Some two-thirds (68pc) of UK risk experts expect financial crime risks to increase over the next 12 months. The findings come as part of risk consultancy Kroll’s new 2023 Fraud and Financial Crime Report, which surveyed 400 risk professionals across four continents. Those in the UK replied broadly in line with their global counterparts and the figure for all respondents was 69pc.
About one in five, 22pc of UK respondents expect this increase in crime risk to be ‘significant’, below the global average of 26pc. Meanwhile, just 30pc of UK respondents rate their financial crime compliance as ‘very effective’, this is in line with the global average (30pc), level with the figure for Germany (30pc), and ahead of the figures for the United States (26pc) and France (26pc). Well over half (62pc) of surveyed global companies are expecting a rise in government regulatory enforcement in the next 12 months.
A third of UK respondents (32pc) warned that ‘cybersecurity and data breaches’ is the primary driver behind the anticipated increase in financial crime risks followed by ‘financial pressures on companies or individuals’ (16pc) and the ‘impact of remote working’ (16pc).
Globally, the report also found that firms are facing new challenges. The financial crime risk posed by cryptocurrency is a source of concern for 76pc of global respondents, with almost a quarter (24pc) globally listing it as a ‘significant’ concern. Three in ten global respondents (31pc) said that their compliance caters for risks associated with cryptocurrencies.
Sanctions compliance was another challenge, the report suggested. According to near half, 48pc of UK respondents, sanctions compliance poses a significant concern, with ‘geographic consistency’ identified as the top barrier. The report also found that most, 73pc of global respondents plan to dedicate more time towards enhancing supply chain controls or diligence, due to exposure to materials that originate from sanctioned counties or are subject to export controls.
To counter a potential uptick in financial crime, the report found that more than two thirds (68pc) of UK respondents are planning to invest further in technology, while 62pc will in-crease their cybersecurity budget.
Although, artificial intelligence (AI) has already been implemented into financial crime compliance by 56pc globally, the respondents highlighted that it’s still relatively new in most cases. This suggests that the technology’s full potentials are yet to be explored by organisations, the firm adds.
David Lewis, Global Head of AML Advisory at Kroll, said: “The survey results show that firms are face a perfect storm, as financial crime risks increase and get more complex. They are not fully confident in the effectiveness of their defences and will undoubtedly rush to em-brace technology to solve all their problems. While organisations need to ensure that they land on the right technological solutions to manage risk, governance and growth in an ever-changing financial crime landscape, the value of skilled experts mustn’t be overlooked.”
And Haydn Jones, Global Head of Blockchain and Cryptocurrency Solutions at Kroll, said: “In the face of this dynamically evolving landscape, the role of the compliance function re-mains more crucial than ever. As we look toward the future, the complex interplay between technologies of all types, geopolitics, and financial crime, means specialist skills will be re-quired to navigate what is essentially a data-based future.”
About methodology
Kroll commissioned a survey of 400 global executives and risk professionals in March. Eight countries were represented in the survey with 50 participants from each country: the United States, Brazil, Mexico, the UK, France, Germany, the UAE, and Singapore.
