How banks can strengthen their risk-based approach to financial crime

A recent case study by financial crime prevention firm Acuminor has detailed how banks can improve their stance of tackling the financial crime threats they face through its risk-focused technology.

The company highlighted in the case study how it worked alongside JAK Medlemsbank, a small Swedish member’s bank that previously embarked on a program last year to improve its financial crime processes and procedures.

According to Acuminor, the small local bank had limited time and resources available to spend on their anti-money laundering compliance, and regulatory changes and tighter supervision in the last decade had led to challenges for the bank to maintain an efficient compliance organisation.

At this point, JAK worked alongside Acuminor to use its Risk Assessment Pro and ThreatView products to provide the former with the knowledge and processes to help the firm better understand and assess the financial crime threats they face.

Acuminor underlined that prior to Risk Assessment Professional, many banks faced challenges of having a risk-based approach to financial crime.

The company said, “Since the 4th EU AML Directive came in to force financial institutions have been asked to take a risk-based approach to their AML compliance. The foundation of this approach is having a complete understanding of the threats and associated risks that you are facing to ensure your mitigating actions are relevant and appropriate.

“As a small bank in Sweden, JAK had challenges in gathering the knowledge to understand the specific threats that they faced. JAK had AML and KYC processes and procedures in place and were actively working to ensure that the bank was not used for financial crimes.

“However, following the regulatory issues in 2019, JAK’s management and its operation in that they needed to find a fundamentally new way of handling their risk-based approach to AML. Relying on in-house resources were not enough in today’s increasingly challenging financial crime environment with new threats and associated risks constantly evolving.”

When detailing how Risk Assessment Professional and ThreatView helped JAK, Acuminor noted that ThreatView helped JAK in their daily AML operations through producing Red Flags and Suspicious Activity Reports, while the bank also found use in its internal AML training through Risk Cards, an offering that helps companies understand where threats and predicated crimes and associated risks are displayed in an easy-to-understand fashion.

Acuminor remarked that through using Risk Assessment Professional, JAK was no longer required to spend their limited resources on reading through reports to understand how financial crimes they are exposed to are committed.

The company said, “The savings in time and resources by using Risk Assessment Professional will continue to grow for JAK as the foundational work that they have done in the system will allow them, in the future, to focus on the delta changes, in their risk assessment and associated workstreams. They can do this because as the threat landscape evolves, Acuminor will continually update its threat intelligence database and make it always available to JAK.”

Such technologies could help companies to reduce bottlenecks in tackling financial crime and make a simpler and less time-damaging process. According to Acuminor, moving away from slow, manual processes is not only time-consuming, but it is become an increasingly impracticable way of conducting risk assessments.

Acuminor said, “Using manual, static processes, to conduct risk assessments is becoming an increasingly unviable option. So too is blaming ignorance of the threats and associated risks that an organization is exposed to, but was publicly available, at the time of the latest risk assessment.

“Time has also passed on the rigid structure of doing risk assessments once a year whereby an organisation does not incorporate updated information on customer segments or products that becomes available in-between the current static risk assessment intervals.”

Copyright © 2021 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.