Sarah Pritchard, Executive Director of Markets at the FCA has recently given a speech on how the “force multiplier effect” is key to fighting financial crime. She said the role of those in the first line of defence will be more important than ever, since, due to the cost of living crisis, FCA feels financial crime is likely to become even more prolific – more than seven in ten people have been targeted by scams in the past 3 months.
Ms. Pritchard compared financial crime to Covid in the sense that “you (the firms and individuals in this sector) are the first, second and third line of defence”. The force multiplier effect is used to strengthen these lines of defence.
The force multiplier effect is:
- Having professionals in firms using their knowledge to see red flags from conversations and customer behaviour.
- Using technology to help spot these red flags by detecting unusual activity.
- Sharing information with regulators and law enforcement.
FCA says a whole system response is needed to have a more effective force multiplier effect to limit the threat of financial crime. FCA is constantly working to shore up defences – through its Scam Smart campaign, reviews such as its recent review of challenger bank financial crime controls and its demanding requirements on the 37 crypto firms that it has so far registered. Also, of course it has prosecuted Nat West, and since 2018 has fined 10 other firms for AML failings.
This includes firms future-proofing themselves and using data and technology to stay ahead of the curve. Firms should plan for the potential consequences of the cost of living crisis such as a potential rise loan fee frauds, false access to utility rebates and in the recruitment of money mules.