Tackling Fraud and Money Laundering Within Asia Pacific Financial Institutions

Forensic & Litigation Consulting | Financier Worldwide (Reprint)

January 18, 2018

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In this Q&A with Risk & Compliance Magazine, Geoff Peck discusses how fraud and money laundering is being addressed in Australian Financial institutions and the latest regulatory and legal developments set to impact efforts to tackle financial crime.

R&C: Could you provide a general overview of the extent to which financial institutions (FIs) in the Asia Pacific region are at risk from fraud and money laundering activities?

Peck: While all organisations and individuals are at risk of becoming victims of fraud, financial institutions are a particular target for fraudsters because they hold vast sums of cash. Not only do fraudsters, both employees and external parties, target financial institutions directly, they also target the institution’s customers and in many cases a loss resulting from a deceived customer is borne by the financial institution. Money laundering is also an ongoing risk that financial institutions must manage. In 2015, the Australian Crime Commission estimated the cost of serious and organised crime in Australia to be at least AU$36bn a year, and in its most recent report, the Australian Criminal Intelligence Commission identified money laundering as one of six ‘key enablers’ for serious and organised crime. In order for criminals to freely access this cash it needs to be laundered and of course, financial institutions are a key component in the money laundering process.

R&C: How would you characterise general attitudes toward financial crime in the region compared to other jurisdictions? Generally speaking, are FIs aware of the fraud and money laundering risks they face?

Peck: Managing the risk of financial crime remains a focus for financial institutions in Australia, though the reasons differ between fraud and money laundering. Managing fraud risk is a focus for financial institutions because it minimises financial loss for the organisation and its customers. Financial institutions in Australia have invested heavily in anti-fraud systems and technology, particularly in the high risk areas of credit cards and online banking. Security microchips on cards, transaction monitoring systems like ANZ’s ‘Falcon’ and multi-factor authentication are just some of the anti-fraud measures implemented by Australian financial institutions. The risk of money laundering is a concern for financial institutions for very different reasons. Money laundering does not necessarily cause a financial loss for a financial institution; in fact, unfettered, money laundering would more likely result in additional revenue. Money laundering risk management is a focus for financial institutions because of regulatory and reputational risks. Money laundering has been heavily regulated in Australia since 2006 and there is a legislative requirement on financial institutions to understand and manage the risk.

Posted with permission from Financier Worldwide © 2018. All rights reserved.

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