Skip to content

How regulators are cooperating to combat financial crime

5 min read

Complexity to all transaction aspects.

Eastnets own Deya Innab was part of a Webinar panel discussion that explored the complex world of financial crime. Regulatory measures took center stage, and Deya was joined by esteemed colleagues Dr. Mario Menz, Head of Compliance & Money Laundering Reporting Officer at Ghana International Bank, and Nicolas Marinier, Partner, Forensic & Financial Crime at Deloitte. The host, Gary Wright of Finextra, provided framing around the subject, allowing discussions to take logical and informative pathways.

Here Eastnets provides a synopsis of the webinar. However, you can watch the full discussion here: Financial Crime: How regulators are cooperating to combat financial crime.

Setting the scene: The cross-border digital fraudster

The discussion began with Deya Innab setting the scene, explaining that the goal of FIs is to be compliant but competitive. Deya focused on the challenge of the exponential growth of financial crime that is not likely to slow down. She said, "This is always the same challenge: how does an FI keep up with regulations and balance being competitive with being compliant?" 

One of the issues discussed by the panel was that cross-border payments add complexity to all transaction aspects. Therefore, regulatory collaboration is a must-have in this complex landscape.

Nicolas Marinier entered the discussion, pointing out that public-private partnerships are essential in tackling financial crime's complex and sophisticated aspects. As he puts it, "Financial criminals are themselves collaborative. They work as a multinational organization. The industry must be as good if not better than the criminals but have less time and money."

Dr. Mario Menz's mantra was that there must be a balance between the effectiveness of regulations and the cost of implementation. He stressed, "Effectiveness is an issue, and more of the same may not offer better results."

Dr. Menz has a unique perspective as he is an academic and works in the financial sector. These two hats have led Dr. Menz to question the cost/effectiveness balance. He says, "If I look at the challenges of implementing regulations as a head of compliance, I need to acknowledge the costs." However, Dr. Menz points out that while effectiveness is an issue, we must recognize if this is because of wilful circumvention of requirements or a subjective interpretation. Deya reiterated Dr. Menz's concerns: " Doing the same thing while expecting different results will never work.”

The panel agreed that more of the same is not the answer, but improving how we respond to regulations and financial crime will help solve this challenging situation.

Issues and challenges of AMLA and cross border payments

The discussion continued, moving into the realm of the EU's AMLA (Anti-money-laundering authority). The panel established that cross-border payments are significant for the global economy, but the reality is that they need to be more transparent. Recently, the G20 has attempted to make them faster, cheaper, and safer through actions outlined in a report called G20 Roadmap for Enhancing Cross-border Payments. The report offers a series of building blocks to ensure rules are implemented correctly globally, not just at an EU level. Ultimately, the goal must be to reduce cross-border payments friction and improve security. However, Deya highlighted insufficient detection of suspicious activities across borders by FIUs (Financial Intelligence Units). The panel stressed that this is exacerbated if there is a reliance on a single national authority; more is needed to address the complex cross-border nature of money laundering. Information sharing is one area that can move the dial in terms of the war of attrition between financial criminals, regulators, and FIs; Deya said: "The industry has to be honest and admit that currently, information sharing between banks and FIUs means that transactions are oblique and only a small portion of a what is a large complex puzzle is visible.”

The panel also discussed regional variations in how the maturity of technology, national supervisory intelligence units, etc., impacts effective collaboration. AMLA must take these things into account. Deya agreed with Nicolas that "clarity on how data sharing works across regions is vital." Panel members concurred that AMLA rules in data sharing must be balanced against data privacy. Nicolas stressed that this "Starts with data capture, on time, that is complete, accurate, and granular; this is vital to get right before we even start to share information.”

The way forward in tackling cross border financial crime

The panel discussed solutions, and Deya recommended using "Collaborative analytics to bring data together and develop sharing initiatives." She said, "This integrated approach will improve understanding of the complex puzzle of financial crime."

Panel members agreed that AI offers excellent hope in identifying patterns and providing the means to detect early, low-level, signals of financial crime and terrorist financing.

Dr. Menz pointed to recognizing the difference between possibility and probability. He stated, "As an industry, we have not got our head around thinking about probability, as this would enhance effectiveness and reduce costs.”

To listen to the discussion in full and catch the answers to some insightful questions from the audience, watch Financial Crime: How regulators cooperate to combat financial crime.

The video will also reveal poll results for two questions put to the audience:

  • Q1 “Do you believe the new regional collaborations in the fight against financial crime like AMLA will be helpful to your organization?”
  • Q2 “In the event of a centralized AML authority being established in your region, what would you consider a key area of focus for your organization?”

Featured expert

Image of Eastnets


Insights from Eastnets

Subscribe to our newsletter