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Global Business Review Magazine
Tuesday, February 7, 2023
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Increasing number of financial crime: How to curb them?

Increasing number of financial crime: How to curb them?

Criminal Hacker, Concept of Fraud, Cyber Crime. Vector Illustration EPS10

Financial crime, in the recent years has been so rife nor so sophisticated. Let us consider an example: the government’s pandemic support loans have been a high-profile victim of financial crime in recent months with over £1.1 billion of suspected fraud prevented  so far in the ‘Bounce Back’ scheme alone. Governments and large banks are dealing with large-scale financial crime and have technology help them fit their broad needs, but what about smaller institutions that are under the same pressures as their larger counterparts?

Money laundering is one of the main problems the industry is currently tackling with fines topping £36 million  in the first six months of 2020. Small and Medium-sized banks are especially at risk of suffering breaches and with far fewer resources to work with compared to larger institutions, they need more support. Existing anti-money laundering applications are often not flexible and are incomplete for smaller financial institutions to maximise efficiency.

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The most vulnerable are the hardest hit:

Smaller banks are forced to pay high even in the worst times. They need systems that can scale and improve and go ahead with acquisitions, as they expand and grow in the market, and that will protect them as the risk of money laundering and other illegal activities have seen an upsurge during this unprecedented time. In short, they need access to high end technology that big banks employ, but tailored for them in an easy to manage, cost-effective way.

Smaller financial institutions, just like larger financial institutions find their anti-money laundering programmes plagued by low detection rates and high false positives. Larger financial institutions can afford effective solution for tackling this problem. These include building new machine learning models in-house, new scenarios while working with niche vendors to tackle specific issues, or purchasing a best-in-class, end-to-end solution. Subsequently, smaller financial institutions have fewer resources to build these capabilities. In the same way, their core anti-money laundering system should look at elevating its detection effectiveness and accuracy on its own.

A new generation of anti-money laundering technology

In light of these special needs and threats directed at smaller banks, a new kind of protection is required. The new software it employs needs to offer the same quality of protection enjoyed by larger banks without the time and expense required to implement and maintain an on-premise solution. Managing a good cloud service will prove as the key to tackle this issue. Solutions based in the cloud and integrated end-to-end offer key advantages and are much better than traditional programmes. For smaller banks, every passing minute and hour is crucial and cannot afford to be squandered on managing time-consuming deployments and upgrades. These innovative solutions are largely self-sufficient. They are equipped with a strong base of industry-approved watch lists and sanctions lists along with inbuilt tools for analysis, threshold simulation, custom scenario design, and tuning. This is the input the software needs to detect and prevent money laundering attempts at accelerating speed and efficiency with less and less oversight. This reduced need for human intervention helps save crucial hours for already overstretched IT and anti-money laundering teams to deal with more complicated issues that require their experience and personal touch.

Another major advantage of cloud-based programming is the ease of scaling and reconfiguring to each bank’s specific needs. Banks can purchase the services relevant to the specific needs and vulnerabilities of their customer, rather than having to invest in systems that will rarely create value for the group. Subsequently, the banks may start investing more in this infrastructure as they grow, adding new services or expanding their existing capabilities as they need them. The cloud is also far more cost-effective and productive way than any traditional equivalent. Not only does this eliminate the need for additional hardware and middleware, it also removes the installation costs, and implementation costs are reduced.

A new future for banking

Financial crime will not be disappearing any time soon. Mid-sized and small-sized banks are particularly vulnerable, as they are failing to enjoy the same modern crime detection afforded by bigger banks. But newly designed tools to fit their unique needs and requirements can help them survive this environment, particularly when it comes to anti-money laundering applications. Cloud-based protection provides the much needed flexibility and capability that smaller financial institutions need in an easy to manage and cost-effective way. By focusing on optimal cost without compromising on efficiency and effectiveness, cloud solutions can help mid-sized financial institutions stay safe, compliant, and ready for business growth.

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After China central bank vows to crack crypto trade, Bitcoin slips

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