In November, 12 of Singapore’s most senior security executives gathered to discuss the future of Financial Crime Compliance (FCC) and Anti-Money Laundering (AML) in Singapore. The discussion featured an opening Q&A with DBS Bank’s Group Head of Financial Crime and CISO, Richard Moore.
The discussion was robust and diverse, with attendees from a variety of local and international banks offering their insights into the challenges facing Singapore-based banks when responding to the changes in FCC and AML.
From the discussion, four key themes surfaced which should be considered as challenges for banks as they look to create efficient FCC and AML strategies.
To Compete Globally – Banks Need to Take FCC and AML Seriously
Of late, Singapore’s financial services industry has been modernising how it does business with new FinTech emerging. The Monetary Authority of Singapore (MAS) is encouraging FinTech innovation and emphasising the need for banking institutions to operate with efficiency.
This is in the hope that Singapore will retain its place as a global banking powerhouse and gateway to the ASEAN region. For FCC and AML, the same pressures are there for banks to manage the risks efficiently and effectively.
It was noted that the pressure is on banks to manage fraud and money laundering as a major priority. Without resistant FCC and AML strategies, customers on a local and global level will lose faith in their providers and this will, in turn, impact the overall outlook of Singapore’s banking system.
Technology implementation and a varied workforce were noted as critical tools in building an effective strategy. For some organisations, this challenge is exacerbated as they have legacy systems and a global footprint that overlap one another.
Understanding the Data
For banking organisations, data has the potential to hold greater value than the money it stores. The value of data is at such a high crescendo that some organisations are defining data as an asset on their balance sheets.
Within the context of FCC and AML, data offers an unparalleled insight into the habits of customers and the variances of these regular habits. It was obvious amongst the group that data was a tool for building a FCC and AML strategy, however, the challenge is in the management and analytics of this data.
It was noted that without context, data is stale. And for it to be used effectively it must be managed, analysed and responded to. All of these lines of operations are relatively new for banks, and due to the “proliferation of data” growing at an unprecedented rate, banks are having to quickly adapt to these new changes.
Along with getting the technology right, the group expressed the need for security groups to also have the correct team. New skill-sets are required to ensure that data is active and used to its greatest capacity, the skill-sets are typically found outside the realms of traditional security teams.
Competing with “Fintech”
FinTech is being seen as the next stage of growth for Financial Services in Singapore. But how are traditional banks going to compete with nimble counterparts whilst maintaining the levels of compliance required by MAS?
This was another area of discussion by the group as they assessed the evolving landscape of banking innovation. The FinTech community is an agile, expressive market, meaning that it is often easier for them to comply with standards and have a more transparent view of transactions and processes.
The table noted that bigger financial organisations face harsher regulations than their FinTech counterparts, and therefore have a more difficult time meeting these regulations.
FinTech is on a separate expressive market. On paper, everything is set to succeed, everyone wants the cutting-edge technology at the forefront of FinTech. But the banks need to analyse because of the scale of the tech and the size of the business. Regulators will act if a touch goes wrong versus a FinTech that doesn’t have the same accountability.
It was discussed that the emergence of FinTech will put even greater pressure on efficiency in FCC and AML. There will be the potential for organisations to leverage off this new market and form ecosystems that aid this efficiency. However, within the context of compliance, the traditional banking structures are at a fundamental disadvantage due to the nature of their systems and size of transactions.
“Knowing Your Customer” Is a Perpetual Challenge
Another challenge for executives charged with monitoring fraud and money laundering is the digital footprints that are being created within the modern banking world.
Banks have a mandate to be omnichannel, mobile-first and accessible 24 hours a day from anywhere in the world. The implications this has on monitoring your customer is high. Security teams are now charged with creating a platform that incorporates their customer’s entire digital footprint.
The table emphasised that banks will need to be quick to adjust to new technologies, and should be looking to build for the future proactively, rather than being reactive to new advances in technology.
The group discussed the implications around this. It was noted that although technology is keeping pace, if the customer is in a perpetual digital motion, so too should the monitoring systems. As digital engagement continues to increase, security and fraud professionals will need to become more responsive.
In the era of digital, criminals are utilising the power of technology to reach new levels of sophistication. Banks not only have to build up a robust plan to counteract this, they have to do this during a period of disruption that is being driven by the Fintech revolution.
It is a challenging time for Singaporean FCC and AML executives. However, as the luncheon highlighted, it is critical for banks to innovate through technological advances. Without taking a progressive stance on processes, banking institutions will not have the ability to firmly protect their assets, which has the potential to be disastrous for global credibility.