Financial Services Firms Working To Combat Financial Crime, Boost Compliance

by Robin Pilgrim, LawAndTax-News.com, London

13 April 2006

Research carried out by Datamonitor on behalf of Norkom Technologies, published this week, reveals a significant shift in the way financial services providers are managing their regulatory compliance obligations and their efforts to stem financial crime.

It revealed that 21% either are integrating or plan to integrate the departments that address financial crime and compliance, along with the technology infrastructures that support their activities.

"Traditionally financial service providers have viewed...financial crime and compliance as separate disciplines, explained Paul Kerley, CEO of Norkom Technologies, continuing:

"But within an increasingly tight-margined industry there is a strong desire to pursue a single investment stream to both reduce criminal losses and drive down the cost of compliance. This is now achievable since single technology platforms are now emerging that can detect crime, investigate it and compile the management information required to fulfil the regulator's requirements."

Cost is clearly a fundamental concern; the need for greater efficiency is named as the first or second priority for all crime and compliance investment decisions by 100% of respondents.

The research also revealed that traditional corporate structures hamper progress. Organisational inflexibility, which discourages cross-functional communication, shared processes and pooled approaches, was named as the number one barrier to consolidation by 67% of respondents.

The research also revealed that ID theft and money laundering are the financial crimes which give financial institutions the most widespread cause for concern, named in the top three issues by 87% and 86% of respondents respectively. However, while not receiving the same number of responses in absolute terms, card fraud emerged as the top priority, listed by 67 of respondents as their number one concern.

"It can come as no surprise that financial service providers are pre-occupied with financial crime and compliance," concluded Mr Kerley.

Analysts estimate that financial crime costs the global financial services industry GBP11 billion ($19 billion) per annum, and that the cost of meeting compliance requirements will increase by 43% over the next three years.

Recommended