Emerging finance firms fall prey to financial crime

Emerging finance firms are finding themselves at risk of being the victim of financial crimes, data from a survey conducted by SmartSearch, a digital compliance solutions provider, revealed.

The study found that more than a third of firms in the emerging finance sectors were victim of financial crime within the last six months.

“There’s no question financial crime can have massive implications for businesses,” said Martin Cheek (pictured), managing director of SmartSearch.

“It’s not just the loss of revenue, it’s also the reputational damage and the questions it raises for regulators and authorities about the safeguards and compliance measures in place,” he added.

What were the survey findings?

The findings showed that banks in general were the most significant victims of fraud incidents as 40% of those surveyed experienced financial crime, including money laundering. This number was even higher for challenger banks, small retail banks that were created to compete with established national banks, at 46%.

Aside from banks, other sectors that were surveyed and reported being victims of financial crime included property developers, gaming firms, and crypto platforms.

The survey revealed that less than a quarter of firms had completed the necessary checks required by regulators in order to verify the identity of new individual customers, which may have contributed to the large number of victims.

“As the threat of money laundering and financial crime increases, and the burden of compliance grows even heavier, firms must take action and improve both their systems and their processes to avoid becoming victims too,” said Cheek.

“Advancements in digital compliance are helping firms of all sizes mitigate these challenges by not only identifying potential red flags as part of detailed checks, but providing constant access to real-time data and intelligence,” he added.

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