4 Best Practices to Protect Your Banking Institution from Financial Crimes


Banking and many other commercial activities have become increasingly digital over the last few years, due in large part to the vicissitudes of the COVID-19 pandemic. Health and safety restrictions gave rise to an urgent need for fast, secure, and convenient ways to conduct financial transactions remotely, and now that the dust has settled, it’s quite apparent that digital-first banking is here to stay. Neither banks nor their customers are eager to relinquish the speed, ease, and wider net of access online banking offers.

The widespread shift toward more digital banking does, however, create opportunities for tech-savvy cybercriminals to likewise exploit this new and still evolving business landscape. In concert with a large jump in digital banking transactions worldwide, criminal activities like phishing, account takeovers, online banking fraud, and other types of cybercrime have also been on the rise in recent years. As a result, it’s more important than ever for banks to familiarize themselves with the digital solutions and current best practices that will help them protect themselves and their customers.

Here are four tried-and-tested tips to help your bank effectively fight back against financial crime:

Leverage Current Technology

Any legitimate bank operating today should already have front-end security measures such as password protection, account encryption, and two-factor identification in place. These barriers are meant to prevent hackers from gaining access to customer accounts. However, the increasing incidence of financial crime worldwide makes it clear that today’s criminals have grown adept at disabling or even bypassing many of the mechanisms meant to keep them out.

Banks thus need to invest in next-generation technological solutions that will improve their ability to detect and prevent financial crime from the back end, such as more sophisticated data analytics and customer profiling tools. Dedicated sanction screening software, for instance, allows banks to efficiently assess potential customers, vendors, and other business partners against their jurisdiction’s watch lists, politically exposed person (PEP) lists, legal sanctions, and other lists. Such software is also able to screen for instances of suspicious user behavior and block possibly fraudulent transactions in real time.

Transition Away from Silos to More Holistic Systems

Many traditional banks today still utilize highly fragmented, siloed systems that depend predominantly on decades-old processes and similarly antiquated technology. This is especially the case for banks that have grown over the years by acquiring rival institutions, which can lead to even more fragmentation as different divisions continue to use their own systems. Silos can make it difficult for different bank branches to communicate, which not only compromises the whole bank’s operational efficiency but also cripples its anti-fraud efforts.

Standardizing bank systems by integrating more cloud-enabled software, big data, and other tools to facilitate efficient inter-branch and interdepartmental communication is crucial for many banks aiming to modernize their operations. This more holistic, enterprise-wide approach to banking is particularly beneficial for spotting and guarding against financial crime.

Compliance, fraud detection, and fraud prevention teams have begun to collaborate more closely at many banks, sharing information on possible cases of illicit activity and even utilizing the same investigation tools. Some banks even merge these disparate teams into single, unified financial crime centers to tackle threats in a more organized and coordinated way.

Provide Structured Training for Bank Staff

Vigilant, engaged bank employees that understand the dangers they and their institution face on a regular basis are a solid line of defense against financial crime. To produce and empower such employees, however, banks have to be willing to do more than give their team members lengthy, dense guidebooks on company policy to read. Dedicated training sessions that outline common sources of risk, identifying signs of illicit activity, and recommended interventions are generally much more effective.

When organizing training sessions, it’s important to ensure that the person conducting training is able to communicate the information they’ll be sharing with your employees in a clear and accessible way. You may also want to train each department separately if possible, so that training sections can be contextualized according to the particular needs and functions of each team. That way, your staff members will come away with a fuller understanding of how your bank’s anti-fraud policies and initiatives relate specifically to their individual jobs.

Communicate Regularly with Law Enforcement

While law enforcement in most jurisdictions will provide banks with intelligence on emerging scams, suspicious individuals, and other trends, many banks will often see evidence of new schemes before the authorities do. Much of the time, it’s banks who furnish law enforcement with key information on illicit financial transactions and suspicious customer behavior. This data can, in turn, help authorities uncover and combat more widespread, organized crime.

Regular meetings are an efficient way for local law enforcement and area banks to update each other on active cases, verify suspicions, and generally share information about financial crime. Strengthening private-public partnerships in this way creates a stronger and more united line of defense against would-be criminals.

Adopting an organized, effective approach to combating financial crime has endless benefits for banks, including increased customer trust, an improved reputation, and significantly reduced material loss. By leveraging modern technology, existing partnerships, and anti-fraud education and training, banks can stay one step ahead of even the most accomplished cybercriminals.

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