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 evolution of financial crime and the trends shaping the future.
The following is an interview we recently had with Christopher Liew, CFA, Founder of Wealth Awesome.
What is the state of financial crime today?
The COVID-19 pandemic ushered in an even higher volume of cashless and digital payments. As many businesses transitioned to online systems as a means of survival, cybercriminals also kept up with the times and improved their fraudulent schemes such as making phishing emails look more convincing, impersonating bank telemarketers to collect financial information over the phone, bogus sellers and buyers, hacking online wallets, loan fraud, identity theft, and so much more. Because of this new age of digitalisation, the Anti-Money Laundering Act of 2020 or AMLA 2020 became law and will force many changes to the compliance programs of financial institutions. The Financial Crimes Enforcement Network (FinCEN) will be required to upgrade and modernise its software systems while regulators are also required to update their risk assessment programs and avail interoperable software systems or make use of multiple software apps to further prevent financial crimes to pass through and proliferate.
How has financial crime evolved over the past 5 years?
Financial crimes have always been rampant, even during the first few years of America achieving independence. Crimes and scams such as money laundering, embezzlement, investment fraud, insurance fraud, extortion, identity theft, illicit gambling, organised crime activities, terrorism financing, bribery, corruption, insider trading, and the like. Certain AML policies and procedures were already in place back then with FinCEN regularly updating and requiring financial institutions to be in strict compliance. Unfortunately, because of the pandemic, FinCEN who used to delegate its authority to perform in-person examinations of such cases is now working virtually. This transition may pose certain risks for financial institutions as it was more feasible to maintain and monitor compliance programs when examinations, exchange of documents, and communication were done personally.
What’s the future of financial crime?
As digitalisation proved its convenience to the globe in terms of cashless payments and transactions, financial criminals utilising these digital channels will by then evolve to become even more aggressive and relentless. Add in the modern-age investments such as cryptocurrency and you’re sure to hear reports of cybercriminals making use of more sophisticated ways to hack online wallets, commit cryptocurrency fraud, and identity theft. Unless financial institutions don’t take advantage of cloud-based software or any modernisation tools to upgrade their AML procedures, employ tighter restrictions, create more advanced preventive measures, and create a culture of AML compliance among its employees, fighting financial crimes will only be more difficult in the future.