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How Can Outsourcing Financial Crime Analysists Benefit Financial Institutions

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To address financial crime staff requirements large financial institutions, hire their own employees or bring on board expensive contractors. Mid-sized financial institutions to date have not had much access to financial crime analysis. At Valenta we can provide help to mid-sized financial institutions in this area. There are a few other service providers focused on the mid-market, but not many. Our assistance typically takes on two forms, 1) consulting for a set period and/or 2) ongoing engagements to provide continual financial crime analysis and reporting.

Financial crime analysts are commonly charged with looking for the following issues and offenses: fraud, electronic crime, money laundering, terrorist financing, bribery and corruption, market abuse, insider trading, human trafficking, sanction evasion, and tax evasion. A bulk of the work in these areas revolves around KYC (know your customer) and CTF (counter terrorism funding) due diligence. No financial institution wants to be serving clients who participate in nefarious activities. It can be hard to identify these types of actions especially when dealing with massive amounts of transactions and customers.

Fines and penalties issues levied against financial institutions dipped in 2021, likely due to the pandemic, but had previously been steadily rising. Anti-Money Laundering or AML actions and enforcement has been steadily rising in western democratic countries. Kroll, a leading provider of risk services to tier 1 institutions, reported that a total of $2.25 billion in fines were levied in 2021 to 67 different institutions globally. These figures include bribery and sanctions violations in addition to money laundering. Kroll also provides interesting historical data going back several years.

Outsourcing Financial Crime Analyst

Because of all of these reasons it is easy to see the need for financial crime due diligence for every financial institution in the world. In the remainder of this article, lets examine some of the benefits to mid-sized institutions for seeking outsourced financial crimes risk management, and crime consultancy.

Get Hard to Find Skills

Getting hard to find but essential skills in the area of financial crime is the top reason to look outside and bring in experts trained in this area. At Valenta we offer both experts in the field to provide proper assessment plus individuals who can be there for ongoing support. One way that outsourcing financial services around crime consultancy can help is with initial risk assessment and investigation. Independent reviews and compliance inspections can also be essential. Outside financial crime analysts and consultants can design and deliver AML and CTF training programs to existing staff. They can also provide advice on supply chain programs and software tools. Outside financial crime analysts can provide ongoing monitoring of AML and CTF plus conduct remediation and look back reviews. Creation of and participation in an AML Center of Excellence is another big benefit of outsourced financial crime analysts and consultants. These CoE can provide the required ongoing transaction and KYC monitoring. Especially for KYC remediation and monitoring, outsourced staff can be extremely helpful. The US for example has a law that states that banks must know any shareholder who holds more than a 25% stake in an LLC. When you are talking about 100’s of thousands or even more LLC corporate customers this can be a daunting task. Payment monitoring is critical in the fight against AML and is a liability area for small and mid-sized financial institutions. Human error is the prevalent reason for infractions. Oversight and involvement of outside specialists in financial crime make all these challenges easier to address for mid-sized financial institutions. Financial crime, AML and CTF are big important topics where mistakes are not an option. It is fortunate that financial crime staff augmentation is now available to all sized institutions and services providers.

In addition to bringing in hard to find skill sets, there are other benefits to outsourcing in financial services for financial crime.

Complement Existing Staff

Outside help can make all the difference regarding financial crime impact in business. Financial crime staff augmentation is there to assist existing staff by taking on and owning this important requirement. In our experience, we are almost never replacing in-house staff at financial institutions. Instead, we provide a supplement to in-house staff and are a back-office service. Working together and dedicating the right resources to the right type of work significantly benefits mid-sized banks and institutions. Supplementing and enhancing inhouse staff is an important aspect of outsourced financial crime services and a compelling reason to leverage them.

Reduce Costs

Glassdoor is an excellent source of salary information. In preparation for this article, we took a look at average salaries for financial crime specialists in some of the countries we service. Glassdoor reports that the average salary for analysts is 81.9K a year in San Diego CA, 79.5K a year in Miami FL, and 68.6K CAD in Toronto, Canada. The salary is slightly lower in the EU and is 57.6K Euros in Amsterdam and 43.8K pounds in London. If you wish to do your own research on this role in other cities, please find this link to Glassdoor. These salary amounts do not consider government taxes for Social Security, unemployment, and other items. They also do not account for costs related to health insurance or infrastructure for employees in the form of office space and computer equipment. Outsourced financial crime specialists can be provided for a fraction of these costs … typically, half to a third the costs of salaries, and with no additional costs for taxes or benefits

Focus on Core Business Functions

Utilizing outsourced financial crimes risk management, mid-sized banks and institutions can focus on what is most important. For example, proper time and dedication can be given to strategic direction setting. Also, adequate time and attention can be given to top customers. Additionally, outsourcing and AML, CTF and KYC initiatives allows executives to focus on other critical operational functions plus bottom line profit and top line growth initiatives exclusively.

Flexible & Scalable

Financial crime staff augmentation can flexibly provide people with specific skill sets and experience on an as needed basis. All outsourced financial crimes risk staffing and services we provide are contract based and run month to month. This dynamic aspect of outsourcing is quite different than the employer employee relationship, which is much more rigid and inflexible. The employer and employee relationship is also one that comes with some risks and liability. The flexibility of outsourced financial crimes risk management services also means that they are very scalable. Businesses can ramp up and ramp down based on business growth or decline. Businesses can add staff for specific tasks like remediation or keep them for ongoing monitoring. The process of recruiting, hiring and training new financial crimes staff can be challenging, and it is a very specific field. Finally, when leveraging outsourced financial crimes staff, an institution will always be contracting resources that have worked in the field

Want to Learn More?

Valenta specializes in providing Financial Crime Consulting and full-time staff and part time staff outsourcing in the area of financial services. We have extensive experience working across a diverse range of projects and roles including financial crime. Valenta has an established presence in Bangalore India and has additional service centers in Malaysia, the Philippines, the Caribbean, and new planned service centers in Latin America, and Eastern Europe. Our team consists of local Managing Partners in many major cities in the US, Canada, the EU, Australia and elsewhere. We have additional onshore and offshore consultants and offshore staff available for ongoing requirements. Please Contact Us to know more.