Failure to invest in the right financial crime risk management tools will ultimately cripple a company’s ability to do business. But if the company, especially a fintech firm, equips itself with the latest risk management and cybersecurity technologies, they’ve got the edge.
This is especially true in today’s world when money moves more quickly and where enforcement and reputational risk may impact business with just one incident, according to Andrew Davies, vice president for global market strategy, financial crime risk management of Fiserv, a financial services and payments technology firm.
Fiserv provides fraud risk management and anti-money laundering solutions including the Financial Crime Risk Management platform which can spot the most elaborate crime.
“It’s impossible to predict all the patterns and types of money laundering and fraud,” said Davies. “However, financial institutions, businesses and fintech companies can stay on top of today’s new and emerging threats and combat them head-on by adopting flexible tools that offer protection today and preparation for tomorrow, while allowing them to easily monitor new channels and transactions.”
Davies added that detection and remediation of financial crimes like money laundering is most effective if data is up to date, complete and accurate. Stale data also poses a risk.
“Data drives all well-informed business decisions. Likewise, bad data may lead to bad business decisions,” he said. “In financial crime risk management and detection, accurate data that cannot be manipulated is crucial to preventing financial crime. If a business’ fraud or anti-money laundering program is undermined by poor data, that business is vulnerable to reputational harm, enforcement action and liability.”
Examples of bad data are incorrect customer addresses and employment information that is not updated. If companies are swimming through a lot of these inaccurate data, it will be harder for them to track down financial crime.
According to the United Nations Office on Drugs and Crime, money laundered via the global financial system amounts to 2 to 5 percent of global GDP annually. This translates from $800 billion to $2 trillion. False-positive rates are believed to be about 75 percent.
In the Philippines, micro, small and medium-sized enterprises are the backbone of the economy, making up more than 99 percent of business enterprises in the whole country.
For these small businesses, Fiserv proposes a risk-based approach to managing financial crime risk in accordance with industry guidance and regulators’ recommendations.
Through this approach, MSMEs will focus their use of technology on their products and services which are most vulnerable to risk, making it more cost-effective.
“Fintech companies can differentiate their services by offering quick and simple transactions, as long as they do so in a way that is secure and compliant with local legislation. Building financial crime detection and risk mitigation into product offerings can be a critical differentiator,” said Davies.