Financial Crimes and Compliance: A Comprehensive Guide

With the growth of technology and globalization, financial crime has become a growing concern for banking and fintech institutions. Over the years, financial crime is a particularly pressing issue, with the region being at the forefront of financial innovation and integration into the global financial system. This blog will delve into what are different financial crimes, what is FCCM and more. 

For companies in all industries around the world, the need for a successful FCCM strategy is more crucial than ever before. Technology is constantly evolving, which has altered the nature of attacks, the level of access, and the possibilities for cybercriminals. Most organizations conduct business online, which makes companies vulnerable to cyber attacks and cybercrime. Financial criminals are increasingly resorting to advanced methods to gain access to sensitive financial information and cover their activities. Furthermore, there have been instances of corporate insiders committing financial crimes by exploiting their knowledge of the organization’s critical data and concealing their illegal acts.

What are the types of Financial Crimes?

Financial crime is stealing funds or assets illicitly from a person or entity for personal profit. The most prevalent financial crimes include money laundering and terrorist financing, fraud corruption, insider trade, tax fraud, embezzlement, digital crime, and identity theft. External attackers and internal employees, including those at the top of the business, can carry out these crimes.

The term “financial crime” also encompasses various less criminal severe acts. Although the costs or legal consequences may not be as high as the more severe crimes mentioned below, this conduct falls under the category of financial crimes:

    • Purchases for personal use: Employers can use the company’s funds to purchase items that aren’t directly related to work.

    • Theft: Employees take cash (e.g., from an ATM or a safe) or even items that belong to the business and then sell them in exchange for money.

    • Skimming: Employees cut small amounts off the top of each transaction, generally in amounts small enough to be unnoticed. However, they increase over time, which is a major issue for cash-based retail companies.

    • Payroll scheme: In some instances, employees of payroll issue bonus checks that are not approved or understate an employee’s working hours.

    • Billing schemes: Employees present fake invoices to businesses, which the company will then pay the employee, or an accomplice is paid the money.  

    • Forgery: The process of obtaining or reproducing documents with someone else’s signature. Documents may include timesheet cost reports, agreements, and even checks.

In contrast, perpetrators of financial crime typically range from minor criminals to large-scale criminal syndicates across the globe:

    • Organized criminals: Big-scale and extensive operations that may include dangerous, influential people.

    • Individual criminals: These include hackers who have no connections to the business or its suppliers, customers, or contractors but who have some understanding of the industry.

    • Business leaders: These include directors or executives who steal from their companies or lie about an organization’s performance (e.g., manipulating financial information to overstate profits).

  • Employees: This typically involves stealing money and doing things to cover up their tracks (e.g., skimming). Criminals from outside often employ employees as partners to carry out their criminal actions. Employees may be involved in this scheme or unknowingly targeted to be engaged in illegal activities, e.g., a criminal pretending to be a CEO or business leader gaining access to secure information (phishing).

What is Financial Crime Compliance?

As a financial technology company, we understand the importance of financial crime compliance in protecting against illegal financial activities. Financial crime includes actively seeking financial gain from criminal acts and actions taken to conceal the proceeds of these crimes.

    • Anti-Money Laundering (AML): Help ensure illegal funds don’t enter the legitimate financial system.
    • Know Your Customer (KYC): Verify the identity of the customer to ensure they’re legitimate and perform due diligence to determine the risk they pose.
    • Watchlist Screening: Monitor and screen clients against applicable sanction lists.
    • Preventing payment fraud: Holistic anti-fraud systems that are robust and can quickly adapt and deliver security and protection with minimal customer friction.
    • Deterring cybercrime: Defensive measures to protect the integrity of systems and data.
    • Customer Due Diligence: One of the critical steps in implementing FCCM is customer due diligence (CDD), which involves identifying and verifying the identity of customers and assessing any potential risks.
    • Transaction Monitoring: This involves monitoring customer transactions for suspicious activity and flagging potential financial crimes.
    • Investigations and Reporting: In the event of suspicious activity, investigations and reporting are conducted to determine if a financial crime has occurred and to take necessary actions.

Oracle Financial Crime Compliance Management

Oracle Financial Crime Compliance Management (FCCM) is a comprehensive solution to help financial institutions prevent, detect, and report financial crimes such as money laundering, terrorist financing, and fraud. The solution combines advanced analytics, machine learning, and case management capabilities to identify and investigate suspicious activity.

Key features of Oracle Financial Crime Compliance Management include:

    • Automated transaction monitoring and suspicious activity detection.
    • Advanced analytics and machine learning for enhanced risk profiling and customer due diligence.
    • Integrated case management for streamlined investigation and resolution.
    • Watchlist screening against global sanctions and politically exposed person lists.
    • Robust reporting and analytics capabilities for compliance with regulatory requirements.
    • Integration with other systems and data sources for a complete view of financial crime risk.
    • Flexible deployment options, including on-premises, cloud, and hybrid deployment.

Profinch: Your Preferred FCCM Partner

Financial Crime Compliance Management (FCCM) is essential to maintaining safety and compliance in the financial sector. Advanced solutions such as Oracle’s FCCM suite and end-to-end application suite can help combat financial crimes and achieve compliance. Implementing FCCM with the help of Profinch along with steps such as customer due diligence, transaction monitoring, investigations and reporting can be very helpful in preventing financial crimes.

With Profinch as your FCCM is your preferred partner as, you get-

  • 35+ governance, risk and compliance projects executed globally
  • Strong team of 70+ risk/compliance professionals
  • Dedicated Center of Excellence (CoE) delivering successful cloud transformations
  • 20+ compliance projects – AML / BSA / CFT transformation journeys across Universal banks, Digital only banks, Wealth Management companies and Insurance service providers
  • Diverse coverage for BSA/AML and Fraud
  • Handled Financial crime solution integration with various CBS/CRM i.e., Flexcube, T24, Bancs, FIS, etc.