Clarity in Conversation with RUSI
In our most recent Clarity in Conversation fireside chat, we had the opportunity to talk to Tom Keatinge, the Director for the Centre for Financial Crime and Security Studies at RUSI, one of the most respected security and defence think tanks in the UK. At a time when security and financial crime is at the top of most global agendas, we deep-dived into issues such as the impact of COVID, how to balance innovation and risk of emerging technologies, and the state of global intelligence sharing at a time of protectionism.
Here are some of the highlights and key takeaways from the discussion:
The proliferation of Organised crime post COVID
The unprecedented financial support during the COVID crisis has created a field that is more ripe than ever for criminals to exploit ways to access large sums of money. This has put governments in a difficult situation, where they are having to create economic stimulus through financial support whilst ensuring they take cautious approaches to protect people from financial crime. There is a real risk that the pressure to support people as quickly as possible and launch new schemes and initiatives could help line the pockets of the fraudsters, and it’s up to both the private and public sector to ensure this doesn’t happen.
The relationship between financial inclusion and financial crime
The restrictions and regulations put in place to combat terrorist financing and money laundering are designed to protect financial institutions but it also impacts their ability to help those in need, as offering products to the underserved becomes more difficult. This is a problem that has been further exacerbated during the pandemic. Financial inclusion today is not something limited to developing regions — developed markets like the UK also face it. Regulators now have to ensure that everyone is included in the financial system with schemes that provide services that are widely accessible. At the same time, banks have to review their metrics and standards of who they lend to. This relationship between banks and regulators has become considerably strained during the pandemic.
Technology — a double-edged sword
Technologies, such as fintech, can play a hugely important role in combating financial crime, providing access to finance, facilitating cash flow and improving financial literacy, but it can also create opportunities for fraudsters to exploit new ways to conduct fraud. As a result, regulators have to find a way to not only embrace and support these types of innovations, but also control them. This is notoriously difficult because the evolution of tech almost always outpaces the development of regulations. A closer, more collaborative relationship between the private and public sector is essential to achieve this balance between fostering innovation and managing risk.
The state of intelligence sharing
The current state of protectionism, volatility and uncertainty around the world has clearly created a trust issue and nations are more cautious about what they are sharing as a result. While we might not suffer from a lack of intelligence sharing, the sharing of evidence is likely to be impacted (moving evidence from a country to another country is difficult even at the best of times). As a consequence, there is a risk that the structures around law enforcement collaboration might break down. This is something that must be prevented from happening because it’s the evidence — not the intelligence — that allows law enforcement to prosecute criminals.
The future
When the near future comes, we will judge the past on two fronts. Firstly, the impact that the economic catastrophe will have had on financial crime in various shapes. Sadly, it is very likely that the impact will be significant. On a more positive front, there is hope that the UK’s Integrated Review will come out with a real response to tackling illicit finance in the country. The outcome of this is of paramount importance. The UK’s reputation has a global impact, and unless the problem is solved, it will make it challenging for the UK to create international trade relations.
Thank you to Tom for joining us for this insightful discussion. If you’d like to stay in touch with Tom and his team, and to hear more about their research and activities, you can sign up to the Centre for Financial Crime and Security Studies mailing list here and follow them on Twitter.
To keep up with Clarity and stay up to date on future Clarity in Conversations follow us on @claritypr.
