The banking and financial crisis of 2008/2009 is still having an effect. Politicians and regulatory organizations are making an effort to sustainably strengthen the financial system. This is clearly noticeable in stricter, more complex and more intensively pursued regulatory requirements. National and international regulatory and law enforcement agencies are keeping a firm eye on the global financial industry – and are cracking harder.
For market participants, this means that they have to deal with a multitude of new rules, changed standards and previously non-existent obligations. Added to this is the rising risk of banks being abused for money laundering and terrorist financing, and thus being unknowingly punishable by law.
In an economic system that is more global, faster and more complex than ever before, pressure is increasing on all sides: regulatory, societal, political, but also market-driven.
Because the competitive and price pressure in the industry forces each institute to deal catchy with its own strategy and dealing with risks, not least because the business of lending and borrowing itself has been undergoing a fundamental transformation for years.
Globalization makes cross-border banking the standard. Digitization multiplies market participants and the products available on the market. Mr. Bitcoin has created the Internet itself a currency that is just as manipulable and vulnerable as the new big resource of the global economy: data.
These are particularly sensitive in the banking and financial world, for example, through credit card and online banking customer data, the loss of which can be life-threatening for service providers in the market.
Under extreme cost and regulatory pressures from outside and inside, the risks of market manipulation and corruption inevitably increase. Digitization also creates new areas of risk: fraud, data theft, hacker attacks and industrial espionage. The important trust that banks and financial service providers are trying to regain after the crisis is always in danger. These are the risk areas of the financial industry that are critical from our experience:
Fraud, corruption and competition offenses There is virtually no form of fraud and corruption that the banking and finance industry does not have to deal with. On the one hand there are those fraud offenses directed against companies, for example the manipulation of data and products, misappropriation and misappropriation of capital or simply theft. But equally common and dangerous are offenses that are superficially useful to the company: tax evasion, competitive or interest rate manipulation, bribery or balance sheet manipulation. All these offenses are now internationally extremely harshly regulated. It threatens high damage in the form of fines, management liability and loss of reputation.
Money laundering and terrorist financing
The danger of being unknowingly misused by criminal organizations for money laundering or covert terrorist financing has never been more present than it is today. Following the principles of “Know Your Customer” (KYC) and “Risk Based Approach”, banks and financial service providers must make extensive efforts to ensure that their business activities do not support any illegal or criminal organizations. For this reason, the regulation in the field of money laundering prevention is particularly strong.
Data theft and cybercrime
The topic of data protection and data security occupies the banking and finance industry in particular. Every day we work with strictly confidential data. Stealing such data does not only mean a loss of value, it also shakes the trust of stakeholders.
Technically, this involves an unusually complex data landscape that must be protected against hacker attacks, theft and manipulation with the highest security standards, for example transaction data, customer data from online banking, trade secrets (eg computer models), data from real-time trading or credit card information.
Financial sanctions and embargoes
Compliance with international financial sanctions and embargoes falls into the same area of risk. Not least because of the fragile global security situation, the topic is increasingly moving towards the political and regulatory agenda.
In the case of violations, massive fines, market foreclosures and existential scandals threatened.