Financial Crime Compliance (FCC) is a process to ensure your bank or financial institution is meeting the policies, standards, and regulations laid by the Financial Crimes Enforcement Network (FinCEN) of the United States Treasury Department.

Meeting financial crime compliance is a legal requirement for banks and financial institutions to combat the various financial crime risks and activities. It helps banks and financial institutions detect, prevent and report illegal financial activities.

The blog discusses the financial crime risks in banking and financial institutions, the cost of financial crimes, and associated challenges. It also highlights the importance of digital solutions to combat financial crimes and strategies to meet the Financial Crime Compliance (FCC) and various other regulatory requirements.

What is Financial Crime?

Financial crime is criminal conduct involving malicious acts against banks and financial institutions committed by individuals, groups, or criminal organizations to steal, manipulate, launder money, finance terrorism, and obtain financial gains and professional advantage.

Financial crime can have devastating impacts on the social and emotional well-being of individuals. For organizations, failure to inculcate financial crime compliance can have significant financial and reputational losses to the organizations. Following are some examples that are normally considered a financial crime,

  • Money laundering
  • Terrorism financing
  • Cybercrime
  • Bribery and corruption
  • Market manipulation
  • Insider dealing
  • Tax evasion
  • Credit fraud
  • Insurance fraud
  • Embezzlement
  • Theft or forgery
  • Slavery/human trafficking

Global Financial Crime Compliance Requirements

Adherence to the regulatory requirements is critical for financial crime compliance for banks and financial institutions. They need to prioritize and adhere to the following global requirements for financial crime compliance:

Bank Secrecy Act (BSA) and Anti-Money laundering (AML

Also known as the Currency and Foreign Transactions Reporting Act (CFTRA), Bank Secrecy Act was enacted to identify financial crime activities. Banks and financial institutions also require to have a robust framework to file reports of cash transactions exceeding $10,000, currency transaction reports (CTRs) and assist the US government to detect and prevent suspected money laundering activities for BSA and anti-money laundering compliance.

Know Your Customer (KYC)

Banks and financial institutions are obligated to verify their customer identities (KYC), understand the nature of their business, and assess the criminal risks they pose. The KYC components include,

  • Customer Identification Program (CIP)
    CIP is a critical KYC requirement during customer onboarding. This includes collecting customer information, such as full name, date and place of birth, address, and identification number (any document issued by govt authorities, such as passport or SSN for individuals). Banks and financial institutions need to perform the CIP to meet the KYC and customer risk assessment obligations.
  • Customer Due Diligence (CDD)
    CDD refers to the set of processes that involves collecting personal information and identifying a customer with solutions, such as documents or biometrics. It also includes the customer risk assessment by checking the customer data against the database for document verification. It is required at the time of opening an account in the bank or financial institution. CDD is required for customers considered to be low-risk.
  • Enhanced Due Diligence (EDD)
    EDD involves protocols to verify and assess high-risk customers or individuals by performing additional checks, which may include more documents, additional database verifications, frequent identity verification, or a combination of all of the mentioned checks. Following are some common factors that may trigger the need for EDD of identified high-risk customers or individuals

    • Politically Exposed Person (PEP)
    • People linked to financial crime or money laundering activities in the past
    • The person is the subject of averse media
    • Individuals on the sanctions list or related to a company or country subjected to sanctions
    • A person belonging to a high-risk country.

All FATF members must implement the FATF risk-based approach recommendations to meet CDD and EDD requirements for AML/CFT compliance.

OFAC Sanctions Regulations

Office of Foreign Assets Control or OFAC Sanctions compliance program requires banks and financial institutions to implement a robust system in place to prohibit any financial and trade activities with countries, entities, or individuals engaged in state-sponsored criminal activities, breaches of international laws, the proliferation of weapons of mass destruction, and human right violations. Following are the OFAC sanctions types imposed against individuals, entities, and countries.

  • Primary OFAC Sanctions: Targeted against individuals or entities within the US preventing them from trade or commerce activities with US sanctions targets.
  • Secondary OFAC Sanctions: prohibits the US persons from doing business with third parties residing in foreign countries but not directly subject to the US jurisdiction.


The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 puts forth measures “to deter and prosecute financial crime activities, such as money laundering and financing of terrorism.”

By complying with these regulations, banks and financial institutions can prevent and detect financial crimes, such as fraud, money laundering, and financing of terrorism effectively.

Financial Crime Compliance Challenges

Following are the three major challenges banks and financial institutions encounter when it comes to meeting various compliances and regulatory requirements.

Rapidly Changing Regulations

Preparing for a rapidly changing regulatory environment is a challenge for the banking and finance industries. Failure to comply with federal laws and industry regulations can lead to reputational damage and incur legal penalties. Thus, banks and financial institutions need to be aware of the changes, understand the impact of the regulation and implement the necessary changes to meet the regulatory changes.

Cyber Attacks

The financial services industry is one of the prime targets for cybercriminals. It includes financial crimes, such as stealing credit card or debit card information, gaining access to accounts to initiate unauthorized transactions, identity fraud, and so on.

Even though banks impose the strictest security policies, the risk of cyber security breaches and falling victim to attacks, such as ransomware, malware, phishing, and denial of service attacks, are quite high, which can lead to heavy costs and penalties. It can have dramatic consequences for both customers and financial institutions, irrespective of their size.

High Compliance Costs

Compliance cost increases with the increase as individuals or entities operates in different jurisdictions. The average cost to meet the various regulatory compliance, such as AML/CFT, is estimated to be ~$5.5 million. For non-compliance, it is ~$15 million.

Growing Need for Financial Crime Compliance

Financial crime and fraud is a trillion-dollar industry growing at a rapid scale with more sophisticated fraud techniques, such as Synthetic Fraud—also referred to as the crime of the new millennium.

According to one report by Thomas Reuters, the cost of organized financial crimes including human trafficking and slavery was estimated at a staggering $1.45 trillion in 2018. And almost 50% of large APAC organizations have been victims of financial crimes, such as money laundering and fraud.

In addition, companies including banks and other financial institutions spend 3.1%—an aggregate of $1.28 trillion—of total annual turnover to combat financial crimes.

Besides economic losses, financial crime also causes immeasurable harm to the world and humanity. The proceeds of financial crimes are generally used in the financing of terrorism, the proliferation of weapons of mass destruction, human rights abuses, and environmental crimes.

Financial Crime Mitigation

Financial crime mitigation requires banks and other financial institutions need to identify the vulnerabilities and implement the controls and systems to prevent financial crimes. To achieve this, they can put the following controls in place:

  • Batch-level real-time transaction and behavioral monitoring for fraudulent transactions or activities, including suspected money laundering activities
  • Real-time global watchlist screening and PEP matching
  • KYC risk profiling, Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD)

Financial Crime Compliance Solutions: Manual Vs. Digital

Digital financial crime compliance solutions, such as Robotic Process Automation (RPA) embedded with artificial intelligence and machine-learning capabilities, can help address the challenges in traditional solutions with real-time tracking and monitoring of transactions with high accuracy.

By leveraging these intelligent digital solutions, banks, and financial institutions can analyze the data and detect suspicious activities and transactions, generate audit trails to support compliance, and save the organization from penalties and the high cost involved in the manual or traditional approach, which is prone to errors.

Consultative Approach for Financial Crime Compliance Management

Financial crimes, such as money laundering, terrorist financing, fraud, bribery, and corruption, pose a greater threat to the integrity of banks and financial institutions across the globe. Failure to manage the risk of financial crime can have severe consequences, including loss of reputation and goodwill, penalties, and regulatory sanctions.

At Anaptyss, we help banks and financial institutions fulfill their financial crime compliance obligations in a customized manner with our Digital Knowledge OperationsTM (DKOTM) framework. The DKOTM framework empowers banks of any size to protect their customers, and reputation and avoid regulatory fines or sanctions.

Interested in knowing how the DKOTM-based solution approach can help your financial institution to attain financial crime compliance? Read how Anaptyss offered a consultative BSA/AML-focused risk mitigation program for a US-based community bank by implementing the DKOTM framework to meet the regulatory requirements.

Write to us: [email protected].

Prasenjit Mukherjee

Prasenjit Mukherjee

AVP, Compliance

Prasenjit is a senior business leader with significant hands-on experience in the financial crime and risk mitigation vertical. His areas of specialization include regulatory compliance, anti-money laundering laws, fraud analytics, KYC, and prevailing quality standards such as Six Sigma.

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