Fraud and financial crime regulatory updates

Fraud and financial crime regulatory updates

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By Guglielmo Migliori, Senior Research Executive, CeFPro. 

Fraud and financial crimes including money laundering continue to be of paramount importance across the industry, with the increase in technology across the industry what impact is this having on security? With global regulators heightening focus as a result of the increase in sophistication of fraud and financial crime, jurisdictional approaches often vary, causing challenges for global institutions.  Many industry professionals have claimed that a more effective cooperation between banks and law enforcement agencies is needed to achieve common goals. With cryptocurrency being utilized across parts of Europe, many institutions are looking to develop new platforms to avoid highly sophisticated money laundering operations.

Because of the points aforementioned, successfully identifying and mitigating against fraud cases is rapidly growing in important. The demand for the sharing of intelligence data also plays a very important role, as well as deploying innovative software and technology for this purpose. These solutions may boost efficiency to augment cybersecurity, protecting customers’ data privacy and creating effective fraud risk assessments. Ideally this would allow financial organization to obtain a clear picture of potential threats.

To assess current landscape further, The Center for Financial Professionals conducted extensive research with a multitude of industry professionals. Our goal was to pinpoint the main opportunities and challenges addressed by fraud, financial crimes and AML specialists in the upcoming months. The results from this analysis provided an interesting array of results. Just some of the main topics produced from research have been highlighted below;

International regulations alignment

As always regulation continues to be a top area of debate and discussion. Research suggested that many are concerned with the impossibility of international collaboration. This skepticism was due to fundamental legal differences and the ability to solve international cases in a cooperative way. Several experts claimed that a regulatory guidance was needed for clients across different jurisdiction. This approach could ultimately limit fraud and money laundering, as well as sett a global standard to handle KYC efficiently. Another point raised was the ability to balance local legislations and bank policies, by identifying similarities in different legislations can achieve common goals and avoid to give fraudsters any advantage.

This is reflected in some of the comments below;

“There’s been a lot of commentary, particularly in Europe, about how financial crime is an international problem but we have national solutions only for it. If we’re trying to run an investigation and dealing with a customer who uses multiple financial institutions in multiple jurisdictions, there’s not much we can do to trace the flow of funds or get additional information from overseas. We need to cooperate better”

“There is the need to create a coordinated overseeing body or establishing a regulatory framework to achieve patchwork solutions. In reality, financial crime as it exists today, is an international problem.”

“International organizations would need a global standard to best handle international cases, to boost the efficiency in several markets within different regulations”

Banking Marijuana Money

Another top area highlighted by multiple sources was marijuana banking money.

It was suggested that the issues here are the different laws enforced in those states which legalized marijuana related businesses – how should federally insured banks face this?

There are clear conflicts with Article 2 of the Constitution and the 10th Amendment; because of this, the tax money deriving from this would obviously become illegal at federal level. Banks need to share best opinions with their peers, regulators and law enforcement to understand how to face this problem. Just some of the comments mentioned include:

“Under article 2 of the Constitution, no State can pass a law that is in conflict with Federal law. The 10th amendment of the Constitution also says that powers not specifically reserved for the Federal Government, go to the State Government. So there is a conflict of powers here, as marijuana is never mentioned in the Constitution. We need to address this as soon as possible at Federal and State level with all the parts involved”

“This is extremely important for bankers and law enforcement agents – if there’s an activity that appears to be illegal, then any funds from unlawful activities can’t be taken into a bank. Some States are making quite a lot of tax money, which could be considered federally illegal. And banks with national presence have big legal challenges here and all we need is some guidance”


And lastly there has been a strong focus on the cryptocurrency environment. This is an area which is concerning multiple parties as questions have been raised over the lack of regulations around this area given its recent popularity. One recommendation suggested FIs could enhance due diligence to track source and destination of funds, by deploying innovative hi-tech solutions to enable transaction monitoring of cryptocurrencies. More queries also arose around the security of cryptocurrency ATMs, ultimately how to avoid deposits of illegal funds. This has been a top priority in some parts of Europe where as mentioned earlier regulatory guidance is lacking. Arguably adapting new systems to enhance controls could help, for example creating and applying new risk assessments and increasing exposure to digital currency exchanges through customers. Below are just some points mentioned on this topic during our research:

“For banks it’s hard to build out a truly tailored risk management program for cryptocurrencies. A part of the issue is that there’s some very patchy regulatory guidance on this. We need to understand if some guidance can be provided.”

“Banks need to discuss about some potential best practices that could improve the preparation for proper cryptocurrency security infrastructures”

In conclusion, there are several issues which were presented as top challenges for the coming year. Keeping an eye on the horizon and what might cause problems in the future is common practice for fraud prevention and identification, whilst also looking ahead at technological advances. To explore these ideas and concepts further The Center for Financial Professionals will be addressing these issues and more at our upcoming Fraud and Financial Crime Congress, taking place on March 27-28 in New York. The two-day congress will bring together financial firms and law enforcement agencies to review the latest updates within regulation, markets and technology.

To view a copy of the Fraud & Financial Crime agenda, plus our exciting speakers please visit our website at the following link –

Additionally, please feel free to contact me for more information. I can be reached via phone on +1 888 677 7007 or via email at

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