This article is part of Kyckr’s new Future of Financial Crime Series which will feature interviews with leading industry professionals and thought leaders to learn more about the trends that will shape the future of financial crime.
The following is an interview we recently had with Garry W.G. Clement, CAMS, CFE, CFCS, FIS, CCI, President and CEO of Clement Advisory Group and Adjunct Advisor to the AML Shop.
What is the state of financial crime today?
Financial crime is the crime of the 21st century. The global e-commerce market is predicted to grow to 4.9 trillion US dollars by 2021. In 2018, one in every ten dollars spent globally was spent online, and by 2022 online sales will make up 17% of all global consumer sales. We are seeing sophisticated criminals and state actors capitalising on what technology has provided from online fraud, ransomware, phishing scams, and romance scams that have successfully bilked 1000s of citizens of their life savings and hampered companies including hospitals from carrying out their responsibilities.
Cryptocurrency has changed the dynamics for money laundering, requiring many countries to play catch-up relative to legislating appropriate controls on these new actors. This has also resulted in law enforcement having to play catch-up relative to entrenching appropriate skills, thereby enabling effective investigative abilities in this new reality.
How has financial crime evolved over the past 5 years?
In the last 5 years, we have witnessed a total paradigm shift in the way financial crime is carried out. Today most financial crime is directly related to the criminal or state actor’s ability to utilise technology to take advantage of weak security controls and scam unsuspecting individuals and institutions. The new generation of financial crime actors have not known a world without computers and therefore have garnered skills that are valuable in the criminal milieu.
The world of money laundering has also capitalised on the use of new technologies, especially the crypto-coin industry. Countries have been playing catch-up to close many loopholes that are attractive to the financial crime element and unfortunately these actors are remaining one step ahead of legislation and enforcement.
State actors have found a whole new world in which to attack a country’s sovereignty. Using techniques such as proclaiming “national daughter’s day and/or national son’s day” which is not an official day, enables state actors to collect information on citizens and families which helps build profiles for potential scams later.
What’s the future of financial crime?
As the pandemic has shown, financial crime has continued to grow exponentially and based on what is occurring on an almost daily basis will continue to be a threat and drain on economies for the foreseeable future. Until legislation changes to enable investigations to be less complex and legislation such as unexplained wealth orders are embraced, financial crime will continue to flourish unabated. It is also essential that when it is ascertained that state actors are behind the criminal activity, strong sanctions need to be implemented by democratic countries to ensure a strong message is delivered to the leadership.
As for law enforcement, it will be essential that there is a capacity to investigate sophisticated financial crime which will require a need for strong public/private partnerships and the acceptance that financial crime demands experience and skills which need to be embraced and encouraged. This may require a shift to skill-based pay to maintain and encourage advanced skills.
