It is no secret that the world has a problem with financial crime. It is near the top of the agenda for everyone; from those working within the financial services industry and regulators, to law enforcement officials and policy makers.
Not only does financial crime rob people of funds, it also contributes to broader societal harm.
So why is our record in tackling it so poor? Why is it that despite our efforts, we successfully detect and recover less than 1% of the estimated amounts of criminal and terrorist funds assessed to be flowing through the international financial system?
Fighting financial crime together
Part of the problem is that while individuals may place a high priority on the challenge, we have traditionally been poor at working together.
We have failed to share with each other the information and data that we need to be effective at combating crime.
Furthermore, we have failed to demonstrate the flexibility and agility that we need to keep up with ever more sophisticated criminals and the tools that they employ. A new approach is required.
Fortunately, there are signs that such an approach is developing – and is beginning to succeed.
Since 2015, when London hosted a global Anti-Corruption Summit, a handful of countries have embarked on the creation of new public–private financial information-sharing partnerships (FISPs).
These bring law enforcement and other public agencies together with groups of major financial institutions to tackle money-laundering and terrorist-financing risks more effectively.
FISPs now exist in Hong Kong, Singapore, Canada, the U.S. and Australia, as well as the UK, and the partnerships are paying dividends.
In the UK, we have seen some 63 arrests and more than £7m in suspected criminal funds seized as a result. In Hong Kong, in the first four months of activity alone, 65 people have been arrested and HK$2m seized.
The potential of collaboration
There is the human side too. In the UK, four senior members of a human trafficking gang were convicted in November 2016 after names and addresses allegedly linked to organised crime and the sexual exploitation of women in London were shared by police with major UK banks and analysed collectively through the UK FISP.
So, while the amounts of money may seem small in comparison to the estimated total of financial crime around the world, this demonstrates the real potential that such partnerships have.
To help take them to the next level, Thomson Reuters has been supporting the Royal United Services Institute (RUSI) and NJM Advisory. They work to analyze what makes a successful FISP, compiled with EY and HSBC.
Watch video — Thomson Reuters World-Check – Committed to helping global business fight financial crime
The subsequent report outlines the five main principles that should be taken into account when establishing a FISP to increase its potential for success. They are:
- Leadership and trust – ensuring there is sufficient buy-in and engagement from across the participants.
- Legislative clarity – to facilitate information sharing, within a clear and consistent regulatory and data protection framework.
- Good governance – to provide accountability and transparency.
- Technology – to ensure that we are using the right data and analytical tools to keep up with the criminals.
- Evolution – setting up the FISP in such a way that will allow the flexibility to evolve and adapt to respond to changing threats.