Tackling financial crime is one of the biggest challenges that security agencies, regulators and companies face today. Criminals are robust, resourceful and relentless. While efforts continue to diminish the effect that financial crime has on the global economy, criminals use increasingly sophisticated tactics to remain one step ahead of the authorities and firms. According to Special Inspector James Phipson, commercial director of the Economic Crime Directorate at City of London Police, financial crime costs more than $2.1 trillion globally.

Regulators and law enforcement agencies continue to fight back, but it often appears as if the criminals are winning. A report published by PwC in July indicated that in spite of “significantly increasing investment in compliance and being continuously under the scrutiny of regulators”, economic crime in the global financial services sector has increased markedly in recent years.

The financial services industry is perhaps most threatened by economic and financial crime, given its role as facilitator of so much financial activity. Indeed, 46 percent of respondents in the financial services industry surveyed by PwC said they were victims of economic crime in the last 24 months – 10 percent ahead of the industry-wide global average.

Financial institutions are not neglecting their investment obligations in the fight against financial criminality, with compliance expenditure outstripping other industries. But it is not enough just to throw money at the issue. Firms need a more holistic approach, which has been lacking in the past. As PwC notes in its report, “Financial services organisations have struggled to join the strategic dots across the growing volume, sophistication and variety of economic crime”.

Oct-Dec 2016 Issue

Richard Summerfield