Disrupting financial crime calls for public-private collaboration

While financial institutions and government bodies are fighting fire with fire by employing technology to combat sophisticated financial crime operations, experts say stronger collaboration between public and private sectors is required. They identify a need for the creation of global data standards by government regulators working closely with business and the international banking community.

Yet while better data sharing across sectors and between banks, governments and regulators will enhance transparency and security, there are concerns regarding individual privacy.

Colm O’Flaherty, director, Financial Crime, at Deloitte, believes insufficient collaboration is affecting the State’s ability to combat financial crime.

“A recent Royal United Services Institute’s study highlighted the inadequacy of existing legislation to effectively handle financial crime in Ireland,” he says. The upshot of this misalignment of supervision, intelligence and data protection policies is inefficient resource use and over-reporting without substantial outcomes, in his view.

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“Criminals are taking advantage of the lack of co-ordination and information sharing, jumping from bank to bank,” says O’Flaherty.

The study underscores the urgent need for legislative reform and a strategic realignment to foster effective public-private collaboration in combating financial crime, he adds.

“We live in a globalised world and bad actors can see where the weak points in the system are, and we are one of those weak points currently.”

Frankie Cronin, business risk partner at Grant Thornton, agrees.

“At European level there are great intentions but I am not sure the infrastructure is there just yet to have proper, real-time information sharing,” says Cronin. “Also, GDPR can be a challenge for sharing information and people can fall back on it. There have been cases in the courts where the bad actors have been prosecuted and it’s fallen down on GDPR grounds that financial institutions were sharing information with each other and this was a breach of data privacy.”

O’Flaherty notes that the State has taken a more conservative view on balancing GDPR requirements against financial crime prevention.

“We hope that the new EU Anti-Money Laundering Directive package will clarify that and enable public-private information sharing to prevent financial crime and protect our communities,” he says.

“If we ever want to be successful and actually move the dial on reducing and preventing financial crime, we need our banks, regulators, law-enforcement agencies, telecommunications companies and the technology and social-media platforms headquartered here to come together sharing resources, insights and knowledge to protect the people of Ireland.”