Article 6 min

Understanding Financial Crime Compliance

Effective procedures for financial crime compliance are not only a legal requirement but are an essential business practice. Ensuring an organization has robust financial protocols and limits the damaging effects of enabling criminal activity protects a business’ economic well-being, reputation, customers, partners and employees.

The losses from financial crime are staggering. There are numerous forms of financial crime and many are complex and well-hidden, so it’s difficult to pinpoint an exact number of losses as a result. The amount of money laundered alone is estimated between $800 billion and $2 trillion (U.S.) per year, and that’s only one aspect of the problem. Some additional forms of financial crime include:

  • Cybercrime
  • Bribery
  • Corruption
  • Securities and commodities fraud
  • Bank fraud
  • Mortgage fraud
  • Insurance fraud
  • Embezzlement
  • Insider trading
  • Market manipulation
  • Credit fraud

Understanding your organization’s threats and having countermeasures is fundamental to modern business success.

What is Financial Crime Compliance?

Financial crime compliance is the strategies and tactics deployed by organizations to prevent, detect and report illegal financial activities. Financial crime includes actively trying to gain from criminal acts financially and actions trying to hide the proceeds of crimes.

Numerous laws and regulations might apply depending on the jurisdiction and industry, so understanding applicable sectoral requirements are necessary. The wide variety of types of financial crime requires targeted policies and processes for obligations such as:

  • Anti-Money Laundering (AML)
    Help ensure illegal funds don’t enter the legitimate financial system
  • Know Your Customer (KYC)
    Verify the identity of the customer to ensure they’re legitimate and perform due diligence to determine the risk they pose
  • Watchlist screening
    Monitor and screen clients against applicable sanction lists
  • Preventing payment fraud
    Have holistic anti-fraud systems that are robust and can quickly adapt and deliver security and protection with minimal customer friction.
  • Deterring cybercrime
    Defensive measures to protect the integrity of systems and data

Ongoing vigilance is necessary as financial crime, the legal requirements to fight it, and the most appropriate solutions constantly change.

Financial Crime Risk Management

There’ll be errors, failures and lapses in any financial crime compliance program, even with the best intentions, efforts and processes. There’s also the limiting factor of the cost of performing financial crime compliance; in 2020, these costs totaled $213.9 billion, and they can account for 6 – 10% of revenue. Eliminating financial crime is not feasible, so it becomes a matter of effectively managing the risk.

What is financial crime risk management?

Financial crime risk management (FCRM) takes a risk-based approach, balancing the level of risk with appropriate risk management controls to limit the occurrence and damages of financial crime. FCRM is a practical approach and calls for more scrutiny on accounts and transactions that present the most risk.

An effective FCRM program is about:

  • Understanding the overall risk environment
  • Knowing the nature of your organization’s business and specific risks to operations
  • Having policies that can effectively gauge and appropriately handle risk
  • Educating staff on risks and risk policies
  • Performing due diligence at account onboarding to determine account risk
  • Monitoring transactions for unusual activities
  • Reporting suspicious activities
  • Performing ongoing due diligence on an appropriate schedule, or if risk conditions change
  • Auditing and reviewing the program regularly, or upon noticing any deficiency

As many of the activities, and much of the risk, are digital, it makes sense that many elements of a robust FCRM are automated tools. While an FCRM relies on compliance, risk, fraud and security professionals to define, refine and investigate the overall program, sophisticated technology is often necessary to run the vast amount of data checks and analysis.

Financial Crime Solutions

Preventing most financial crime is possible if your organization has the proper mindset, program, people and technologies.

The risk posed by financial crime is severe and needs consideration from the top levels of the organization. If ignored, losses to theft and fraud, fines and sanctions, reputational damage and criminal charges can ruin a business. Your FCRM needs to have the budget and buy-in from the board and throughout the organization.

Beyond people and culture, technology provides capabilities to operate faster, run more checks, analyze larger data sets effectively, and automate numerous functions. Some of the factors to consider when developing and optimizing your FCRM technology include looking for systems that are:


There are numerous types of financial crime with an ever-growing number of techniques, so you need to be able to counter a wide array of approaches. You also need to consider all the markets you operate in and the different requirements. If you are using a single-point solution, how does it integrate with all your other tools? Look for solutions that can cover multiple FCRM needs and can integrate quickly and seamlessly with your other tools.


Laws change, as do criminal threats. How easy is it to modify your approach to better fit new requirements? Requiring development time or entirely new systems can be an expensive and unnecessary risk. Solutions that allow you to quickly adapt your processes help you keep on top of the changing risk environment and lower costs.


Is your business growing and looking to control costs and risk? Effective FCRM solutions can scale to handle the workload and keep your operations going forward. The intelligent use of automation helps minimize false positives and costly manual checks while delivering program performance that matches your risk mitigation strategy.


In terms of technology, solutions need to manage processes and workflows to run the proper checks and determinations promptly. One big selling point of technology is speed, so if your FCRM stack is not delivering, how valuable is it? Security is essential, but if the processes significantly delay customers, employees and partners, the results can be lost business or much higher operational costs. Examine how your FCRM technology affects customer onboarding workflows and employee productivity.

Identity Verification for Compliance, Fraud Prevention and Trust

At Trulioo, we believe the first step of the customer journey, customer onboarding, is crucial for creating a positive customer experience and preventing financial crime. After all, intelligent identity verification processes can help stop financial criminals from gaining an account before damage can occur. Identity verification can also assist in performing ongoing due diligence, keep account information current and accurate, and help avoid account misuse.

Protecting your organization with an effective financial crime compliance program is a vital business consideration. Implementing solutions that seamlessly handle current requirements and future-proof your organization will help cut risks, costs and worry.

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Navigating the Maze of Financial Services Compliance Requirements

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