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Financial crime rises, highlighting consumer protection and cybersecurity needs

There has been more Suspicious Activity Reports (SARs) filed by banks and other financial institutions in the UK this year than ever before, according to official data by the Financial Conduct Authority.

The FCA’s release, including analysis of data from 2017 to 2022, found that reports by staff members of suspicious activity have risen from 887,500 in the 2017-18 fiscal year (FY) to 1,028,260 in 2019-20. That constitutes a 16% increase over that time, with the number expected to grow further as digital transaction volume increases.

78% of SARs were reported internally to a nominated data officer, with 85% being submitted externally to the FCA.

Retail banking made up the largest segment for SAR submissions, with 804,105 submissions almost quadrupling the 204,374 submitted in the retail lending sector. Wholesale Financial Markets placed third highest segment with 12,062 submissions, highlighting the large volume of fraudulent behavior and suspicious activity happening in retail lending.

“Money laundering and other forms of financial crime present major challenges for banks, and this is an issue which has only been buoyed by the advent of widespread remote working and online banking systems. It is therefore absolutely essential that firms work closely with the FCA to openly and honestly report signs of illicit activity and work with them to take appropriate actions,” co-founder and CEO of Encompass Corporation told Finextra.

“For the majority of financial services firms, managing complex Know Your Customer (KYC) and Anti-money Laundering (AML) programmes can be a hugely challenging task, costing time and resources. Key to this effort requires investment in the necessary automated regulation technology to run due diligence on demand, collate critical documents and flag up potentially suspicious transactions, helping banks operate with reduced administrative overheads,” he said.

In other recent fintech news, EBANX acquired payment firm Juno following news that it is planning a US IPO. Bank of America also reinforced its fraud prevention services with its newest Account Validation tool.

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