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Key financial crime and anti-money laundering risk areas for businesses revealed

Source: fscom

A major report has revealed the key financial crime and anti-money laundering (AML) compliance challenges facing financial services firms in 2022.

Produced by leading governance, risk, and compliance consulting firm fscom, the Financial Crime Compliance Report 2022 uncovered the most common weaknesses in AML compliance programmes based on the analysis of a large sample of audits.

The report comes as the International Compliance Association warns that financial crime now accounts for 3.6% of global GDP as criminals acquire more sophisticated means of laundering money and financing terrorism.

The top five areas of AML strategy in which deficiencies were identified are

• Customer Risk Assessment;
• Whole Firm Risk Assessment.
• CDD (file testing);
• PEPs;
• Sanctions and Adverse Media; and
• Compliance Monitoring.
The main issues detected across these areas were:

• Whole firm risk assessment not being detailed enough, and only high-level risks identified.
• Compliance monitoring plans either not being executed or non-existent.
• Firms failing to update their risk assessments with key changes made by HM Treasury or European Commission.
Regularly brought in by financial services firms of all types and sizes to audit their financial crime and AML compliance processes, fscom compiled the analysis by studying 57 audits carried out in the year prior to July 2022.

Within the audits, the team of deep-domain experts assessed both the firm’s compliance with regulatory requirements designed to safeguard against financial crime, and the potential impact of each risk on the firm.

Authored by Financial Crime Director Philip Creed and Senior Compliance Associate Richard Dunlop, the report also includes key trends in risk and compliance that firms should prepare for, and the best practice steps to mitigate risk.

A copy of the report is available to download here.

fscom Director Philip Creed said:

“Financial crime becomes more prevalent with every passing year as criminals grow more sophisticated in their attacks. Financial services firms are at a constant risk and have a duty to ensure their compliance processes are tight as criminal activity continues to drive global corruption and inequality.”

“Though this report features the most striking findings, they are risks that all firms should be aware of. We hope it will provide a useful benchmark of how a company may be doing in terms of compliance, and the areas they should consider revisiting to protect against external threats. Of course, every firm faces its own challenges, so our advice is to speak with a financial crime expert if you think your existing processes require more detailed investigation.”

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