Frauds, scams, financial crime have become so common, they are used almost everyday and happening around us constantly They  fill pages in newspapers globally. It is also correct  to mention that digital innovation has speeded up  the financial crime multiple times and also innovation in carrying out the financial crimes.  People are finding new ways to swindle information and money online, which thankfully, also leads to people finding new ways to protect themselves from such online scams. But initiating action  to a financial crime after the its happening rarely helps the victims. Which is why, it is better to prepare ourselves  for and prevent such attacks.

This concept applies not only to individuals but also  to  organizations and large corporations, as these financial crimes against them could cost  in millions.  Hence  they focus more on preventing and protecting from financial scam, using various pre-planned strategies. Every organization has a set of strategies and even have  formed separate teams to combat them. This process is called Financial Crime Risk Management (FCRM).


Financial crime risk management (FCRM) is the practice of proactively looking for financial crime, by investigating and analyzing suspicious activity, rooting out vulnerabilities in software and manual processes, and taking any and all steps to lower an organization’s risk of becoming a victim. The proliferation of financial crimes has led to increased government legislation, which now makes it the organization’s responsibility to protect their data  as well as their clients data from both external and internal threats and be compliant with regulatory laws. If organizations fail to take the necessary steps to identify and combat financial crime, they could face stiff penalties that may run into the millions and even billions of dollars. This is especially true if the crime affects the public.


Financial crime is global, and no organization is spared. Several large digital organizations have been victims to financial crime like data leaks, scams, and other frauds. Big Companies like Pepsi Co and Volkswagen too have had their incidents of cyber criminals hacking them. With digital avenues for financial crime growing, small and large firms are becoming easy targets of these crimes, which is why governments around the world have regulations and laws in place. These regulations may vary from region to region, but essentially they direct companies to have a well structured internal system to guard against financial crimes to best of their ability. This system should have specific guidelines in place that stonewall all vulnerabilities or potential entryways for criminals, while not curtailing the growth of digitalization and  technology. Most international organizations have a well laid down FCRM policy so that they are compliant with international standards and regulations of their Regulators and Governments. In the United States, the Financial Crimes Enforcement Network (FinCEN) lays the principles for financial crime compliance:

The Bank Secrecy Act (BSA), that requires financial institutions to work with the U.S. government in cases of suspected money laundering and fraud.

The U.S. Patriot Act puts helps “to prevent, detect, and prosecute international money laundering and financing of terrorism.”

Know Your Customer (KYC) is a part of the Patriot Act that requires businesses to verify the identity of customers and understand the nature of their activities.


While there are several laws and regulations in place most organizations also have their own FCRM policies to suit their business type. These policies may have specific guidelines for the company’s processes, but some policies are common across the organizations. These policies help protect from basic vulnerabilities, while also ensuring  to meet the new avenues for financial crime. The policies usually include,

Adaptation of Critical Processes for All Situations: Businesses should review their processes to adapt to the changing technological, social and economic environment. The continuance of critical risk assessment, such as monitoring and sanctions screening, is crucial to maintain the financial system’s integrity and protect institutions from potential breach.

Practicing Centralized Governance: It is crucial to ensure that consistent and centralized governance decisioning is maintained, for example, by creating a compliance supervisory board committee. Decisions by members should be justified and documented as action plans that address any deviation from normal operating standards.

Improvement of Financial Compliance Capabilities: Connect with regulators of law enforcement, as well as representatives of other industry participants who are continuously monitoring the financial risk landscape of the particular industry. They can offer insights on emerging threats, their impacts observed locally or globally, and prioritization of risk-based countermeasures.

Creating Awareness of Emerging Financial Risks: Use internal communications and training to create awareness to their employees on various risks and possible countermeasures to avoid or limit its impact.

Implementation of Quick Risk Assessment: Ensure assessment protocols reflect the volatility of current conditions, can stand against the potential impact of known vulnerabilities, and operate within the level of reasonable control your organization can exert over those risks. Frequent Risk Assessments and its monitoring the level is essential.

Know Your Customer Policies: Ensure the KYC policies meticulously follow up thorough multiple verification techniques to compensate for lack of face-to-face contact. Also ensure the data collection process is transparent and compliant to related government regulations.

Constant Updation of Transaction Monitoring Programmes: One of the important implementation is Transaction monitoring for financial organizations. These should cover all possible scenarios to identify red flags applicable to the organisations / individual activities, and its threshold levels to be updated or validated appropriately depending on their Risk Appetite. Data analytical tools to be used to enhance monitoring capabilities and quality assurance of output.

Keeping Compliance Records: Ensure maintenance of compliance records wherever necessary that are in consistent with the regulatory guidelines.

Preservation of Privacy and Data Security: Ensure all applications in every process are updated with latest security patches. Data access requires multi-factor authentication and need to know basis. All employees are to be made aware of the principles of customer privacy and data security.

Planning for All possible Scenarios: With Work-From-Home and other remote work options becoming normal, it is essential to ensure all related vulnerabilities in those scenarios including network related are also accounted for.

Updation of Regulators on Challenges: Keep updating Regulators for challenges in meeting regulatory requirements, while also ensuring the necessary guidance and support or exemptions are provided.

Continuous Monitoring and Testing: It is imperative that continuous monitoring and testing the scenarios happens so that programme gaps are identified and addressed effectively

These elements ensure that any company is sufficiently protected in the current financial crime scenario.


As the Financial fraud / Financial Crimes are constantly increasing, and the loss to the organisations in millions it is that a well laid down  FCRM policies and monitoring of its follow up may reduce the loss to the organisation. These policies protect the  organisations from internal and external threats, and being created by compiled by experts It is to be noted that these policies requires periodical review and updation to ensure continued protection.

Proper control of access, monitoring the employees activities may result in curtailing the internal fraud by the internal employees.

Author’s profile

Sruthi Murthy who is very talented, headstrong, has an eye for details and keen on reaching great heights, wrote this wonderful article on Financial crime for us. Worked with Sun tv, Production houses and now being a freelance writer she wrote this article to give us more insights on financial crime.


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