The development of finance does not only come with benefits. It also comes with a price, which is financial crime. In today’s article we will specifically discuss the problems that financial institutions in Asia are having to deal with. Due to the concentration of capital and other factors, financial institution will need to prepare methods to mitigate financial risk. Are you interested in finances? Do you want to know how will these institutions deal with financial risk? Keep reading!
What is the problem with financial institutions in Asia?
As we said above, Asian financial institutions have to deal with a growing financial crime. This is because of many reasons. We can see the concentration of capital into and within the region or the direction being taken by governments across the region. Another cause can also be the spate of financial crimes in the last years. For example, last February an Indian bank was involved in fraudulent transactions exceeding 2 billion dollars. What were the causes? Essentially the lack of control of proper control systems in the bank. This allowed criminals to work through loopholes in the system and bribe employees to help them commit fraud.
However, this is not an isolated crime. The same issue has occurred in many other countries in the last few years. Because if this, banks all over Asia and the world need to deal with problem. If they don’t do it as soon as possible, the costs will be too high. Banks need to manage and mitigate risks associated with financial-crime right now. This way, they will limit freedom for criminals and guaranteed their protection against financial distress.
How can they fight against financial risk?
Asian financial regulators expect bancks to improve in terms of monitoring, controls and reporting. Because of this, they will have to move closer to international norms and invest in financial-crime risk management. During the last month some people suggested actions plans. However, right now we will talk to you about 6 main areas that Asian financial institutions need to improve in order to gain control:
The first thing senior leadership in a bank need to do is to establish good communication. They need to transmit the importance of financial-crime control to the rest of the institution. What is more, boards and executive committees need to be aware of the possible failures of financial-crime controls and their consequences. Leadership teams in financial institutions need to recieve education on the criticality of quality risk management in finances.
Within the financial institutions there has to be a culture of organization. It is important act critically in order to manage financial crime, but also to satisfy community expectations. Bankers and employees have to reach a high level of expertise in finance and have a solid transaction logic. This can be a competitive advantage for the banks and they won’t be fooled by unusual requests by clients that could put them in risk.
Everyone at the company need to understand the financial institution’s obligations. This will lead to clearer and more transparent reporting to regulatory and supervisory organisms. Workforce should also be aware of how compliance must be a gate and a basic requirement in every way.
Financial-crime risk management also requires the control of some technical aspects. For example, the fact that all transactions need to be screened. In addition, all customers need to go through procedures of identification of the desired quality. Financial institutions should also perform risk assessments to cover all products and segments. The aim is to meet well-articulated minimum standards.
Many advanced financial institutions are finding extreme increases in productivity from analytics as well. Transaction monitoring has gone from merely screening to the use of advanced analytics and machine learning. The use of computation in institutions will save, not only time, but also money. Large organizations have gained in productivity and helped set new aims for the industry.
Cooperation is extremely important for finances and can benefit everyone. For example, with the creation of utilities for processes of getting to know your clients. Regulator will act more comfortably, clients will be more satisfied and banks will be more efficient. There are many other methods financial institutions can use in order to manage financial-crime risk. However, this is a good start.
Finances or financial risk management sound interesting to you? Would you like to become an expert on that area? Your best choice is to start the Master in Financial Risk Management from the University of Acalá. In this master you will learn everything you need to know about finances and its place in the future. Do not hesitate and join us. We are waiting for you!
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