A spate of incidents such as a recent massive computer virus attack, which hit bodies such as the UK's National Health Service and the US logistics giant FedEx, have kept cybersecurity risks in the spotlight. Continued uncertainties around developments such as Brexit, a run of recent elections, and tensions around the South China Sea, have also added to industry concerns.

Brexit
In relation to Brexit, the results were mixed. 51 per cent of financial crime professionals felt it will have both positive and negative impacts on the ability of the UK financial institutions to fight financial crime. 30 per cent believe Brexit will have a positive impact, 14 per cent say it will have a negative impact, while the rest remained unsure.

Most participants, during extensive interviews, indicated that changes in sanctions arrangements, following the election of Donald Trump, were also a concern; more so than Brexit. The Trump administration was also more of a concern regarding sanctions than anti-money laundering. Sanctions against Iran and Russia also concerned participants.

“Imposing sanctions has recently been the US tool of choice when responding to an international threat,” said Dean Curtis, UK managing director at LexisNexis Risk Solutions. “Over half of these sanctions have been implemented since 2009 and the Trump administration may potentially continue to utilise sanctions in favour of costly military action. Financial institutions have found managing evolving sanctions policies and the introduction of new targeted sanctions tools – such as the sectoral sanction regime – to be a significant challenge, making them understandably concerned about the need to manage and update risk policies, process and controls.”

Outdated technology
The report also found that financial institutions believe that effectively responding to underlying risks is a significant challenge. With 92 per cent of financial crime professionals agreeing that outdated technology will become a barrier to fighting financial crime over the next year.

In addition, 87 per cent of professionals also cited that disparate technology systems that do not inter-operate or process data properly as a significant challenge, whilst 87 per cent also say their business is not able to enhance their technology fast enough to counter evolving criminal methods.

This problem is enhanced by increased regulation which requires new technologies; 60 per cent of respondents believe this as a root cause of cost increases.  In the 2015 edition of Future Financial Crime Risks, it was revealed that one global investment bank was spending £1 billion on financial crime compliance alone. The 2017 report reveals that since then, 63 per cent of financial institutions say its compliance costs have increased, whilst just 2 per cent say they have decreased.

“Criminal methodologies are constantly evolving and financial institutions are struggling to keep up with their changing tactics when implementing financial crime defences,” Curtis added. “For those tasked with combating financial crime it can feel as if they are fighting 21st century criminals with 20th century tools. Our report shows financial crime professionals do not believe the industry is doing enough to leverage the advantages of technology to fight financial crime.

“Whilst the FCA is assisting the acceleration and adoption of technology to fight financial crime through its regulatory sandbox, more needs to be done. Practitioners must adopt a more strategic view of technology to enhance operational effectiveness as regulation has rapidly evolved in the last 15 years and simply increasing staff numbers is not a sustainable approach."