Organizations across Asia Pacific (APAC) are looking to increase investment in technology to fence off financial crime, according to Refinitiv’s new Innovation and the Fight against Financial Crime survey.
Refinitiv, a global provider of financial markets data and risk intelligence, surveyed 3,138 managers with compliance-related responsibilities at large global organizations and found that almost three-quarters (75%) of APAC organizations have been victims of financial crime over the past 12 months. 44% said they have experienced cases of financial crime by their own employees.
The research also found a lax approach to due diligence checks when onboarding new customers, suppliers and partners.
With financial crime on the rise, 60% of APAC companies have adopted new technologies to combat illegal activities and companies across the region intend to increase investment in tech by an average of 47% to mitigate the crisis.
The findings for APAC companies echo global trends. An overwhelming majority of respondents globally (97%) believe that technology can significantly help with finance crime prevention. Cloud-based data and technology was cited as the top choice, followed by artificial intelligence (AI) and machine learning (ML).
Organizations cited enhanced regulatory compliance, financial crime prevention and process efficiency as the top three drivers to adopting new technologies.
Though organizations are confident that technology can help them prevent financial crime, a majority of them are still struggling to harness technological advances, with 72% of APAC respondents stating so.
Opportunity for the APAC Region
For Alfred Lee, managing director for APAC at Refinitiv, this represents an opportunity for companies in the region to invest more in innovation, technology and processes.
“With three-quarters of companies across Asia Pacific affected by financial crime in the past year, more investment must be made in technology and processes,” Lee said.
“Advancements in AI, ML and cloud computing are increasing companies’ abilities to analyze data in real-time, streamline processes such as Know Your Customer (KYC) and to uncover previously undetectable activity.
“At the same time, with companies only conducting due diligence on around half of external partners and customers, despite them accounting for the majority of financial crime cases, this is enabling an environment for criminal activity to flourish.
“Increased collaboration between technology companies, governments and financial institutions is critical to address this issue.”
A majority or 85% of APAC respondents said they had some sort of an exiting partnership or task force in their country to combat financial crime, compared with 81%.
In a separate report on the true cost of financial crime published last year, Refinitiv claimed that financial crime, which includes money laundering, bribery, tax evasion, fraud and corruption, generated US$1.45 trillion in lost aggregate turnover in 2017.
The World Economic Forum (WEF) estimates that every year, US$2.4 trillion in proceeds from activities such as forced prostitution, terrorism, and drug trafficking, are laundered through the world’s financial markets and banking systems.
Corruption and financial crime aren’t new. What is, however, is the sophistication of financial criminals and their ability to use technology to facilitate money laundering. But while technology is an enabler of crime as its perpetrators move increasingly online, technology can also be one of the most powerful tools to fight it.
In the past years, hundreds of startups have begun to apply digital technology, including APIs, AI and robotic process automations (RPAs), to the numerous tasks required to comply with regulations. Referred to as regtech companies, these promise not only to cut the cost of compliance processes but also to improve effectiveness to make them quicker and more reliable and lessen the risk of costly compliance failures.
Download the full Innovation & the Fight Against Financial Crime Report HERE.
