Published: Thursday October 31, 2019
6 key takeaways from GBG’s ‘Future of Compliance’ event
If you weren’t able to join GBG’s ‘Future of Compliance’ breakfast seminar in Copenhagen earlier this month, we’ve pulled out six key takeaways from our panellists as they discussed collaboration, culture, data and more.
GBG’s Managing Director of Customer, Insights and Innovation Mick Hegarty and Regional Director Carol Hamilton were joined by industry experts from Express Bank, Acuris Risk Intelligence and PricewaterhouseCoopers (PWC).
- Dr Jeremy Davey, Director of Financial Crime Analytics at PWC
- Camilla Skov, Compliance Manager at Express Bank, part of BNP Paribas Group
- Nick Parfitt, Head of Market Planning at Acuris Risk Intelligence
1. Collaboration is more important than ever
Camilla Skov is a Compliance Manager at Express Bank in Copenhagen. Camilla says the future of compliance requires greater collaboration internally within organisations.
Express Bank have created a dedicated role that interfaces between the 1st line and 2nd line compliance functions. This promotes more effective collaboration and integration within the end-to-end Compliance function, as well as facilitating buy in from across the business including engagement with management and the Board.
Panelist Nick Parfitt is Head of Market Planning at Acuris Risk Intelligence. He spoke about getting employee buy-in for compliance by uniting behind a single mission.
“If you look at things like human trafficking and modern day slavery, which is a huge, huge issue now globally, one of the control lines is around the AML processes that we have within the organisation. I think if everybody has that single view that we are doing this for the right reasons, then I think it becomes a lot easier to be united.
2. More data, joined up processes and technology investment are vital
GBG Regional Director Carol Hamilton said there were three major challenges for organisations to overcome – Siloed data creating limiting perspectives on problems, isolated processes and teams, and the need for continuous technology investment and innovation when competing against perpetrators with a high spend in technology.
With regard to data, she added: “Siloed data sources produce challenges and give limited perspectives on problems. Where you aren’t using third-party data to supplement what you’re doing, your success will be capped. Poor data quality is an issue for the smallest and largest banks, and limited augmented intelligence causes challenges.”
Camilla Skov highlighted the need for reliable data. “Reliability of data is very important. We need to have commitment from the top management that we have the right data, and that it's also prioritised because Compliance can otherwise be seen as show stoppers. If we are going to rely on the data, then it’s very, very important that we have confidence in good data and that we can rely on.
3. You must adapt and flex
Carol Hamilton stressed the importance for adaptability and flexibility: “We must acknowledge and appreciate that data sources and key data will change. What is a really good indicator of fraud, compliance or money laundering today, was not the same two years ago. We need to be adaptive and flexible.”
With continuous regulatory pressures and further AML Directives to come, Nick Parfitt observed that it is well worthwhile for organisations to have a specialist group to look at what is coming up in terms of upcoming regulations, and how the business can more seamlessly ensure they are in good shape to transition towards new requirements.
4. There are benefits for convergence of fraud and compliance
Carol Hamilton highlighted the fact that bad actors who are intent on committing crime and are succeeding won’t limit themselves, so their victims can’t afford to either. Organisations need to leverage intelligence in different departments to fight back.
Panelist Dr Jeremy Davey is Director of Financial Crime Analytics at PWC. He says there’s “definite value” in the convergence of fraud and compliance functions,
“We're starting to see, certainly with a number of our clients in the UK, that convergence and bringing the Fraud and AML functions together. It's taken time to move towards this, as there's quite a number of operational changes, but installing teams that make work on alerts together, and that are willing to share their experiences with what's going on before they're actually starting to do risk assessments together and understanding the risk at a much more realistic level”.
“There’s movement away from standalone KYC checks to more perpetual KYC, where you look at the risk from a starting point and then bring all the different kind of events that are happening across the customer lifecycle to develop a much richer model about understanding the customer profile and a joined up monitoring approach all the way through”.
5. Compliance can provide overarching benefits for wider business functions
Compliance has got to be seen less as a hindrance or business development blocker, but more as an enabler to get good customers on-boarded faster. Camilla Skov noted that Compliance ought to engage more with the business stakeholders, talk about what they are doing and why they need to do it to, rather than just drive it from behind the desk / via email.
Dr Jeremy Davey gave an example of a bank that was able to use its financial crime data interrogation insights to help its marketing function. The bank found a significant number of customers that on face value appeared to raise suspicion on money laundering, however were in fact simply using the wrong product. This otherwise hidden insight enabled the marketing team to target those customers with focussed messaging about a more suitable product.
6. Future compliance requires innovation
What will compliance look like in 5 years’ time? Our panellists and audience had an interesting range of perspectives, however one thing we can be certain of is that the compliance landscape will continue to evolve with further scrutiny and in parallel so does the cost of performing such checks.
Compliance regulations do not show any signs of abating, and organisations will be increasingly reliant upon technology to better automate checks throughout the customer lifecycle. Technology may refine how compliance departments are structured, including better integration with other business functions.
There are bound to be more machine learning and artificial intelligence techniques available in the market place with which to identify financial crime. Some will prove more effective than others and whilst we move into more innovative platforms, there will still be a need to explain how you arrived at decisions.
We may also see private and public sector organisations increasingly working together towards common goals via utility type organisations, with greater emphasis on data sharing and more centralised registries.