The state of compliance in 2024
For compliance professionals at the forefront of the fight against financial crime, the challenge has grown considerably over the last few years. In the UK alone, 64 percent of businesses (according to data from the Global Economic Crime Survey) have experienced fraud, corruption or other incidents of financial crime within the last 24 months, while ONS stats show there were 3.7 million incidents of fraud in England and Wales in the year ending December 2022.
The threat of AI
AI-facilitated fraud techniques are bringing a new front in the battle against fraud. Whether it’s using AI voice generation platforms to create voicemail messages or leveraging deep fake video tech to impersonate a person’s identity, as tech advances so too do the capabilities of bad actors.
So it is easy to see why, based on our recent research into compliance professionals, over half of the regulated businesses we surveyed told us that they see the deployment of AI as their biggest threat this year. This means compliance professionals need to stay vigilant in understanding and adapting their strategies to counter these evolving tactics that leverage AI for illicit purposes.
However it’s also important for compliance professionals to remember that when used correctly, advanced technology such as AI has the power to optimise compliance processes and resources, automating repetitive tasks, and actually improving the detection and prevention of financial crime. With advances in tech comes a lot more opportunity to combat fraud and get ahead of bad actors. AI, machine learning and advances in biometric verification will allow for much more effective fraud defences in the year ahead.
For example, machine learning algorithms will better predict potential incidents of money laundering before they occur and automated technology will make due diligence more thorough and free from human error. Advances in biometrics, e.g. finger-vein recognition, may also give us a much better chance of staying ahead of the scammers and the deep fakes.
Understanding the regulatory landscape
Our research shows that one in five regulated businesses are unaware of the penalties associated with non compliance, while 15 percent of regulated firms have faced financial penalties for AML violations and non-compliance in the last three years alone. The average fine sits at £130,000, with the highest fine reported by a company in the banking industry which reached £2.49 million.
The cost of non-compliance is enough to shatter a business and so it’s alarming just how many companies don’t understand the financial implications of non-compliance, not to mention the legal and reputational damage for both the company and its executives that comes with it.
Compliance teams play such a crucial role in helping businesses navigate this complex landscape and avoiding being landed with such substantial fines. While 46 percent told us they are worried about the evolving regulatory landscape, it’s also really notable to see that more firms than ever are investing in their AML processes, with 50 percent planning to prioritise Anti Money Laundering (AML) processes this year.
The future
With new fraud and financial crime tactics evolving all the time, an increasingly challenging regulatory landscape and the significant financial and reputational risk that comes with non-compliance, it’s safe to say that the crucial role of compliance has never been more pronounced.
By leveraging the right technology, compliance teams can ensure they not only meet regulatory requirements and safeguard their operations, but also protect their reputations and crucially, maintain that all important customer trust.
