Government agencies and large corporations alike depend on compliance laws to maintain ethical and legal boundaries. Unfortunately, for those in this field, there will be more challenges ahead (as we’ll explain later).
Public and private organisations around the world face new laws and regulations, as well as increasingly stringent penalties and enforcement. Violations can lead to heavy fines. Sometimes, criminal charges may be filed – against an organization, an individual, or both.
According to Finextra news site, these are the top five foreseeable trends and challenges in the compliance industry for the year 2021:
The potential fallout from non-repayment of BBILs/CBILs
It was said that over £60billion has been lent by banks, and other certified lenders, to around 1.4 million companies as part of the Bounce Back Loan Scheme of the UK Government. Most government bailout schemes during the pandemic period will start to due or clearing up by mid year of 2021. The government will need to initiate vigorous fraud investigation and debt collection arrangements to minimize the impact to the taxpayer.
As businesses started to look into their cash flow for 2021 following the effect of the pandemic, loan schemes will be a focus of the year. Effective and fast Customer Due Diligence (CDD) will be required for onboarding as well as a greater awareness of fraud will be needed.
Anti-Money Laundering landscape after Brexit
In this aspect, UK in general has a tougher laws for financial crimes than the EU Anti-Money Laundering Directives and this will likely remain post Brexit. Additionally, a major point will be whether UK still has access to information sharing by Europol with its withdrawal from the member states.
An explosion of Deepfake usage
The rise of technology and AI algorithm improvements have started to popularize Deepfake application. Firms which are regulated will need to prepare against the possible usage of Deepfake technology in the areas of security and client due diligence process, especially during the onboarding process. As a matter of fact, there have been cases of Deepfakes being used for fraud and extortion in recent times.
In 2021, the FBI’s cyber division warned that social engineering attacks aimed at businesses, including deepfakes, are a critical emerging threat. Attestiv, a data authentication startup, announced a survey and found that almost half of respondents (26% of the respondents) acknowledged that their organizations lacked a plan to tackle the growing threat.
According to the survey report, almost 80% of respondents said manipulated media could pose a potential risk to their organization, though fewer than 30% had taken measures to mitigate the fallout from a deepfake attack.
Accelerated digital transformation required to deliver customer experience
Businesses will need to adapt and adopt digital transformation as customers are requesting for such changes, even more so following from the experience of the pandemic. Digital solutions and interactions will be expected to further expand for the year.
Companies often enter uncharted territory when undergoing digital transformation because of its disruptive nature. While some organizations have jumped right into the process and are ahead of the curve, other organizations are still reeling from the turmoil and are more cautious about how to move forward. However, it is important to remember that the overall result is the same: full digital transformations typically introduce new and unfamiliar operating processes that can impact businesses greatly.
Furthermore, although the transformation impacts every part of the organization, it can be particularly challenging for executive decision-makers. Often, execs are not positioned to make sound decisions about digital technology. They may lack the skills and experience necessary to understand the model or do the tech homework.
Focus on Fraud
With the continuing pandemic into 2021, fraud will be another main financial crime focus of the year. This usually involves individuals perpetrating fraudulent activities by taking advantage of the current pandemic situation such as the examples of “false promises of delivery of vaccines and PPE designed to extract money from firms”. Digital or online fraud activities can be expected to occur more as public online presence is increasing while working remotely will also be vulnerable to exploitation by potential criminals. It was said for the 2020/2021 business plan, the UK FCA has “reinforced its commitment to fighting financial crime and intends to keep up the pressure of enforcement action where necessary”.
Full Article:
https://www.finextra.com/blogposting/19742/top-5-compliance-challenges-and-trends-in-2021
