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 Ned Kulakowski, Esq., CAMS, Senior Financial Crime Consultant, Fenergo.
What is the state of financial crime today?
Financial crime continues to run rampant through the vastly interconnected global financial system. Although the public as a whole may not realise it, financial crime affects everyone, from individuals to corporations to local small businesses. Despite financial institutions increasingly providing resources to focus on the problem, and continued regulatory and governmental focus, bad actors continue to find ways to exploit the system and commit predicate offenses related to money laundering and numerous other fraudulent acts.
The good news is that many governments and their regulatory arms have made recent strides in tackling these challenges. For example, in the United States, the Anti-Money Laundering Act of 2020 (“AMLA”) has shepherded in sweeping changes to the Anti-Money Laundering (“AML”) and Counter-Terrorist Financing (“CTF”) regime, the largest since the passage of the USA PATRIOT Act 20 years ago. Over the next few years, we will see the numerous aspects of these regulations take effect, and many financial institutions and their technology partners have already begun preparing to address these new requirements. Hopefully, new regulations such as the AMLA in the US and its counterparts around the world will bring in a new era in fighting financial crime.
How has financial crime evolved over the past 5 years?
The rapid advancement of virtual currencies and the continued evolution of banking, such as digitisation and mobile banking, have greatly altered the financial crime landscape and have opened additional opportunities for the exploitation of individuals, companies, and financial institutions. The recent COVID-19 pandemic certainly shifted the landscape, enabling criminal actors to exploit the system in different ways, but even prior to the pandemic the past five years have seen a significant shift in everyday financial activity occurring online, virtually, and via mobile devices. The various forms of illicit activity committed via these advancements in technology would have been unthinkable even a few years ago.
What’s the future of financial crime?
Underlying financial criminal activity is nothing new and will not disappear in the future. Human trafficking and smuggling, tax evasion, identity theft, sexual exploitation, bribery, corruption, and drug trafficking, to name a few of the specific criminal acts being committed in our world, show no sign of slowing down. The battle against those who commit these crimes will continue to be a growing challenge as the means to commit these acts will continue to evolve along with the technologies enabling it. It will be critical for financial institutions to embrace technology and be willing to adapt to the ever-evolving nature of criminal activity not only to remain compliant with their local jurisdictional requirements and their various regulators, but to truly be effective in working with their global law enforcement partners in fighting financial crime.