Effectiveness of a Financial Crime Framework

Customer facing functions would traditionally celebrate a framework solely on the basis that it creates minimal disruption to the customer experience and allows business opportunities to be pursued. The role of a Compliance Officer is to focus solely on the risk side of the risk/reward equation. The potential income to be earned is not a factor to be considered when assessing the financial crime risk of a particular customer relationship or transaction.

This tension between the revenue generating side of any organisation and the risk managers charged with protecting it is not new. What has changed significantly in recent years however is the material cost of failure within this relationship. The advent of the Senior Managers Regime in the UK means that now more than ever customer facing staff and risk managers are operating in an environment of Mutually Assured Destruction.

In such an environment there is a keen interest from all stakeholders in having a financial crime framework that is effective. The question still remains how this effectiveness can be measured and what constitutes success. If an organisation declines a larger number of potential clients quarter on quarter; does that indicate an effective framework or one which is setting thresholds of customer due diligence too high? If an organisation increases the number of suspicious activity reports filed during a 90day period is that automatically indicative a more effective transaction monitoring system?

The answer will vary depending on the institution, the products and services offered, the customer base, geographic footprint and a host of other factors specific to that organisation.

What is the differentiating factor?

Find out here