Financial crime is set to soar while fraud and scams will continue to evolve during 2023, according to a new report by financial crime and fraud risk detection firm, ComplyAdvantage that says 99 per cent of firms say they are reevaluating their risk appetite due to the uncertain economic environment.
Environmental crime is also expected to surge, while crowdfunding of political extremism will also increase concludes the State of Financial Crime 2023 Report, which also identifies de-risking as a trend amongst UK financial compliance professionals.
Soaring financial crime in the context of difficult economic conditions is expected by 59 per cent of firms that responded to ComplyAvantage’s inquiries, with 58 per cent planning to hire more staff. A faltering economy could increase levels of risk-taking behaviour according to the report.
It says tax and investment fraud are top concerns for compliance teams, with the temptation for criminals to offer bogus “get rich quick” schemes rising as the economy worsens.
The second highest typology of concern for firms when submitting suspicious activity reports (SARs) was environmental crime, behind only tax evasion, according to the report.
It says international concern about environmental crimes and wildlife trafficking soared in 2022, reflecting the threat posed to food security, political stability, conflict, and forced migration.
When asked which predicate offenses were most important to their organisations, more than one in four respondents selected environmental crime, making it one of the top selected offences.
Proportionate risk management is an essential compliance strategy, the report says, but it expresses concern over de-risking when firms adopt blanket policies that, in practice, push criminals into less regulated territories.
De-risking can also undermine the wider financial system, as it disproportionately affects groups like humanitarian organisations and charities that rely on financial services to support vulnerable people worldwide, the report points out.
The State of Financial Crime 2023 Report can be downloaded on request here.
Categories: Trade Based Financial crimes News