Financial Crime Risk Management

Financial Crime Risk Management Frauds, scams, financial crime have become so common, they are used almost everyday and happening around us constantly They fill pages in newspapers globally. It is also correct to mention that digital innovation has speeded up the financial crime multiple times and also innovation in carrying out the financial crimes. People are finding new ways to swindle information and money online, which thankfully, also leads to people finding new ways to protect themselves from such online scams.

Frauds, scams, financial crime have become so common, they are used almost everyday and happening around us constantly They  fill pages in newspapers globally. It is also correct  to mention that digital innovation has speeded up  the financial crime multiple times and also innovation in carrying out the financial crimes.  People are finding new ways to swindle information and money online, which thankfully, also leads to people finding new ways to protect themselves from such online scams. But initiating action  to a financial crime after the its happening rarely helps the victims. Which is why, it is better to prepare ourselves  for and prevent such attacks.

This concept applies not only to individuals but also  to  organizations and large corporations, as these financial crimes against them could cost  in millions.  Hence  they focus more on preventing and protecting from financial scam, using various pre-planned strategies. Every organization has a set of strategies and even have  formed separate teams to combat them. This process is called Financial Crime Risk Management (FCRM). Financial crime risk management (FCRM) is the practice of proactively looking for financial crime, by investigating and analyzing suspicious activity, rooting out vulnerabilities in software and manual processes, and taking any and all steps to lower an organization’s risk of becoming a victim. The proliferation of financial crimes has led to increased government legislation, which now makes it the organization’s responsibility to protect their data  as well as their clients data from both external and internal threats and be compliant with regulatory laws. If organizations fail to take the necessary steps to identify and combat financial crime, they could face stiff penalties that may run into the millions and even billions of dollars. This is especially true if the crime affects the public. Financial crime is global, and no organization is spared. Several large digital organizations have been victims to financial crime like data leaks, scams, and other frauds. Big Companies like Pepsi Co and Volkswagen too have had their incidents of cyber criminals hacking them. With digital avenues for financial crime growing, small and large firms are becoming easy targets of these crimes, which is why governments around the world have regulations and laws in place. These regulations may vary from region to region, but essentially they direct companies to have a well structured internal system to guard against financial crimes to best of their ability. This system should have specific guidelines in place that stonewall all vulnerabilities or potential entryways for criminals, while not curtailing the growth of digitalization and  technology. Most international organizations have a well laid down FCRM policy so that they are compliant with international standards and regulations of their Regulators and Governments. In the United States, the Financial Crimes Enforcement Network (FinCEN) lays the principles for financial crime compliance The Bank Secrecy Act (BSA),that requires financial institutions to work with the U.S. government in cases of suspected money laundering and fraud. The U.S. Patriot Act puts helps “to prevent, detect, and prosecute international money laundering and financing of terrorism.” Know Your Customer (KYC)is a part of the Patriot Act that requires businesses to verify the identity of customers and understand the nature of their activities.