by Frank Staelens
Although the global amount spent on combating financial crime went above $1,3 billion, 2020 saw a record number of enforcement actions in numerous global jurisdictions. Furthermore, estimates suggest between $800 billion and $2 trillion of criminal money flows went through the financial system in 2020, while an overwhelming majority of it remained undetected. In other words, the Financial Crime combat status at the average financial institution today is too high in spending, and too low on results. Although regulators around the world always allowed for financial institutions to design their own risk based approach, review procedures are often copied from one institution to another and/or are standardised by using fixed checklists and risk weights. For instance, the risk weight for involvement with real estate activities is usually the same for all clients, while the specifics around the nature of the real estate activities (professional/private person, renting/promotion/project development, number of transactions and amounts concerned, the regions of activity, risk mitigating factors …) are best taken into account to avoid either over- or under qualification of risks.
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