This week, the Wall Street Journal reported that many companies are experiencing “new risks or that existing risks have been exacerbated by the coronavirus.” Yet, as employees acclimate to the remote work environment, it’s no surprise that only 16% of financial crime investigators suggested that “their compliance programs have become more effective as a result of the pandemic.”
As we’ve previously highlighted, the current pandemic has exasperated the fight against financial crime. With the UK experiencing a 33% increase in fraud in April and the FBI receiving as many fraud reports by the end of May than in all of 2019, enforcement resources are further constrained. With rising financial crime, and as compliance teams adjust to remote working, the imperativeness of new approaches to financial crime compliance can’t be understated.
Prior to the challenges associated with remote work during the pandemic, investigators still spent between 60-70% of their time, on average, collecting data from many systems to support case investigations. So, it should not come as much of a shock that the quality of suspicious reporting has declined. Yet, as public and private sector resources are increasingly stretched in today’s environment, each case will undoubtedly get less attention. So, what’s the solution?
According to the WSJ survey, “More than three quarters of survey respondents said they now rely more on data and advanced tools to help them streamline workflows and more quickly flag new risks. About a third of respondents said they expect an increase in resources next year, while about half expect no change and 21% expect a reduction in resources.” With a McKinsey study suggesting that an overwhelming majority of productive financial investigations that lead to enforcement investigations originate with inquiries from external sources, such as publicly available risk-relevant information and adverse media, shifting from a mindset of merely complying with regulation towards an effective outcome mindset of finding risk in data seems to be the future.
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