The AML landscape around the world is complex, and financial institutions must keep up with new rules and regulations to meet their compliance obligations.

In order to ensure AML/CTF compliance, you need to work with and understand local, national, and international regulations wherever you do business. After all, it's important to keep your customers and your business safe, as well as make sure your business is compliant with the financial laws.

The scope of both financial crime and regulatory enforcement is expanding. In order to prevent and detect financial crime, it is expected of financial institutions to have effective AML policies, procedures, and internal controls in place and to follow regulatory requirements.

Read what Launchpad's Head of Product, has to say about financial crime

  • Having worked in the banking sector for many years, how has financial crime changed in the banking and non-banking sectors? How has the industry addressed these challenges?

Over the years, I've seen how crimes have evolved and how regulators and financial institutions have stepped up their defenses. New technologies allow consumers and businesses to move money globally within seconds, which comes at the cost of the same being exploited by bad actors, trying to perpetrate financial crimes via modern payment rails and new payment methods.

As a result, regulators all over the world have made their rules stricter, encouraging and allowing new technology and industry collaboration to be used to fight financial crime. Although compliance is not a revenue-generating function, institutions have invested substantially to upgrade aging systems, automate compliance processes, and harness innovative digital solutions to proactively detect unknown threats and hidden criminal networks.

  • When it comes to financial crime, which parts of the world are the most vulnerable, and why?

Criminals operate across countries and continents in sophisticated networks to commit financial crimes. Drug trafficking, human trafficking, and terrorist funding might differ by area. Political bribery, corruption, money laundering, and terrorist financing are indeed global phenomena, while law enforcement authorities pre-dominantly operate within national borders, which makes fighting financial crime a non-trivial task.

The Financial Action Task Force (FATF) regularly looks at how its member countries handle AML/CFT and how well they follow FATF's recommendations. Countries identified as "high risk" are those found to have serious deficiencies in their AML/CFT measures. Such countries may be more exposed to financial crimes than those with stronger AML procedures.

  • Can you provide technology and solution insights that have significantly aided the industry in combating financial crime?

In the banking industry, for example, the use of technology to help with risk assessment has already made anti-money laundering and fraud detection more effective and efficient. Other tools help with due diligence process, anomaly detection, and pattern recognition.

Criminals are more likely to refrain from illegal activities if they perceive the chance of being caught is too high; therefore, having strong anti-financial crime controls is of paramount importance.

  • What do you believe should be a top focus for fintechs and neobanks in terms of AML compliance and regulations, and how do you see Flagright's Advisory Services as an innovative way forward?

When it comes to prioritizing compliance areas, fintechs and neobanks should first determine who their target customer will be and which jurisdictions they will provide their services in, i.e., will they offer their products/solutions in one region or around the world? They will also need to hold internal discussions to better understand the risks involved with their product or solution.

Once the company's strategies and risk threshold have been determined, it is critical to develop a risk assessment to help define priorities and implement policies and procedures accordingly.

Flagright's advisory services can assist in navigating the complex world of financial regulation and compliance with minimal effort.

Flagright’s Advisory Services

Flagright's advisory services are provided by experts in fintech who can provide practicable tailored solutions to a wide range of financial crime and regulatory compliance challenges, such as:

  • AML/CTF framework setup
  • Customer onboarding & KYC process design
  • Transaction monitoring rules
  • Customer risk assessment methodology
  • Crypto compliance
  • Enterprise-wide risk assessments (EWRA)
  • Investigation procedures
  • Regulatory reporting
  • Assistance with bank/partner due diligence
  • General retained regulatory support

In conclusion

Financial institutions, such as fintechs and neobanks, are subject to a variety of compliance requirements, and the penalties for non-compliance can be significant.

Whether it is related to policies and procedures, licensing, crypto compliance, regulatory strategy development, AML/CTF assessment methodologies and calibration, outlining compliance staff functions, or any other compliance topic, we have the knowledge, expertise, partners, and products to assist you.

Visit our Launchpad page to learn more.