Not all organizations are in the same league when it comes to fighting financial crime. Some aren't even playing the same sport.
While most organizations have safeguards in place, those at the beginning of the journey are having to deal with fragile structures and building foundations. Other organizations are more mature yet are spending large amounts of money on programs to ensure effective financial crime risk management. Where are you on the spectrum?
What you should be doing
A company's success in fighting financial crime is often seen to depend on its maturity - be that in established years, skills, or knowledge. But while experience is essential, it doesn't always result in an optimal solution when it comes to an ever-changing environment like financial crime. It could even lead to complacency and embedded weaknesses, where legacy systems and controls are rolled forward without assessment of their design or operating effectiveness.
That's because the journey isn't a linear one, and there's no designated end point. Any business that thinks it has financial crime risk mitigated is likely to be in for a shock at some point. This is a journey that should never be considered complete.
In my view, the key is having a dynamic and agile anti-financial crime risk management model which is properly governed. Organizations that pay the least attention to the fight against financial crime could have an elevated risk of scrutiny by regulators, while firms that place a high importance on it - and can evidence it - will likely navigate regulatory obligations more comfortably and effectively.
The amount of money invested in this area does not necessarily equate to success. There are countless examples of good money being thrown at bad solutions. What I believe organizations need to do if they're trying to identify where they stand in all of this, is to spot where the inefficiencies might be.
What is your return on investment when it comes to dealing with financial crime?
Dealing with financial crime can cost businesses a lot of money. Some of this is a direct cost, such as the technology and people involved in meeting financial security regulations. But there's also an indirect cost that needs to be considered when deciding how much time, effort and money is justified in tackling this problem.
Financial crime is not restricted to greedy traders or small-time credit card fraudsters. Those involved are often organized gangs that also trade in modern slavery, wildlife trafficking, terrorism and more.
Your investment in the journey to becoming a mature financial organization can help to combat this. It's not a battle that you can fight on your own, or one that will be won overnight, but every little step helps, which is why improving your systems and expanding your teams' knowledge is important.
KPMG believes that financial crime maturity is crucial for your future. Let us help you understand where you are on the journey and guide you through it with our honest and challenging approach.
Throughout this article, “we”, “KPMG”, “us” and “our” refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.