The anti-financial crime committee, which is a supervisory committee to look after the affairs of financial crime risks and incidents. Per its defined terms of references, this committee works to provide support and supervision to different entity functions, such as the anti-financial crime function, to prevent financial crimes.
Anti-Financial Crime Committee Roles and Responsibilities
The entities establish an anti-financial crime committee or AFCC led by the CEO and may include important key executives such as the head of risk, head of operations, head of credit, head of legal, head of HR, head of IT, etc.
The compliance officer serves as a secretary to AFCC. The committee meets at a set frequency per compliance program to discuss financial crime risks, issues, and incidents that occurred during the period.
The AFCC ensures that the anti-financial crime function can secure assistance from other departments, for example, legal, treasury, credit, or risk management. An important function that AFCC may perform is to help enhance the collaboration between the departments and process owners to minimize the risk of financial crimes.
The AFCC, in turn, helps the compliance function better understand sources of financial crime risks and devise a targeted anti-financial crime strategy to fill out the gaps. This education from key executives to other department officers helps compliance at the forefront, increases awareness at all hierarchal levels, and makes employees feel the need for risk management.
Besides, at minimum, the terms of references of the central compliance management committee should include the following:
- Oversee the management of entity-wide compliance risks and ensure that management understands the financial crime risks.
- Promote a high anti-financial crime compliance culture and assist compliance function in discharging its roles and duties.
- Facilitate anti-financial crime officers successfully and effectively implementing compliance strategies and programs across different functions.
- Assist and facilitate the compliance officer in implementing anti-financial crime-related policies, processes, and procedures to manage compliance risk; and
- Assist human resources in developing and implementing an organization-wide financial crime prevention training program to ensure that staff maintains a satisfactory level of knowledge of regulations and laws.
Money laundering is the process by which criminals attempt to conceal the true criminal origin and ownership of the proceeds of their criminal activities. It is the process of converting the proceeds of crime into assets that appear to have a legitimate origin. If successful, it allows criminals to keep control of and enjoy the proceeds.
The requirement to launder criminal proceeds through the financial system and other means is critical for the success of criminal operations. Those involved seek to take advantage of the world’s financial institutions in order to profit from the proceeds of their criminal activities.
Transnational financial crime has grown at an exponential rate in recent years, undermining global financial systems, impeding economic growth, and causing massive losses to businesses and individuals around the world. Corruption exacerbates the problems by providing a breeding ground for organized criminal activity.
Criminals can commit financial crimes with increasing efficiency and sophistication by taking advantage of globalization and digitization processes. The COVID-19 pandemic has demonstrated how quickly criminal organizations can adapt their methods to capitalize on new opportunities for defrauding individuals and businesses, such as phone fraud, phishing, non-delivery fraud, investment fraud, and payment card fraud. Financial crime and corruption are major concerns not only for law enforcement, but also for financial institutions, the private sector, and other international stakeholders.