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Why Your Company is Not as Safe as You Think: Preventing Financial Crime in a Highly Digitized World

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Do you feel that your company is well protected from financial crime? There is a possibility it is not as secure as you think.

46% of organizations surveyed by PwC said they experienced some form of financial crime within the previous 24 months.

Furthermore, almost 70% of surveyed organizations reported that the worst incidents of financial crime came through either an external attack or a collaboration between internal and external sources.

The top external perpetrators in 2020 were customers (26%), hackers (24%), and vendors/suppliers (19%).

Preventing financial crime, including accounting fraud, is a challenge that can be complex, and complicated even further by today’s digitized world and unstable risk landscape. However, there are some methods will aid you in financial crime risk management.

Table of Contents

Introduction to the Financial Crime Framework

What is the cost of financial crime?

In the UK alone, it is estimated that financial fraud accounts for 52 billion pounds every year, according to Richard wood, former Morgan Stanley fraud manager and current CEO of Synectics Solutions. Conversely, it is believed that twice that sum is actually prevented, thanks to the way businesses have focused on financial crime prevention.

False IDs, chat rooms, data breach specialists, the dark web all contribute to the world of financial crime. Organized crime groups are becoming more specialized, even including bonus structures and incentives.

There are many types of financial crime. Some of the most common ones are:

  • Fraud

  • Money laundering

  • Breach of sanctions

  • Bribery

  • Tax evasion

  • Corruption

The Covid-19 Pandemic & Digitization’s Roles

The Covid-19 pandemic accelerated the trend of digitalized platforms. In response, fraudsters increasingly began to target digital spaces. For external fraudsters, digital platforms, such as eCommerce and social media, serve as a point of entry.

There were also fraudsters that went back to their old modi operandi. For example, the “crash for cash” schemes in the vehicle insurance industry, despite the fewer vehicles on the road.

Challenges in Financial Crime Risk Management in the Modern World

  • Frequently, rules are changed or created due to growing datasets, integration issues with monitoring systems and differing transaction data systems. This leads to costly and time-consuming exercises.

  • Red tape often hinders the process of sharing data, which is crucial to financial crime prevention. This allows fraudsters to continue with their crimes in the potentially long interim.

  • Data can only be efficiently used (and disparities detected) if there is a clear system of records. This must be structured and regularly maintained and updated. The lack of such structure allows leeway for financial crime.

  • International regulators all try to solve the issue of financial crime in different ways, with different rules. Hence, for global entities with operations in various jurisdictions, it can be a task to determine which rules apply for what transaction.

How to Prevent Financial Crime

While there is no fool-proof method of protecting yourself, the following methods drastically reduce the changes of your company falling prey to financial crime.

1. Daily Operations & Risk Management

Your first line of defence should be monitoring financial activity for unusual behavior, and reporting any suspicious activity to the concerned authorities.

Ensure that your reconciliation, including bank reconciliation and credit card reconciliation, is done regularly and on time. Reconciliation can be tedious and frustrating, and it’s easy to fall behind, especially as your business grows. However, it is crucial to conduct reconciliation to detect suspicious activity.

While manual reconciliation is still used, we do recommend considering automation with software such as Crush Errors. Here’s why.

Separate duties so accounting staff know that their work will be double and triple checked by others on an ongoing, regular, and random basis. If entries are randomly checked, an internal fraudster could take a gamble that their fraudulent entries will go undetected. Must check all entries for fraud to prevent fraudsters from finding a loophole to access funds.

2. Knowing Your Customers

Strive to establish long-term business relationships with all your customers – especially if you are a bank. This will help to facilitate the prevention and detection of financial crime.

3. Matching Values

We do not recommend entering into business relationships with companies or persons whose values are contrary to your own or otherwise unethical. It may also be wise to consider ending any existing such relationships.

4. Focus on Risk Assessment

Finite resources are a common headache among businesses, but conducting a thorough risk assessment is a good investment. This should include all departments in all areas of business for all financial crime risks. It will be tedious, but it will result in more effective, practical and user-friendly policies.

5. The Support of Senior Management

Your program will work best with the full support of your senior management. Many times policies can seem like just another layer of bureaucracy. Statements of ethics given by management and rewards-based HR structures can be far more effective.

6. Train Your Staff

If it is possible, train each department in the prevention of financial crime separately, so they can understand how it applies to their work. Expecting them to read a tome of policies may lead to them being confused or disengaged.

Furthermore, we encourage you to develop a comprehensive assessment and training program. You can enlist the help of financial consultants like NextGen Accounting if you find yourself short-staffed or at a loss on how to proceed.

7. Checking Third-Party Contracts and Contacts

Prevention of financial crime does not begin and end with only your own staff. It is crucial to conduct due diligence on companies you do business with, especially the ones in your supply chain.

Ensure that your contracts require them to comply with all relevant laws in a way that is clear and understandable. For example, instead of writing that they need to “comply with the Bribery Act”, you can explain what the act is and what you will require.


We hope the above points have helped you gain further understanding on financial crime risk management so that you can protect your company. What are the measures you take to prevent financial crime? Let us know in the comments!

One of the best ways to detect financial crime is through reconciliation. NextGen Accounting gives you reliable bank reconciliation services and credit card reconciliation services, every day. If it doesn’t pass audit, we pay the fees.

Our management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC.

If you want reconciliation services that free up your accounting team, prove your books, and reduce credit card chargebacks, contact us today!

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