuring the firms we regulate are effective in preventing financial crime through sound controls is a key priority for the FCA”
On 7th October the FCA published findings from its 2017-2020 financial crime data returns. It is now a legal requirement for certain financial institutions to submit these returns annually and 2,300 firms made submissions in 2019-20.
Some of the many interesting outputs from the respondent firms’ submissions included that there are now 390,000 high-risk customers in retail banking who have increased exposure and vulnerability to being used for money laundering. These statistics only further highlight the potential risk of financial crime to society and the importance in creating effective controls to ensure the safety of individuals.
During 2019-20 over 1m unusual activity reports were submitted internally within the respondent firms, of which 480k were then submitted to the National Crime Agency (NCA). Questions remain unanswered as to the total number of alerts that financial crime controls are flagging but not being escalated to MLROs and the number of SARs submitted to the NCA that were then deemed to require further investigation.
The costs of fighting financial crime are a staggering £1.1bn annually in staff costs alone with at least 17,000 people now employed in financial crime control roles. Technology costs are also widely reported to be rising and increasing efficiency in fighting financial crime is a key challenge faced by financial institutions.
The complex challenge facing financial institutions in the fight against financial crime is becoming increasingly apparent. This recent FCA report indicated a breadth of fraudulent threats with c175 different typologies submitted by respondents when asked to note their top 3 fraud concerns.
FinCrime Dynamics improves financial crime controls through the accelerated adoption of new technologies in the fight against financial crime. Our synthetic data and financial crime simulation technology allows financial institutions to measure and improve the performance of their financial crime controls using AI free from data privacy concerns. Labelled financial crime simulations provide a powerful way for financial institutions to tune their controls against the growing number of increasingly sophisticated financial crime techniques.
Sources:
https://www.fca.org.uk/data/financial-crime-analysis-firms-2017-2020