Balancing global regulatory requirements for fraud and AML to align practices globally

Balancing global regulatory requirements for fraud and AML to align practices globally

by Sandeep Sharma, CAMLO, KEB Hana Bank Canada

Interview ahead of Fraud and Financial Crime USA Congress, taking place March 27-28 in New York City 
Can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

I am working in the Canadian Financial Services Industry for the last 16 years, with a dedicated focus on Compliance, Anti-Money Laundering, Fraud Management, Corporate Governance, and Risk. Starting from my first job as a Compliance Analyst to my current role as Chief Anti Money Laundering Officer, I have experienced numerous challenges in ensuring that every Financial Institution, where I worked, is in compliance with national & international regulations.

Compliance roles have evolved over the past two decades and are still rapidly evolving due to regulatory changes; thus, Compliance programs must have variation in their approach and activities. Currently, I am increasingly focused on driving cultural change, in addition to managing financial institutions’ approach to regulation. The changes in regulations has forced three crucial needs upon financial institutions; compliance leadership; advanced understanding of transactions within the digital realm, and regulatory relationship management. I am highly focused on handling all these three critical scenarios in my current role.

What, for you, are the benefits of attending a conference like the Fraud and Financial Crime USA Congress and what can attendees expect to learn from your session?

Fraud and Financial Crime USA Congress is providing an unparallel learning platform to all the members of Financial Crime teams across America and the rest of the world. As companies are losing a significant amount of their annual revenue to fraud, the ability to detect and deter financial crimes is critical and provides significant benefits to organizations.  In my session, I will offer an interactive discussion on developing effective tools to detect financial crime. I am planning to share numerous insights and personal experiences in fighting crimes and how to manage regulatory expectations vs Board and Sr. Management expectations.  Finally, I hope to motivate the audience in increasing their efforts to fight financial crimes.

You will be joined by Metropolitan Commercial Bank and Citi, in your opinion, what are the key challenges to aligning regulatory practices globally?

Regulations around the world are rapidly gaining synergies as more and more regulators have started to follow each other’s best practices. The key challenges in today’s regulatory environment are compliance risk management, financial crime compliance, cybersecurity & data privacy, conduct & culture, and geo-political issues. As emerging technologies are creating new sources of business and service models, the regulators must continuously establish and enforce ever evolving regulations. In Canada, Financial Institutions are working with regulatory agencies in creating a sustainable environment to fight financial crimes by sharing information on clients, knowledge and experience.

What are the Implications related to cost cutting and downsizing increasing operational risk and how can financial institutions overcome these challenges?

With ever increasing regulatory scrutiny, all control functions including Compliance team are under great pressure to meet enhanced regulatory expectations in most efficient way. The technological advancements are proving to be a great boon for financial institutions to strike a balance between fostering innovation, protecting consumers, and addressing the potential service disruptions. Ultimately, FIs must do cost benefit analysis of the risks and assess it against their risk appetite and implement mitigating controls accordingly.

What are the opportunities fraudsters have through regulatory divergence and how can financial institutions tackle this?

The fraud management systems have become quite strong in the last few years; however, unfortunately, fraudsters have also become equally as smart in finding new ways to commit financial crimes. Financial Institutions can handle adverse situations by increasing both human and technological resources, role focused regulatory training to all employees, encouragement to participate in industry seminars etc. The sharing of information among FIs & regulators can help in tackling financial crimes.

How do you see the impact of Fraud and Financial Crime evolving over the next 6-12 months?

It is difficult to measure the full costs of financial crime. In my opinion over the next 6-12 months, organization would need to strengthen their compliance regimes by adding competent individuals and the latest technologies, which may significantly increase the cost of managing financial crimes.  The pace of change in terms of technology, product innovation and criminal methodologies, virtual currencies, peer-to-peer financial solutions, mobile payments – all present challenges for compliance. Ever evolving criminal methodologies, including use of digital technologies, is by far one of the biggest worries among compliance professionals.

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