Payments is evolving sector

Sarah Jordan, director of FA - Forensic at Deloitte LLP

engagements and communications from the FCA, the Central Bank of Ireland and the New York State Department of Financial Services Consent Order to Coinbase. Key risks include:

• Compliance programmes that fail to match the growth of the company;

The impact on a business and its operations can be far reaching, from the ability to serve clients well, to internal frustrations and regulatory breaches; not to mention the broader impact on the economy and society, particularly vulnerable groups who are often the ones worst affected through associated crimes, such as human trafficking.

My experiences in industry, and now supporting payments clients within Deloitte’s anti-financial crime team, inspired me to join The Payments Association’s Market Intelligence Board as the content lead and coordinator for Project Financial Crime. Throughout the year we will shine a spotlight on the key challenges firms are experiencing and the steps they can take to navigate those challenges.

With increasing digitisation in many aspects of our lives, the payments sector continues to see exponential growth, bringing fresh competition and innovation to the industry, for example, by offering weekend settlement through crypto.

This evolution in the sector has resulted in an increasing focus from regulators around the globe on payment firms and anti-financial crime features at the top of the regulators strategic priority list, given the risk of exploitation by criminal networks.

We see several key risks, challenges and priorities emerging from our client

• Failure to either complete anti-money laundering risk assessments at all, or to provide a sufficiently comprehensive assessment; and

• Inadequate oversight of third parties (both intra-group and external parties to the firm).

With innovation and growth these risks become more prevalent. It is easy for firms to become overwhelmed with compliance related activities, which do not fundamentally reduce the financial crime risk they are exposed to, leading to potential backlogs in alert monitoring, delays to client payments and, in some cases, suspicious activity reporting.

There are several steps payment firms can take to prevent and remediate these challenging risks.

First off, a business-wide and customer risk assessment is foundational to developing an informed and scalable antifinancial crime programme.

This should be supported by the right infrastructure for the firm and its growth ambitions, defined within the firm’s (target) operating model.

Lastly, there is enormous value in quality control and quality assurance to ensure the programme is operating effectively.

It’s exciting to be part of such a dynamic industry and knowledge sharing forums such as this because it can only help us to make sure the future of payments is one where it is harder for criminals to find and exploit weaknesses in the payments ecosystem.