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Governments And Businesses Must Be Able To Continually Manage Financial Crime Risks

Published by: Asia-Pacific AML, Friday 20 March 2020

As financial institutions strain to operate under limited resources, a global crisis presents new opportunities for criminals who seek to exploit weakened financial systems. Essential anti-money laundering and countering financing of terrorism (AML/CFT) controls and monitoring must not only continue but should also be considered for strengthening. Failing to do so it also failing to manage essential risks, such as the risk of financial crime. Should financial crime rise or escalate, so too will financial instability and social harm across the community.

The primary focus of this article is Risk Management. In risk management terms, some say Coronavirus is a risk that is likely to happen on a ‘1-in-100 year event’. Others say it is a risk that is likely to occur as a ‘1-in-1,000 year event.

The values of Risk Management include the benefits from identifying, managing, monitoring and reporting risk. If effective risk management was applied to Coronavirus, the World would likely have reacted sooner to protect its borders and placing required controls around national health systems.

For businesses, remedies or methods of dealing with Coronavirus may mean personnel at all management levels, could be 3-6 months in self-isolation. Persons in self-isolation should be able to continue their role remotely or have a succession plan in place for delegation to another person.

Sadly, if businesses have neither a succession plan or the ability to work remotely, regardless of their size, they are most likely to fail. Succession planning includes development and testing of a ‘Business Continuity Planning’ (BCP). An effective BCP requires planning for a 1 in one-hundred year event, and a 1 in one-thousand year event.

The more important the business to financial stability, the greater the urgency for an effective BCPs. Without doing so a global or national crisis could see the likes of banks start to fail, quite literally, overnight.

When comparing Coronavirus to the last major global pandemic – the Spanish flu – Governments and their health systems are today more prepared to deal with such crisis, including their own BCPs. The Spanish flu effected 27% of the world’s population.

When it struck Wellington, New Zealand in 1918, Heads or governing chiefs of essential services were killed by the virus itself. Because there were no BCPs or the equivalent in place, the community had to take command of managing the virus outbreak. This lead to volunteers establishing make-shift hospitals at schools and attending to the sick.

Lessons learnt from the 1918 Spanish Flu pandemic are likely to be well embedded into today’s planning for public health controls that work to lessen the spread of a pandemic virus.

Today’s technology ensures essential knowledge can be easily shared, enabling business operations to continue despite the CEO or the Head of Risk falling ill.

Now that we can reflect on the 2015 global financial crisis, hopefully any lessons learnt to better manage global economic impacts, are already embedded into controls.

Because risk technology can bring real-time monitoring to hundreds or thousands of people simultaneously, there is greater chance of lessening the impact of any potential harm. Should a crisis strike, the ability to operate business operations and technology infrastructure remotely, will ensure a greater chance of business survival and ongoing community support.

For businesses that switch from labour intensive resourcing to using technology to automate workflows, the drain on human resourcing capacity will significantly lessen. Technology therefore not only enables businesses to allocate human resourcing more effectively, but their overall operational costs are likely to reduce.

For those businesses that are currently unable to manage AML/CFT risks remotely, the benefits of Software-as-a-Service and AML360 regulatory technology (RegTech), means legal requirements can be met almost immediately.

AML360’s regulatory technology has the ability to deliver an end-to-end AML/CFT compliance framework within 48-hours for a small business. For businesses that have greater complexity and volume of activity, an end-to-end framework can be established within 5 working days.

AML360’s SaaS solution can be used to process client onboarding, automate record keeping, complete business risk assessments and policies, manage online meetings, carry out transaction monitoring, analyse country risks, report or escalate issues, complete training, and manage case reporting.

AML360’s prestige partnerships with Identity and PEPs/Sanctions screening providers, ensures businesses now have the opportunity to establish a single system to manage, monitor and report on all AML/CFT compliance matters.

Corona Virus Implications

If your business is looking to remotely manage AML/CFT compliance or you wish to establish a remote ‘plug and go’ compliance framework, go to the AML360 website get in touch.

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