Financial crime top concern for senior management – survey

9 Feb 2011

Financial crime management is back on the senior-management agenda in 2011, a survey by Norkom Technologies on the global financial crime and compliance community suggests.

Norkom Technologies, a provider of financial crime and compliance solutions to the global financial services industry, reveals the main concerns for senior management in 2011 include internal fraud, anti-money laundering and payment fraud. Financial crime teams will attempt to combat these threats by increasing budgets and consolidating financial crime information.

Some 162 senior financial crime and compliance executives from international financial institutions participated in the survey. The survey revealed the rate of increasing fraud attacks is easing, however, “attacks are yielding much higher gains for the fraudsters’ efforts.”

David Dixon, Norkom’s managing director of global solutions, explains, “The results of this year’s survey confirm one thing for us – that the world has become a far more dangerous place for financial institutions. However, the good news is that financial institutions are beginning to enhance their defences against organised crime and terrorism once again through the increase of crime fighting budgets.

“With anti-money laundering headlining the financial crime agenda once again, we anticipate a second phase of AML purchasing to help financial institutions to comply with the expected increase in regulatory oversight, indicated by 65pc of respondents to the survey, and an enhanced focus on sanctions enforcement, which is anticipated by two in five financial institutions.”

Consequences of fraud attacks

Some 64pc of the surveyed organisations reported they experienced an increase in the level of fraud attacks in comparison to 71pc in 2009. However, 95pc experienced an increase in financial losses as a consequence of the attacks. Twenty-six per cent witnessed their losses rise to 20pc over the period.

“Fraudsters are researching which financial institutions pose the path of least resistance, pinpointing where their vulnerabilities lie and are flagrantly exploiting these, before moving on to the next unsuspecting target,” said Dixon.

Seventy-one per cent of survey participants indentified the rebirth of internal fraud as a predominant worry for senior management.

“The results indicate that in two years’ time, we expect 81pc of institutions to have in place a common case and workflow management solution, 72pc to have implemented a consolidating solution to provide a more integrated view of the risks facing their firm, with 83pc of these achieving full consolidation for fraud and 100pc for AML. Over the coming years, we expect to see more integrated reporting that interweaves the worlds of information security and corporate security incidents into the overall financial crime fabric in an effort to create a complete end-to-end scenario of the financial crime and risk facing the organisations,” stated Dixon.