State of Financial Crime 2023 Report

What are Financial Crime Units?

Financial Crime Knowledge & Training

financial crime units

Financial crime units (FCUs) help banks and financial institutions detect and prevent money laundering, the financing of terrorism and a variety of other financial crimes while meeting their regulatory compliance obligations more effectively.

In a rapidly changing financial sector, criminals are able to exploit a range of new technologies to commit fraud, money laundering and other crimes. Accordingly, FCUs not only contribute to increasingly important AML/CFT efforts but also protect their institutions from the damaging effects of those crimes, including potentially substantial reputational and financial damage.

What do Financial Crime Units Do?

While national and international AML/CFT entities aid governments and global organizations (like the FATF) and use financial intelligence units (FIUs) to analyze and investigate suspicious activity, FCUs are established by (or work on behalf of) financial institutions as a dedicated resource to help fight financial crime.

While research shows that around 70% of FCUs are focused on preventing fraud, that focus extends to money laundering, the financing of terrorism and other types of financial crime. FCUs use a combination of technology, investigative resources and human expertise to detect suspicious customer or account activity, analyzing vast amounts of transaction data for evidence. Where potential crimes are detected, FCUs take appropriate remediating action to scrutinize the activity, block transactions or payments and, if necessary, report findings to the relevant financial authorities for further investigation.

FCUs are employed by large banks and smaller financial services companies alike. The role of an FCU involves a range of customer due diligence (CDD) and know your customer (KYC) tasks but also involves streamlining internal AML/CFT processes to make regulatory compliance more cost efficient and effective.

What are the Responsibilities of Financial Crime Units?

Financial Crime Units should consider the following tasks and processes as important priorities:

  • Know your customer: To help firms identify and verify their customers, FCUs help firms implement KYC models that reflect the level of risk those customers pose. This process might involve a review of an existing KYC checks or the development and implementation of a new process. An FCU might also provide operational support for the KYC process via IT expertise or the remediation of KYC files.
  • Transaction monitoring: Financial services firms deal with large and complex amounts of transaction data when monitoring for suspicious activity such as money laundering, terrorism financing, sanctions breaches, fraud or other compliance issues. The monitoring solutions that Financial Crime Units use to detect those kinds of activity must be able to deliver results quickly and efficiently so that law enforcement agencies can take necessary action.
  • Regulatory compliance: A core function of an FCU is to help firms achieve effective regulatory compliance. That function might extend to helping firms build new operating models, integrate new technologies, perform impact analyses or adjust internal compliance culture. Given the pace of regulatory change across the financial sector, compliance services should be a priority FCU issue.
  • Sanctions: FCUs can help financial institutions comply with national and international sanctions by designing the implementation process and offering support for sanctions screening and filtering processes. They may also be able to inform sanctions policies and procedures and conduct related audits.

FCU Technology

Technology and innovation must be a primary focus for FCUs as they work to keep pace with the capabilities of criminals operating in the financial sector. In practice, this means that Financial Crime Units should maintain a suitable level of expertise and access to the appropriate tools and software, including data analytics platforms, screening bots, AI reporting tools and more.

FCUs should also perform a vital cybersecurity function, ensuring that customer data remains safe during the compliance process and investigations into suspicious activity.

FCU Compliance Focus

Financial Crime Units are particularly valuable because they can be built to reflect the risk landscape in which banks and financial institutions operate. In practice, this means that FCUs can focus on the AML/CFT concerns that matter to their institution and implement the CDD/KYC processes that will be most effective.

FCUs can bring efficiency to an AML/CFT program by keeping up with regulatory changes, adapting to challenges and monitoring the costs involved with meeting compliance obligations. With the power to conduct audits, Financial Crime Units can also identify blind spots or opportunities to innovate and ensure that the institutions they serve match their compliance environment and adapt quickly to emerging AML/CFT trends.

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Originally published January 17, 2020, updated January 16, 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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