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Covid-19 Crisis Reveals Significant Gaps in Anti-financial Crime Compliance around the Globe

Some companies are able to deal with the challenges better than others. What are the drivers?

Date: 05/13/2020

PITTSBURGH – May 13, 2020 - FinScan, a global provider of AML/KYC consulting and compliance solutions, conducted a global survey to see how the anti-money laundering (AML) and anti-financial crime (AFC) compliance communities are dealing with challenges brought on by COVID-19. The results provide key learnings on the effectiveness of different pandemic response strategies and what the “new normal” will look like in the post-pandemic era.

Many anti-financial crime compliance departments were caught off guard by the sudden onslaught of the coronavirus pandemic. Here are their biggest challenges.

The top challenge facing the compliance community during the coronavirus pandemic has been the need to work remotely from home while lacking the proper technology and access to internal IT systems required to support such a work environment.

Most organizations feel that their exposure to compliance risk has increased, as their normal compliance controls have been compromised due to: remote working conditions; inadequate IT support for remote access; lack of proper due diligence on new business opportunities; and the speed with which the organization had to adjust to crisis management mode and roll out new online services.

The sheer increase in the number of criminal activity attempts and increased alert volumes were also identified as key risk drivers. 63% of respondents expected that criminal activity levels would rise — as well as the resulting alert volumes and backlogs — and that their ability to meet regulatory requirements would be hampered due to the pandemic situation.

Compared with regulators and law enforcement, compliance professionals working for an organization were more optimistic in their outlook of how the COVID-19 situation would impact them and how effectively pandemic-related challenges could be addressed. This difference was especially pronounced in their views on whether the backlog would increase and if they would be able to meet regulatory requirements and deadlines.

Key learnings and implications from COVID-19
Throughout the survey, there was a correlation between having a business continuity plan in place and the organization’s level of risk exposure. For those who had a business continuity plan in place, the reported risk level was lower.

Effect of Controllable Variables on Risk Exposure

Monitoring staff productivity in a remote environment is a challenge, especially due to limited automation capabilities which is shown to significantly limit general readiness for business continuity and increase risk exposure.

Those using automated management dashboards were 2x more confident in their “business as usual” (BAU) readiness than those with no way of monitoring staff productivity.

Looking forward
This crisis has highlighted digitalization of AML compliance functions as a key opportunity for improvement, especially in the areas of customer onboarding and enabling virtual “anytime, anywhere” compliance to support increased online customer transactions.

As many organizations feel that they have some level of business continuity planning in place – but not sufficient planning to accommodate this particular pandemic situation – an opportunity arises to incorporate a more pandemic-related risk-based approach into their existing business continuity frameworks.

Download the full report for more details
Read the complete study to find out how the anti-financial crime and AML compliance community around the world is coping with COVID-19 challenges and what the key learnings and implications are for the “new normal”.

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