Refocus on risk
18 January, 2022
Have your anti-financial crime (AFC) programs and processes ever experienced any of these symptoms:
- Inconsistent approaches or delays due to differing interpretations of policies and procedures?
- Customer risk profiles that are out of line with your risk appetite?
- Unclear translation of policies and procedures and legislative requirements into operational guidance?
- Bottle-necks? …. permanent on-holds? …. or constant waivers & deviations?
These are all symptoms of the difficulties that can exist for Financial Service providers as they try to address the constant need to ensure their first line business teams and second line AFC risk and compliance teams are working together with a shared understanding.
AFC programs and processes used by Financial Services providers can vary for many different reasons (e.g products offered, how services are delivered, local regulatory requirements) but there are certain aspects of these programs that will remain constant, such as the following:
- A successful Know Your Customer (KYC) or Transaction Monitoring based program is one that promotes a competitive business model, while at the same time protecting an organizations’ business from being exposed to the consequences of enabling criminal activities;
- Organizations desire to process their customer’s payments quicker than the competition and to provide a smoother customer onboarding process than the competition
However, the most important constant is the need to demonstrate to regulators and those ultimately responsible for AFC risk and compliance within an organization, that its programs and processes deliver effective management of risks.
PwC can help with this.
Fundamentals of a successful AFC programme and operational framework design should include technical skills, process and policy experience, which enable harmonisation of first and second line teams in implementation of business tailored risk based programs. This can be achieved by:
- creating customer due diligence measures that are commensurate (and transparent for regulators) to the AML risk identified;
- embedding a holistic view, by promoting an assessment of risk factors and deployment of proportionate (and business specific) additional due diligence measures.
It takes hands-on experienced professionals working with first line teams to propose solutions that deliver increases in quality and efficiency. Viable solutions should scale & cater for small as well as larger organizations and include automation and Artificial Intelligence (AI) solutions developed based on real life challenges that have helped many customers address roadblocks, inefficiencies and the risk of not meeting their regulatory obligations.
Such solutions can provide tailored support to address business specific issues that clients have identified, or can be implemented as a broader managed service. The latter brings additional benefits for first line teams, allowing them to focus on other business priorities, while a calibrated managed service delivers high quality, efficient AFC programs and processes. Compliance and transparency - such solutions need to be created and implemented in close collaboration between experienced professionals and an organization’s second line AFC risk and compliance teams. This helps organizations to receive outcomes with real impact for their first line operational staff but also enables:
● their AFC risk and compliance staff to focus on developing their risk based approach and setting an overarching risk framework, while being supported with its implementation and execution;
● their programs and processes to use leading market practices that are aligned to the risk based approach of their business; and
● their AFC risk and compliance staff to retain oversight of their programs and process, while their first line teams are bolstered in development of a solution that provides real benefits.
PwC provides solutions that have the overarching aim of addressing new and existing financial crime threats. To better achieve this aim, we want to work with organisations to deliver solutions that positively impact both their first and second line teams.
Have we piqued your curiosity? Visit https://pwc.to/3Fgjt8h
