In an era where financial crime and illicit trafficking continue to evolve, LexisNexis Risk Solutions stands at the forefront of developing innovative technologies to combat these global issues. Johnny Bell, Senior Director for Europe, Middle East, and Africa recently shed light on the company’s multifaceted approach to tackling not just traditional fin crimes, but also predicate offenses such as wildlife and human trafficking.
Beyond Traditional Crime
While many associate financial crime primarily with banking institutions, Bell emphasizes that the scope extends far beyond. “When we talk about fin-crime, we’re talking about lots of other crimes as well,” he explains. These “predicate crimes,” as defined by the Financial Action Task Force (FATF), include narcotics trafficking, human trafficking, and wildlife trafficking.
The business’s role in combating these crimes is crucial. By providing data and software solutions, they help prevent financial institutions from inadvertently funding organized crime groups involved in these illicit activities. “If you’re a financial institution and you allow a new customer to come on board that’s associated with wildlife trafficking, then effectively your financial institution or the financial services ecosystem could be funding the organized crime group,” Bell warns.
The Power of Public-Private Partnerships
One of the most effective strategies in dismantling organized crime networks has been the emergence of public-private partnerships (PPPs). These collaborations enable information sharing across different types of institutions, including financial institutions, law enforcement agencies, government bodies, regulators, and non-profit organizations.
Bell highlights the success of these partnerships: “There’s lots of different case studies in the market at the moment around how one financial institution has suspected a dodgy transaction, they’ve shared this information with a local law enforcement agent, and it’s resulted in multiple convictions, multiple enforcement actions, and prevented the loss of lives of humans and animals around the world.”
Tackling Wildlife Trafficking
Data has been instrumental in identifying wildlife trafficking hotspots and the most trafficked species globally. According to their research, corroborated by experts from United for Wildlife, the pangolin is the most trafficked animal in the world, followed by elephants and big cats like lions and tigers.
The company’s efforts extend to analyzing trade routes and identifying countries with rich biodiversity as potential sources of trafficked wildlife. This data helps financial institutions and law enforcement agencies to better target their prevention and intervention efforts.
The Convergence of Fraud and Anti-Money Laundering
Bell points out a significant trend in the industry: the convergence of fraud and anti-money laundering efforts. Criminals involved in activities like human trafficking often use fraudulent methods to access the global financial system. In response, they have developed platforms that address both fraud detection and anti-money laundering capabilities, helping their clients stay ahead of evolving criminal tactics.
Challenges in Compliance for Smaller Entities
While large enterprises often have substantial compliance teams and budgets, smaller entities like real estate firms and law offices face unique challenges in meeting regulatory requirements. Bell explains that they offer streamlined solutions for these designated non-financial businesses and professions (DNFBPs), helping them meet their regulatory obligations without the need for large compliance departments.
“All of these firms, not huge budgets, they’re becoming regulatory obligated,” Bell notes. “What they can do is engage with vendors like us who are able to streamline a lot of those services, take a lot of the remediation activities away from the firms in hand.”
The Role of AI and Machine Learning
As the compliance industry evolves, there’s a growing interest in adopting artificial intelligence (AI), robotic process automation (RPA), and machine learning solutions. Bell observes a top-down drive from the C-suite in many institutions to incorporate these technologies into their compliance processes.
“Over half of an entire, over half of a typical firm’s entire compliance budget was effectively spent on people,” Bell reveals. This presents a significant opportunity for AI providers to streamline processes while maintaining regulatory compliance.
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Looking Ahead: The Future of Fin-Crime Prevention
As these crimes continue to evolve, so too must the strategies to combat them. LNRS remains at the forefront of this battle, continually developing new solutions to address emerging threats. From structured adverse media screening to enhanced due diligence processes, the company is committed to providing comprehensive tools for risk management and compliance.
Bell emphasizes the importance of a holistic approach to due diligence, urging firms to look beyond basic KYC processes to understand the full network of entities and individuals they’re dealing with. As regulatory landscapes shift and criminal tactics advance, LNRS stands ready to help institutions navigate the complex world of crime prevention.
In conclusion, as the fight against fin-crime and illicit trafficking continues to intensify, companies like this play a crucial role in equipping financial institutions and other entities with the tools they need to stay ahead of criminal activities. Through innovative technologies, data-driven insights, and collaborative approaches, LexisNexis Risk Solutions is helping to create a safer, more transparent global financial system.
