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Financial Crime is a Trillion Dollar Problem: Sibos in Review

As Sibos 2023 wound down to a close in a blissfully sunny Toronto on the cusp of fall, we listened into the Big Issue Debate with Victor Dodig of CIBC and leaders from Santander, State Bank of India, DBS, CLS and EY, discussing how banks and financial institutions can weather geopolitical turmoil.  

Billions Spent to Confiscate Millions 

In a world of increasing fragmentation, the panel urged for the industry to band together and become advocates for anti-fragmentation. The group agreed that while geopolitical events and turmoil are beyond our control, we can create industry-wide resilience through closer collaboration and affiliation — together we are stronger than the sum of our parts. The panel also discussed how while financial institutions can’t control external risk factors, they can protect themselves and their clients by deploying solid risk-management control systems.  

Looking at financial crime risk specifically, another panel session entitled; Widening the lens: Industry Collaboration in the Fight against Financial Crime, Alan Ketley, from the Wolfsberg Group, said that “financial crime is a trillion dollar problem, pursued by banks spending billions of dollars confiscating millions of dollars.” The group agreed that the focus needs to shift to outcomes and effectiveness while also addressing the need to collaborate more effectively with other financial institutions, standardizing information sharing and drawing from best practices in other jurisdictions. The group also stressed the importance of partnering with technology vendors to ensure the best technology is available for risk management.   

That’s precisely where Fenergo fits within the ecosystem of financial services risk management. Our API-connected Client Lifecycle Management platform encompassing onboarding, KYC & AML compliance and product enablement, allows financial institutions to gain a holistic and real-time view of client risk in order to detect and prevent financial crime. On day three at Sibos, Fenergo CEO, Marc Murphy evaluated how banks handle financial crime operationally, the impact this has on clients and how technology can drive efficiencies, growth and above all, reduce financial crime risk. The panel, which included Sarah Gordon, Senior Vice President Global Wholesale Operations at Scotiabank and Paul Kalinowski, Managing Director, Capital Markets at RBC Capital Markets, looked specifically at the challenges around onboarding vast global entities with highly complex organizational structures.  

This remains a huge and costly challenge for investment banks which often rely on manual processes and disparate data stored across many systems. As Marc Murphy put it; “there are two things I get asked over and over from financial institutions and that’s to keep them safe and to achieve that more efficiently.” Marc also touched on the value of institutional memory. By harnessing the power of data and technology such as generative AI to create intelligent onboarding and KYC and AML systems, financial institutions can nurture positive long-term client relationships while also improving the employee experience. When asked by Marc how banks are keeping bad actors out, Sarah Gorden from Scotiabank responded, “fundamentally at the head of onboarding is risk control. The regulatory bar and rules are always changing, don’t fight it but use it as an opportunity to make good business decisions.” 

Catalyze Innovation with Compliance 

In keeping with the theme of Collaboration in a Fragmented World, Marc described Fenergo as the steel thread that orchestrates the client onboarding journey from end to end, allowing FIs to adopt a risk-based approach to keeping out the bad actors. “Getting the right data and documents that are better quality is an accelerator,” continued Marc. 

Chris Zingo, Chief Risk Officer at Fenergo, echoed Marc’s sentiment during his keynote at the Exhibitor Stage on Tuesday but with the emphasis on how good compliance can create competitive advantage and ultimately growth. To a packed-out audience, Chris highlighted how digital opportunities are reshaping the structure of markets and how financial institutions can take advantage of this to drive a new model of finance that redefines the end-user experience. “We no longer see compliance as a mid-office function but rather a catalyst for innovation,” said Chris.  

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