Financial Crime Prevention: Strategies for Business Owners

Worldwide, financial crime has grown to be a major concern. Every company wants to safeguard itself and lower the chance of falling victim to financial crime. Every business owner’s worst nightmare is this one. However, there are numerous ways to make it easier to spot financial crimes and reduce the risks associated with it.

In this article, we’ll walk you through the precautions you should take to guard against this type of fraud as well as the duties you should be aware of. To avoid any business losses and becoming a victim at a financial institution, train your staff to combat fraud.

Understanding why financial crimes happen

Financial crimes have been part of everybody’s concern for the past few decades. They are unavoidable but some things can be done to prevent your business from collapsing from those crimes. However, before we continue with the strategies that you can use for prevention, it’s good to learn about financial crimes and in what forms you can meet them.

Financial crimes can happen either within the company or outside of it. Usually, external fraudsters collaborate with people inside the company and collectively plot against it. But it can happen even without prior connection to the employees. Financial crime can come in many forms including:

• Bribery
• Corruption
• Fraud
• Cybercrime
• Terrorists
• Money laundering
• Market abuse, etc.
• Victims of this kind of fraud can be either the clients or the whole team in the company.

Those frauds happen within the financial system and are rarely in cash.

Financial Control Any business should have a management team where financial crime risks as well as other similar risks that may be present can be discussed. The company should engage in taking essential steps to prevent this type of crime from happening. Every firm is exposed to risks, and the best thing that needs to be done is to acknowledge the risks so you can find an approach that fits the standards of your company.

The management team should be able to present all the information about possible risks to which the company is exposed. When the team has a better understanding of the financial crime, the better the approach would be to fight against those crimes.

Team hiring and training

Team training should be up to date regarding the renewed policies and regulation that needs to be followed. The staff’s role in the company is important, and for that matter, the team members should be able to get training material and lessons.

Bring more awareness to educating the staff of what exactly needs to be done when a financial crime occurs regarding their role in the company.

Go a step further and actively hire employees that you can trust and who are inline with company policies. Employees with remarkable attention to detail will help mitigate errors and attempts of financial crime.

HR can ask specific attention-to-detail interview questions to filter out undesirable candidates. Prevention is the best cure, so save time and money spent on retraining to hire the right people from the get-go.

Internal policies

The policies in the firm should be easily accessible and understandable by the team members of the company. When the staff has a better understanding of what financial crime is and its risks, they can minimize and help in the prevention of the crime. When the employees are adequately trained and have the required skills and knowledge, the more effectively the risk will be managed in the company.

Interactions from the whole team When dealing with a financial crime, the best thing you can do is to involve the right team to act on the prevention of fraud. The members such as accounts, customer relations, procurement, HR, business development, etc. All of the members engaging and interacting with financial crime prevention will aid in getting a better perspective of the situation.

Monitoring company transactions

Addressing any suspicion about ongoing financial crime in the company can help in stopping the crime from going further. By monitoring transactions in the company, there can be spot money laundering activities, which otherwise will go unnoticed.

The monitoring should become easier to do with the set of policies that are present in the company. With the monitoring, you’ll be able to detect any suspicious activity that’s been happening on the client’s data. You can also request a financial crime health check where you can have professionals review your whole system by making an analysis.

Financial crime compliance

To ensure that your company follows the latest regulations and policies, you need a checklist for AML processes which are small investigations that perform analysis. Meaning that in just a few seconds you’ll have records of data that will help you to manage any risks. Everyone should have the responsibility to follow the rules and regulations according to their role in the company.

Acknowledging the risks

During the past couple of years, there’ve been reports on financial frauds and approximately 51% of companies had experienced these types of crimes. That’s why it’s crucial to be aware of the environment in your company and how well you are prepared to manage the upcoming risks. When you have full control of your surroundings, you reduce the risk of becoming the victim of fraud.

Risk detection

Detection of any risks is the second part of dealing with and preventing any financial crime. By detecting the risk, you’re able to recognize any strange activity or even threats that are happening in your business. When you begin to notice those things, it’s time to act on them, because even waiting for a few more minutes will result in bigger problems.

Whether we are talking about financial or data fraud, the loss can be a huge deal that will happen to you and your company. The best thing you can do is to use technologies that can scan any behavioural changes and detect them. Don’t let criminal schemes go detected in your company, and always pay attention to what’s happening around you and inside your company.

Risk investigation

The investigation is the part when you deal with the problem and resolve the issues. How you handle the risks is entirely your choice. This is the most important part when dealing with financial crimes, because, from the point where you have criminal activity going on in your company, you can either act on it rationally and save your company from any greater loss or make one bad decision and lose everything you have.

Red flags that will help you in the process of preventing financial crimes

Transparent relationships with clients

Being aware of your clients and having them undergo many identity regulations, will result in minimizing the risk of clients having evil intentions while also gaining access to the financial system. Having a set of rules about who can become your client, will keep you notified about any inconvenience and inconsistency happening in the range of the company.

Meaning that you’ll be aware when someone’s value doesn’t match yours. You’ll also be sure about who your business relationships are and whether they are on some international black or watch lists. 

Unusual transactions

Strange transactions can be a strong indicator that your clients may be trying to launder funds. If you happen to see any large unusual payments, or payments coming from a third-party source, should be a red flag and something that you should take into consideration when working with those particular clients.

Regarding the transactions, when there are large sums with unknown sources it’s likely that there’s money laundering going on.

Chip and Pin Machines

Chip and pin transactions are one way to verify that your customers make secure payments. Before any transaction is performed, each of your clients must enter their PIN, which helps to prevent fraud of any kind. Due to the fact that your clients authorized all payments using cards and the proper PIN code, you will not be held responsible for any financial crimes that may occur.

Silent clients

When you’re dealing with a certain client, they should be receptive to queries about themselves and open to dialogue. When someone avoids answering inquiries about their personal life or other topics, it could be an indication that there is something wrong .You have the freedom to refuse to deal with a customer if you think something about them seems off.

Different accounts under the same client The rule for a client having multiple accounts with the same details is to monitor the activity because there’s a strong chance that it’s all about money mule scams. The different accounts are used for making transactions from one account to another without any logical explanation.

Conclusion

Financial crime is a significant issue that may have various negative effects on you and your business. Any business owner could act in a situation of financial fraud by using the tactics we previously revealed.

These kinds of crimes can be difficult to keep an eye out for, but thanks to modern technology, you can take matters into your own hands and prevent chaos from breaking out and ruining your company. Even if you believe “No, it won’t happen to me,” it still may, therefore the best way to be ready is to educate yourself on preventing financial crime.