Deloitte’s approach to combating Financial Crime

A clear and focused strategy

Deloitte helps to protect your business from financial crime

Financial Crime is becoming an increased problem in companies all around South Africa. Events and occurrences of fraud, tax evasion, corruption and bribery are at the source of increased regulatory requirements, scrutiny from the regulatory bodies, as well as deterioration of our nation’s reputation as a reliable financial services hub. 

Businesses need to take a serious look at the risk of financial crime and fraud. However, before a company can mitigate its risk, it is important to understand exactly what financial crime is. 

One of the leading definitions of financial crime, provided by the UK Financial Conduct Authority, is that financial crime is any crime that involves the theft of money under the following circumstances: 

1. Fraud or dishonesty

2. Misconduct in, or misuse of information related to a financial market 

3. Handling the proceeds of crime 

The above would further include money laundering, sitting at the tail end of financial crime.

Mitigating financial crime in the financial services industry

The International Monetary Fund estimates the scale of money laundering to be between 2% and 5% of the gross domestic product worldwide. This emphasises the need to implement measures to protect companies from financial crime. 

This is most pertinent in the financial services industry. Recent inspections of the big four banks by the South African Reserve Bank revealed several deficiencies relating to their financial crime compliance programmes. As regulations are enforced and elaborated and banks face increased regulatory scrutiny, stakeholders are working at the best of their capabilities to show responsiveness and progress in solving deficiencies to avoid possible fines. 

Furthermore, banking customers themselves are demanding a more robust financial system. If inadequate controls exist, it increases the customers’ vulnerability to being a victim of financial crime. This is a serious problem that could result in damaging banks’ reputation and attract more criminal activity as the bank will be viewed as vulnerable by sophisticated criminal elements.

Regulatory requirements raising the bar for financial compliance locally and abroad

Regulatory bodies in South Africa and internationally are placing pressure on companies within the financial services sector to implement and enhance compliance capabilities.Companies that fail to adhere to these regulations can be exposed to significant penalties, reputational damage, reduced competitiveness, negative customer experiences and even the loss of banking licences.

To demonstrate the advanced and complex nature of the international financial crime compliance landscape, here’s a list of regulatory requirements: 

• South Africa: FICA, Anti-Bribery and Corruption Act, PRECCA, POCDATARA

• USA: FATCA, US Patriot Act, OFAC regulations

• UK: Financial Conduct Authority, Guide for Financial Crime, EU Money Laundering Directives 

• Globally: Country specific legislations 

• FATF Recommendations and other international standards 

Challenges facing companies in relation to compliance

In order to comply with these regulations, companies need to overcome significant challenges. Many companies find that they lack the resources to drive compliance and that they lack the experience in dealing with the regulatory bodies. Other factors that may cause significant challenges include, but are not limited to:

• The (mis)interpretation of rules and regulations 

• Project fatigue resulting from long-term investment by the company 

• Dealing with constant changes in compliance requirements 

• Overhauling business processes to comply with the regulations

• The cost of compliance versus the efficiency and effectiveness 

• Regulatory data quality, particularly resulting from inadequate data management

Deloitte’s approach to assisting companies with regulatory compliance

Deloitte’s first step is to assist the client to understand relevant governance and compliance rules, so that it can implement robust programmes, regulatory analytics and reporting systems. 

A priority is given to having the correct technical capabilities in place will assist in rapidly alerting the company to potential risks of fraud, market abuse, insider trading and bribery and corruption. 

If necessary, new technology platforms will be introduced too to facilitate the changes. 

Once these are in place, existing policies and procedures can be reviewed so that employees understand the changing business landscape and their responsibilities. 

Critical stakeholder management, governance as well as strong (agile) project management are provided throughout the project lifecycle, ensuring key milestones are met and a smooth transition to the companies “business as usual” is facilitated.

Deloitte takes a strategic approach to help companies reap the benefits of regulatory compliance

Financial crime compliance should come with a positive message around business benefits, ensuring that business buy-in and stakeholder support is given to the compliance efforts.

By complying with regulations, several business value benefits can be realised, including:

• Opportunities to optimise the value of the data extracted from the company

• Single customer view which enables compliance at a portfolio level 

• A risk-based approach that creates and protects value 

• Protecting the company’s reputation

• Improved ability to respond to the changing regulatory environment and criminal sophistication

• A more positive customer experience that will elevate the company in the market 

Being compliant means that companies can not only optimally benefit from business values but will also maintain their reputation as a reliable business partner for both customers and third parties.

For more information on mitigating the risks of financial crime and reaping the benefits of regulatory compliance, please contact Marc Anley on +27214275707 or email




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