Global framework for fighting financial crime

The Institute of International Finance and Deloitte LLP White Paper

The amount of money laundered each year is estimated to range from 2 to 5 percent of global GDP. The scale of the problem and its impact are immense - but it’s not for want of investment. - The regulations have drifted from its underlying purpose; from fighting financial crime, to a compliance culture where following the rule book is the most important thing. The current framework is not effective, says Deloitte-partner Sir Robert Wainwright.

Billions are spent annually on financial crime compliance, yet the view from stakeholders is almost unanimous: the current regulatory framework does not effectively or efficiently empower financial institutions to combat the continuously evolving tools of criminals.

– Money laundering is still a major problem, and the recent cases in the Nordics are only some examples of that. There is a very large criminal economy operation in the world, and during the last 10-15 years, we see that they have become increasingly sophisticated, said Partner in Deloitte UK and former Europol-leader at a seminar in Oslo september 2020. 

Robert maintains a large network of Supervisory and Executive Board members in a large number of global clients, with a focus on FSI. He was formerly Executive Director of Europol, the EU's law enforcement agency coordinating global operations against cyber, criminal and terrorist networks.

– With the dark web, technology, and a huge enterprising criminal industry - they share their skills and services - we see a modernizing criminal industry. The effect of that is an extreme increase in the scale of their operations. They are better connected, enabled and therefore more effective. What used to be different parts of the problem is now operating together - cyber, tech, etc. But these horizontal crime operations has not been reflected in the regulations, he explained.

Globally, a whopping 1,2 Trillion USD is spent on compliance every year. Twice of that is lost to financial crime. It is evdient that the compliance industry has little effect. 

- So, are the regulations fit for purpose? No. It has drifted from its underlying purpose; from fighting financial crime, to a compliance culture where following the rule book is the most important thing. The current framework is not effective, Sir Robert Wainwirght concludes.

White paper based on interviews with financial institutions, law enforcement, policy makers and regulators

The current perspectives on financial crime from those in financial services and public sector is the focus of a report from the Institute of International Finance and Deloitte. Based on interviews with key players from financial institutions and law enforcement as well as policy makers and regulators, "The global framwork for fighting financial crime" explores the existing challenges faced by stakeholders and provides detailed and achievable recommendations in seven key areas which, taken together, provide a way forward on mitigating illicit financial flows through a combination of regulatory reform, international cooperation and an increasingly intelligence-led approach.

  1. Global systemic improvements for financial crime risk management
  2. Advancing public/private sector partnership
  3. Improving cross-border and domestic information sharing
  4. Improving the use and quality of data
  5. Reforming Suspicious Activity Reporting regimes
  6. Mitigating the inconsistent or incoherent implementation of financial crime compliance standards and guidance, and providing regulatory clarity
  7. Increasing and improving the use of technology to combat illicit finance

This report breaks down these seven areas, providing detailed and achievable recommendations for long-term systemic reform. Taken together, these have the power to transform how society combats criminality in financial services and empower regulators and financial institutions to improve the global framework for day-to-day financial crime risk management.

Global framework for fighting financial crime

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