Financial Crime Increases in a Global Crisis

The Need for Extra Vigilance Is Now

Forensic & Litigation Consulting | Financial Services

May 15, 2020

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In this jointly written article Henry Duggan, Managing Director at FTI Consulting and Manfred Galdes, Managing Partner at ARQ Group have collaborated to discuss the impact of the COVID-19 pandemic on financial institutions in their battle with financial crime.

Unrelenting pressure from supervisors in the past few years has put financial crime risk at the forefront of the concerns for financial institutions, having to go through painful de-risking processes that have impacted both competitiveness and profitability. As we started the 21st year of this millennium, their attention was still largely focused on this area of risk. Boards continued to dedicate a lot of resources and attention to mitigating their potential exposure to money laundering, terrorism financing, financial sanctions, fraud and anti-bribery and corruption.

A Shifting Focus

Naturally, the emergence of COVID-19 in recent months has diverted attention. In an unprecedented global situation self-isolation and remote working have become the norm as businesses have adapted to weather the economic consequences of the pandemic.

Financial institutions have had to come to grips with this situation internally by bringing into action their business continuity plans and ensuring that they can continue to provide good customer service despite the crisis. The protection of their own front-line staff and the limitation of contagion have had to be addressed, while the responsibility towards both society and shareholders shifted the attention of decision-makers within the banks onto other priority areas.

At the same time, the predictions of the IMF and credit-rating agencies have warranted an increase in attention to credit risk.

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