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In the Remittance Service Market, it Pays to Stay Alert

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In the UK remittance service market, the call for vigilance against financial crime has never been louder. The Financial Conduct Authority (FCA), the UK’s financial regulatory body, has reaffirmed its commitment to combating financial crimes, with a specific focus on anti-money laundering (AML) and combating the financing of terrorism (CFT). This emphasis comes at a crucial time: technological advances and the globalization of financial services present, simultaneously, opportunities and challenges in the fight against financial crime.

FCA Pulls No Punches

The FCA’s recent publications, including its 2024/2025 Business Plan and updates to its three-year strategy, highlight a comprehensive approach to reducing financial crime. The authority reports a notable 40% reduction in fraud losses in 2023, a testament to the effectiveness of its strategies, which include partnership with the Advertising Standards Authority, rigorous sanctions compliance testing, and rejection from entry into the financial system of firms which are inadequately prepared. The situation is neatly summarised in a mid-March article by lawyers Osborne Clarke, a firm with deep knowledge of financial regulation – see below for the link.

Remittances Services  – Very Much Part of Global Financial Services

For remittance service providers, the message is clear: staying ahead of financial criminals requires a proactive and technology-driven approach. The FCA identifies the integration of (proven) advanced technology and data management as key tools to frustrate financial crime. The use of behavioural monitoring and the development of profiles for a “typical” customer (and thus an understanding of a-typical behaviours) shows how firms can enhance their detection capabilities.

Further, collaboration within the industry, through data-sharing initiatives and international cooperation, is encouraged to improve protection against cross-border financial crimes. Although some of these measures may seem extravagant for the remittance sector, they are rapidly becoming essential. Remittance services remain vulnerable to abuse by unscrupulous players, and providers should consider themselves at just as much risk as more traditional financial service businesses.

Future-Proofing Compliance for Remittance Services

However, with these advances come concerns over additional costs. While firms may hesitate accordingly, the FCA’s stance is unequivocal. The cost of non-compliance, especially in light of the forthcoming mandatory Authorised Push Payment (APP) fraud reimbursement scheme, far outweighs the investment in robust controls and compliance. The benefits of such investment extend beyond regulatory compliance. They include enhanced customer trust and satisfaction, better reputational protection, and greater all-round security.

This is where services like Compli from Essiell Compli come into play. Compli addresses the critical areas highlighted by the FCA through a comprehensive suite of compliance solutions. These include automated customer screening, sophisticated transaction monitoring, and the provision of alerts for unusual or suspicious behaviours. Additionally, Compli facilitates industry-wide data sharing, enabling firms to build customer profiles in greater depth than usual. The customizable rules engine and case manager ensure that the system adapts to the unique needs of each business. The tailored solution builds significantly improved protection for long term security.

Worldwide Challenges – World-Class Solutions

As the remittance service market continues to develop and mature, the case for a vigilant, technology-led approach to compliance is ever-more compelling. By adopting sophisticated and cost-effective solutions like Compli, firms can not only meet regulatory expectations but exceed them too. Doing so ensures their position as trusted and secure channels for remittances worldwide well placed for future growth.

By Declan Morton, staff writer at Essiell Compli


For reference

UK FCA reaffirms tackling financial crime as a top priority, Osborne Clarke,  28th March 2024

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