Closing the Financial Crime Skills Gap

Last month the FCA published their Annual Report and Accounts for the 2023 – 2024 Financial Year. That report included the statistic that the previous year had seen their highest ever number of Financial Crime charges in one year, a long with a number of prosecutions, freezing orders and fines for businesses with “serious financial crime control failings”. The report highlights that since April of 2023, the regulator has published 5 reviews of different business’s Financial Crime controls, with the aim of sharing and encouraging best practices.

We’ve also recently seen the high profile case of the FCA fining Starling Bank over ￡28,000,000 for “shockingly lax” Financial Crime controls. The issues identified included a reliance on an automated system that was not screening new or existing customers against the full list that should have been used – and discovery of this led to a wider review of their Financial Crime systems which revealed issues with other policies and procedures, failures in the testing of screening systems and inadequate management information for alerts.

The Financial Crime Challenges Facing the Industry

This is a major area of regulatory activity right now, and the rise in the number of Authorised Push Payment Fraud cases and subsequent press coverage and public awareness of fraud is sure to make it a key issue for consumers too. The front line of Financial Crime defence that those consumers will encounter are CDD, EDD and AML staff. Technological developments over the last decade have seen a lot of the customer onboarding process going completely digital, which is of course a positive for many consumers and allows firms to deliver products faster than ever in a streamlined experience, but has created new difficulties too. Protecting your firm and in turn your reputation and your customers from Financial Crime is now a rapidly evolving race against the creation of new fraud approaches utilising different methods and technology. Some businesses are experiencing a skills gap, with their teams struggling to keep up with new fraud techniques and new regulatory standards. Investing in talented, well-trained front-line CDD, EDD and AML professionals could make all the difference.

One area where industry contacts have expressed concern to me is OSINT. OSINT is an acronym for Open-Source Intelligence, and within Financial Crime it refers to making use of publicly available data, gathering insights and identifying connections to investigate individuals and transactions. Even though OSINT utilises information that is open to the public, knowing how to find the right data and how to analyse it is a complex, specialist skill set.

What data is available is also continually shifting as new technology and people’s usage of online services changes. New tech is also leveraged by banks and Financial Services firms, with more and more organisations in recent years automating large parts of their new customer onboarding processes. This has clear upsides, enabling businesses to remotely onboard customers without a need for people to visit branches, opening up access to many more potential consumers - but it also creates problems, like those seen in the Starling case.

Automation Trouble and the Need for Refresh

Where automation is part of onboarding new customers, risks arise when that information is not being properly scrutinised by experts. A number of firms are now facing difficulties arising from a lack of Refresh projects. Large organisations especially need to regularly review existing customers, looking at the EDD from their onboarding and checking against current details. When Refresh projects aren’t happening, serious problems can arise – for example, a business account may be onboarded with a set of directors who pass screening, but later on they add a new director to the board who would not. If details aren’t being checked and updated, the firm has no way of knowing about these potential points of Financial Crime risk, and cannot act to mitigate them. KYC is a core element of bringing a new customer into a business, but how much can you claim to really Know Your Customer if you’re not updating your knowledge of them and their accounts over time?

In order to have a truthful, up-to-date picture of an organisation’s current customers, regular Refresh is needed. This is an area where the skills gap becomes evident – Financial Crime Managers and KYC/EDD Analysts can only work with the data they have access to. They can’t be effective if that data is incomplete or out of date. OSINT skills are crucial here, and a business needs to be able to trust these staff to think outside the box, recognise where they’re working with legacy data, and go and find accurate, current information.

How Can Kind Consultancy Help?

Kind Consultancy have extensive experience of recruiting Financial Crime specialists at all levels of seniority, providing Head of Financial Crime interims, permanent AML Managers and whole teams of contract KYC staff for Financial Services organisations across the UK and abroad, and we will continue to do so.

We also have a new way to help your business stay safe – a unique partnership with the Greater Chatwell Academy of Learning, offering a suite of digitally delivered online e-learning courses in Financial Crime, available through Kind Consultancy. This programme includes training on Managing Tax Evasion Risks, Managing Sanctions and Sanctions Evasion Risks, Managing Fraud Risks, Data Protection, AML Risk Management, Whistleblowing and Introductions to Financial Crime Compliance and Anti-Bribery and Corruption. We also offer a dedicated, specialist OSINT course.

This is great for candidates looking to sharpen their Financial Crime tools and update their knowledge, but it’s also an excellent opportunity for employers. Kind can work with you to tailor a package to have your existing Financial Crime staff undergo this training, which on completion will see them awarded a certificate in association with the University of Gloucester, giving you the assurance that they will be equipped to respond appropriately to threats and potential risks when they encounter them.

To find out more, head to https://www.kindconsultancy.com/services/learning-development/ or contact me on 0121 643 2100 or [email protected] to discuss bespoke training packages, and help your business to stay safe.?