Financial Crimes Management and Control in Financial Institutions

This chapter provides a glimpse of a typical financial crime organization in a financial institution. It discusses the governance structure that comprises two important elements—organization design for managing financial crimes and a set of policies and procedures. Content of the policies for any financial crimes management is typically prescriptive across countries and is generally in line with FATF recommendations. Procedures vary depending on the scope and scale of business, however, the essential elements of ensuring that the customer and beneficiary they are dealing with are not watchlist and that the participants in the transactions are not trying to subvert the system to make illegal money seem legal. Internal audit acts as the third line of defense for the compliance. The other aspect of governance is the compliance organization. While there exist different configurations for the compliance organization, common elements are watchlist screening, transaction monitoring, customer risk assessment, legal, and reporting to the central bank. Authors have also discussed an ideal organization structure and other best practices to govern the financial crime monitoring organization. Authors provided examples of a few rules or scenarios that monitor money laundering in banks and insurance companies are also presented. Lastly, the management reporting that provides performance management overview to the senior stakeholders is discussed. It can be used as a basis to design various dashboards that the compliance organizations may want to implement.