As war rages in Ukraine and inflation wreaks havoc on the economy, banking institutions in the United States anticipate that a future economic collapse will increase financial crime.
Financial Crime In US
A hundred percent of US financial compliance professionals are reassessing their approach to financial crime risk, according to a new poll of financial institutions conducted by comply advantage, a leading financial crime and fraud risk detection service.
For many, this will need “de-risking” or limiting their customer and business contacts to reduce the probability of enrolling criminals. While the strategy appears to be effective, it may make it more difficult for legal customers and businesses to obtain loans and other financial goods.
In addition to the universal intent of financial compliance professionals to reevaluate their approach to financial risk, the poll revealed the following:
- 68% of regulatory teams in the United States are planning for an increase in financial crime.
- 55% of US financial firms intend to hire more compliance specialists.
Vatsa Narasimha, CEO of ComplyAdvantage, commented on the findings as follows: ‘During the Great Recession of 2007-2009, financial institutions reported a huge surge in financial crime. Our poll reveals that, due to the anticipation of an economic slump, businesses anticipate it will climb again this year.
The survey revealed that tax fraud, credit/debit card fraud, and investment fraud are the most concerning types of fraud among US businesses. Despite the fact that the majority of financial crimes will be driven by the economic slump, investment fraud frequently runs counter-cyclically to the market.
After the decrease in asset valuations in 2022, the likelihood of individuals falling for fraudulent schemes promising “outperformance” of the market has grown. According to data from the Federal Trade Commission, American customers lost more than $5.8 billion to fraud in 2021, an increase of more than 70 percent over 2020. ComplyAdvantage anticipates an increase in this number in 2023.
Sanctions Against Russia
According to the research, US corporations are most concerned about Russia moving into 2023. 51 percent of corporations selected Russia as one of their top three hotspots, followed by China (40 percent) and North Korea (31 percent).
According to the statistics, a stalemate is the most likely conclusion of the conflict, with the potential of additional sectoral categories of sanctions, especially if other nations help Russia’s efforts. Also predicted is an intensification of sanctions by Western nations.
In reaction to Russia’s invasion of Ukraine, 52% of US financial institutions reported to ComplyAdvantage that they adjusted their business models, with 52% establishing asset freezes and 31% adopting an onboarding stoppage. Only 3% of respondents indicated that the invasion had no impact on their organization.