8 Best Practices for Financial Crime Compliance

Laundering money in a time when digital transactions are easier and more accessible has enabled criminals to get more creative in conducting financial crimes. This makes it imperative for businesses to tighten Financial Crime Compliance (FCC) measures to minimize crime risks and prevent illegal activities.
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Julia Ront, Founder and CEO of Vespia

March 21, 2024

According to PwC's Global Economic Crime and Fraud Survey, 51% of organizations have experienced fraud on e-commerce platforms. The finding indicates the prevalence of financial crime, especially online.

Fortunately, there are some FCC best practices you can do to ensure your business and clients are well protected against financial crimes, fraud, and exposure to other risks. Read on to learn how.

What is Financial Crime Compliance?

Financial Crime Compliance refers to the measures and regulations that financial institutions and other regulated entities must follow to combat and reduce the risk of financial crime and illegal activities against their business.

Ensuring your business has an effective FCC can play a part in creating a space that discourages criminals from conducting illegal financial activities.

Global Requirements for Financial Crime Compliance

The requirements for Financial Crime Compliance are affected by the laws and regulations that the business resides in. There are, however, international requirements that apply worldwide, which can impact the processes implemented.

The key components of FCC:

1. Bank Secrecy Act (BSA)
The Bank Secrecy Act can also be referred to as the Currency and Foreign Transactions Reporting Act (CFTRA) created to spot financial crimes as they occur. This mandates financial institutions to collaborate with the US government when money laundering activities are suspected. Cash transactions that exceed $10,000 must be reported by banks and assist the US government in detecting and preventing illegal activities.

2. Know Your Business (KYB)
Know Your Business is an extension of the Know Your Customer (KYC) process and is increasingly recognized as a critical component in the broader framework of Financial Crime Compliance. KYB specifically refers to the due diligence processes used by financial institutions and other regulated entities to verify the legitimacy of other businesses they engage with, particularly in B2B relationships.

This can be significantly useful for risk management, and encourage transparency and accountability in transactions — especially with foreign transactions.

3. Anti-Money Laundering (AML) Compliance

Anti-money laundering compliance measures involve employing procedures and laws designed to prevent criminals from disguising illegally obtained funds as legitimate income. This includes monitoring customer transactions, reporting large cash transactions, and reporting suspicious activities to the Financial Crimes Enforcement Network.

4. Counter-Terrorist Financing (CTF)

Similarly to AML, CTF measures aim to prevent, detect, and report terrorist financing activities. This involves scrutinizing transactions that may not be large but are unusual or have no clear economic purpose.

5. Transaction Monitoring

Monitoring customer transactions falls under AML compliance and aims to identify patterns of suspicious behavior. This can involve the use of sophisticated software algorithms and AML transa.

Financial Crime Compliance vs Financial Crime Risk Management

Financial Crime Compliance and Financial Crime Risk Management (FCRM) are closely related concepts in the finance industry. They do, however, focus on different aspects of managing financial crime. Knowing their distinctions can help implement strategies effectively to mitigate financial crime risks.

Financial Crime Compliance

The objective of FCC is to prevent the financial system from being exploited for illicit activities such as money laundering, terrorist financing, fraud, bribery, and corruption.

Its key functions include adhering to Anti-Money Laundering Compliance, and CTF regulations. In effect, implementing KYB and KYC processes, trade and economic sanctions compliance, as well as reporting suspicious activity is imperative.

Financial Crime Risk Management

FCRM takes a broader approach by focusing on identifying, assessing, managing, and mitigating the risks associated with financial crimes. FCRM is concerned with the ongoing risk assessment and analysis of a financial institution against crime.

This includes understanding the nature of risks, the likelihood of their occurrence, and their potential impact.

Types of Financial Crimes

Financial crimes encompass a wide range of illegal activities, typically involving fraud or dishonesty in financial transactions. These crimes can significantly impact individuals, businesses, and the global financial market. Knowing the different types of crimes can better inform the security measures businesses can employ.

Money laundering

The process of making illegally gained money from criminal activities appear legal. This often involves a complex series of transactions to disguise the original source of the funds that can come from structuring and smurfing.


This type of financial crime is a broad category that includes various deceptive practices meant to gain financial or other benefits. Examples of the different forms of fraud include:

  • Investment Fraud: Misleading investors about a company's or investment product's prospects.
  • Insurance Fraud: Falsifying claims to obtain insurance payments.
  • Bankruptcy Fraud: Concealing assets to avoid having to forfeit them.
  • Securities Fraud: Manipulating stock or commodities markets.

Tax evasion

Purposely avoiding paying taxes that are owed falls under tax evasion. This can involve underreporting income, inflating deductions, or hiding money and income in offshore accounts.

Identity theft

Identity theft is an activity that involves using someone else’s personal information without their permission, typically for financial gain. This can include credit card fraud.

Bribery and Corruption

Offering, giving, receiving, or soliciting something of value for the purpose of influencing the action of an official in the discharge of his or her public or legal duties.

Cybercrime in Finance

Using computers and the internet to commit financial crimes such as online fraud and hacking into financial systems.

Best Practices for Financial Crime Compliance

Aside from using the right Financial Crime Compliance solutions, implementing these best practices for FCC is crucial for financial institutions and other regulated entities to effectively combat financial crimes. These can help prevent and detect money laundering, fraud, and other suspicious illegal activities.

1. Conduct robust risk assessments

Tailor your business's Financial Crime Compliance framework to the specific risks faced by the organization. This involves identifying, assessing, and understanding the various financial crime risks and applying more stringent controls to higher-risk areas.

Regularly conducting comprehensive risk assessments to understand and identify potential financial crime risks specific to the organization can go a long way. This should include checking for customer risk, product risk, geographic risk, and channel risk.

2. Implement effective KYB procedures

Implementing thorough KYB and KYC procedures to verify the kind of businesses and clients who you transact with can help minimize the chance of financial crime. This means, understanding their financial behavior and assessing the risks they pose for financial institutions matters.

You can verify business customers with Vespia Platform with one click

Important factors that fall under the KYB and KYC procedure includes ongoing due diligence and Enhanced Due Diligence (EDD) for high-risk profiles.

3. Develop strong AML and CTF programs

Develop and maintain robust AML and CTF programs. This means embedding effective systems and controls to detect, prevent, and report suspicious activities. There are many AML solutions in the market today that can help ensure your processes are all-encompassing and thorough.

4. Use Transaction Monitoring Systems

Utilize advanced transaction monitoring systems to detect unusual or suspicious transaction patterns that could indicate money laundering or other financial crimes.

It's one thing to have your standard checks and risk assessment processes in place, however 24/7 transaction monitoring can prove helpful in detecting suspicious activities as they happen. A good transaction monitoring tool will be able to notify or alert you in a timely manner.

5. Conduct regular training

Conducting regular training for all employees can be greatly beneficial. This will help ensure they know financial crime risks, regulatory requirements, and their responsibilities in detecting and reporting suspicious activities. Equipping them with this knowledge can also streamline processes for proper reporting and regulatory compliance.

6. Work on independent audits and reviews

Conduct regular independent audits and reviews of your business's FCC program to ensure compliance. While this step isn't necessary, keeping this practice in place can help identify areas for improvement, speed up processes, and safeguard your clients and business growth.

7. Educate customers

Educating your customers about financial crime risks and prevention, particularly in areas like cybercrime and identity theft. You can do this by incorporating it into your onboarding process and conducting email campaigns that share this information.

In the long run, this enables them to report fraud or any other suspicious activities if this happens to them.

8. Keep track of trends

As technology continues to advance, criminals can adapt and evolve their methods for financial crime. Keeping track of financial crime trends can help you understand and mitigate these new threats, and ultimately improve your FCC program.

Ensuring Financial Crime Compliance

As financial crimes evolve along with technology, ensuring your business can adapt to these changes with the right Financial Crime Compliance practices will make all the difference.

Implementing best practices not only help in safeguarding the business's integrity and financial health but also contribute to the broader fight against financial crime globally. By staying informed of emerging trends and adapting FCC strategies accordingly, businesses can not only comply with regulatory requirements but also foster a more secure and trustworthy financial environment for stakeholders, clients, and financial institutions.

Vespia provides all the necessary solutions to combat financial crime and stay truly compliant. If you're eager to embed this into your system, schedule a Demo today.

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