By Riley Peterson, EMEA Head of Strategy and Governance, MUFG
Interview ahead of the 3rd Annual Fraud and Financial Crime Europe Summit, taking place 1-2 April in London
What, for you, are the benefits of attending a conference like the ‘Fraud and Financial Crime Europe’ and what can attendees expect to learn from your session?
I like these events because they get people out of the office and into the same room to discuss our shared challenges. We’re all manning a post to ensure that the criminal activity is kept out of the financial services industry, so it’s important to meet our peers and share ideas. We spend a lot of time and energy wondering what other institutions are doing, but there’s no substitute for just getting people into the same room.
I came from Big 4 consulting which is a fantastic place to start your career, but I found the culture focused on sales. Being in industry makes these events much for fun, as there is no pressure to sell and I can focus on more meaningful networking.
In your opinion how will Brexit impact fraud and AML?
For Fraud, it all goes back to the fraud triangle (Opportunity, Pressure and Rationalization). Brexit will likely present a massive opportunity coupled with increased pressure on a number of people. I would expect there to be increased instances of fraud along the borders as people look to exploit loopholes or weaknesses.
For AML the challenges will be similar, money launderers will take advantage of a lack of clarity during a time of change. A number of corporate customers have been forced to create subsidiaries on the continent and move assets between UK and EU markets. This will lead to confusion to FinCrime control frameworks as historical transaction patterns shift, and ultimately, opportunity for criminals.
How could the outcome of Brexit affect institutions compliance?
A big challenge for banks will be operationalizing and enhancing their control framework in new markets. We’re already seeing a huge demand for financial crime compliance experience on the continent and this will likely increase. It’s very hard to recruit in some markets (Amsterdam, Paris, Frankfurt) and we’re seeing massive grade inflation.
In addition, EU regulators are now starting to take a more proactive approach to monitoring institutions regarding AML risk. The timing of Brexit means a lot of new subsidiaries are being set up (to allow for passporting) on the continent right when regulators are growing ever more concerned with their offshoring models and reliance on traditional hubs for their control framework.
In your opinion, what is the outlook for risk assessments, policies and procedures going forward?
No change, the foundation for a strong program will continue to be a risk appetite statement, a risk assessment against that statement, and a strong suite of policies, standards and procedures.
What advice would you give to financial professionals in the final preparation for Brexit?
Plan ahead and be flexible. Brexit will challenge London’s traditional hold on the financial services industry. The traditional path of staying in the City (of London) and working your way up the ladder at a Tier 1 bank will still exist, but in a different capacity. Challenger banks, FinTech companies and consulting firms will play a larger role than in the past. Additionally, tech firms and eCommerce companies are now moving into the payments market and will look to lure away top talent.
The people who are willing to take more risks and adapt will thrive. The path to career progression may be in another market or another industry, but the skills will be as important as ever.