Digital Banking - How the FinTech Evolution Impacts Financial Crimes Risks

On May 22, 2019, the ACAMS New York Chapter held an panel discussion hosted by The Director for The Center for Professional Accounting Practices, Fordham University.


Panel (from left to right):

  • KeithHarding CAMS - Practice Lead, Anti-Financial Crimes Advisory Services, Dixon Hughes Goodman (Moderator)

  • Michael Sachs - Executive Assistant District Attorney, Chief of the Investigation Division, New York County District Attorney’s Office

  • Joanne Li -Head of Financial Crimes Strategic Initiatives, PayPal

  • John MacKessy -Global Head of AML Compliance, BlackRock

The panelists gave advice on how financial institutions can successfully shift to digital markets. In particular, it was advised that: Financial Crimes Compliance (FCC) teams need to have a seat at the table during discussions on product changes or expansions so that compliance controls can be implemented accordingly; and that risk assessments, which tend to be a look-back exercise, should be constructed to be forward-looking. Best practices for managing digital banking risks were also shared, which included: understand the business (e.g., products, customers, third parties); collecting data points during the KYC process that will be helpful for internal and external (law enforcement) investigations; and promoting the value of FCC internally.



As the financial services industry continues its shift towards digitization, there are key factors that need to be considered by financial institutions. Such factors include: the advantage of having more data points; a heightened need for collaboration across various functions such as cyber, fraud, and information security; an increased use of non-traditional sources (such as social media) to verify customer information; and the fact that FinTechs may be unaware of compliance obligations. Overall, because digital products reduce cash flow, they can reduce money laundering risk, assuming that customer risk has been appropriately assessed, appropriate typologies and testing procedures are in place, and compliance staff (e.g., investigators) have been trained on digital products and relevant activity.


Additionally, FCC considerations specific to digital currency include: the fact that transactions are often non-reversible and can be used for scams; the anonymity of transactions requires having a strong understanding of where data points reside and also leveraging external relationships for information (e.g., 314(b) process); and that cryptocurrency enables funds to be quickly moved across borders, but obtaining information through MLAT processes can be very lengthy.


Lastly, the panelists discussed that in order to recruit and retain qualified staff, companies should develop and mentor employees to help promote the reputation of the work environment. It was also advised to invest in the growth of multiple people for the same/similar function so that there is never a singular subject matter expert.

Networking session after the panel discussion

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