âThe expansion of payment platforms, while good for business, poses new risks on both the regulatory and security fronts,â says Ed Baum, Fortentâs Chief Marketing Officer. âOur survey reveals that financial institutions are acutely aware that they must respond to these emerging threats.â
âFinancial institutions are finalizing their budgets now for next year, and the question on everyoneâs mind is how they are going to tackle these new threats when staff, technology, and training resources are already stretched,â he adds.
The surveyâs key findings about financial crime threats include:
â¢ Identity theft â Cited most often by respondents (52%) as the greatest emerging financial crime threat, followed by:
o âVirtual worldâ payment systems (44%)
o Electronic checking (40%)
o Employee fraud (32%)
o Stored value cards (28%)
â¢ New payment products â When asked in which areas they expected to see greater regulatory interest over the next five years, 78% cited new payment products, including payment cards, mobile payments, and âvirtual worldâ transactions. Forty-three percent (43%) also expected heightened interest in trade finance.
â¢ Retail banking â Still tops compliance officersâ list as a money laundering concern (77%), due primarily to high volumes. One respondent also explained the pressure to open more accounts: âBranch personnel...are incented to open accounts in volume to meet their goals, but fail to conduct the proper due diligence required.â
â¢ Geographic threats â In identifying particular geographic threats, Eastern Europe (excluding Russia) leads the world as the region that has experienced the biggest increase in suspicious activity related to money laundering, according to respondents. This region was followed by Russia, Middle East/North Africa, and the rest of Africa.
In addition, the survey showed other trends facing compliance departments today:
â¢ There is distinct movement in organizations toward automation and standardization of compliance systems, as 70% of respondents cited a push to further automate and standardize their systems.
â¢ Bank Secrecy Act (BSA) exams pose an ongoing challenge for financial institutions, with 71% of respondents identifying the frequency of and preparation for exams as the biggest challenge.
âStaying ahead of criminals is always challenging, and it is even more so in this economy,â says Ed Baum. âBut banks know that reducing their exposure to financial crime risk â both from a regulatory and a financial perspective â is essential to staying in business.â